Put These 11 Companies in Your America First Portfolio Today

By Nick Rokke, analyst, The Palm Beach Daily

Lee Iacocca saved Chrysler—with an assist from the U.S. government…

In 1979, Iacocca was named CEO of the American auto giant. At the time, Chrysler was near collapse.

One of his first acts as CEO was to secure a $1.5 billion loan guaranty from the U.S. government. If he hadn’t, the automaker would have gone bankrupt.

But that wasn’t all… In 1981, the Reagan administration imposed trade quotas on Japanese automakers. Four years later, Chrysler gained over 1,300%.

Iacocca would later become one of the most famous corporate executives in American history. And part of his success was due to an “America first” strategy…

In yesterday’s Daily, we showed you how import quotas on Japanese cars in the 1980s boosted the bottom lines of U.S. automakers.

Reagan’s agreement with Japan reduced the supply of Japanese cars in the U.S. market. The reduced competition allowed U.S. carmakers to raise car prices by up to 50%.

The Big Three—Chrysler, Ford, and GM—saw their share prices soar 1,300%, 400%, and 100%, respectively, over the next four years.

Reagan’s trade restrictions were a huge tailwind for Chrysler and the other two U.S. car manufacturers.

Today, President Trump is also proposing trade restrictions on imports from abroad. If his plans are implemented, certain U.S. companies will be big winners—just like Chrysler…

If you were wondering how to profit from Trump’s pledge to “make America great again,” our America First Portfolio is the way to go…

How to Build Your Own America First Portfolio

When governments implement trade restrictions to “protect” certain industries, those industries will generally be winners. The U.S. automakers are an example of this.

If the Trump administration is able to erect trade barriers, we’ll see massive gains for certain U.S. companies. The biggest winners will be domestic producers and service providers. (The biggest losers will be multinationals that do a great deal of their business abroad.)

Two companies we mentioned Monday were tobacco giant Altria (MO) and Southwest Airlines (LUV). They were our two initial positions in the America First Portfolio.

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Building an America First Portfolio

To complete the table, we combed through our Elite 25 and found the American companies we thought would be the most attractive if Trump puts his words into action.

(Altria and Southwest are not part of our Elite 25, but they will do well if Trump sticks to his pledge to protect American industries.)

Then we sorted them by the percentage of revenue they derived domestically. Companies that make most of their money from domestic sales were added to our list.

[Our Elite 25 are companies that have a high return on invested capital (ROIC), have high growth, and are cheap. Catch up here, here, and here.]

The table below includes all 11 companies that make up our America First Portfolio:

Company Name

Ticker

Industry

% of Revenue
from U.S. sales

Altria

MO

Tobacco

100%

American Outdoor Brands

AOBC

Guns/Retail

100%

Hibbett Sports

HIBB

Outdoors/Retail

100%

L Brands Inc.

LB

Retail

89%

The Michaels Companies

MIK

Retail

91%

National CineMedia Inc.

NCMI

Movie advertising

100%

Nautilus Inc.

NLS

Sporting goods

88%

Robert Half International

RHI

Professional services

80%

Southwest Airlines

LUV

Airlines

100%

Stamps.com

STMP

Digital stamps

100%

United Therapeutics

UTHR

Biotech

91%

These 11 companies should be insulated from any trade war that breaks out. They won’t be harmed by retaliations by foreign governments because they do most of their business at home.

They’re buys right now, and you should continue to hold them if you believe Trump will follow through on his plans to make America great again.

We won’t track this portfolio each month like we do with our Elite 25… So make sure you follow our risk-management policy on position sizing and exit strategies.

What do you think of our America First Portfolio? Let us know right here

Regards,


Nick Rokke, CFA
Analyst, The Palm Beach Daily

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CHART WATCH

The prospect of protectionism is energizing American producers…

American companies in the manufacturing, mining, and construction sectors are hiring workers at the fastest clip so far this century.

Chart

Businesses don’t hire unless they expect to see more profits soon. So it’s apparent that U.S. companies in these sectors are expecting more demand for their goods and services.

We’ll continue to monitor this trend. It will signify which companies will be most helped by changes in America’s trade policies.

—Nick Rokke

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