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[DEAD WRONG] TV’s Talking Heads on the Markets

Big U.S. multinational stocks can’t catch a break right now.

All the forces of the investment universe are lined up squarely against them.

But if that’s the case, how come they’re performing so darned well?

According to the talking heads on TV, the picture could not look more bleak for the blue chips.

But in reality, the big-cap multinational stocks are outperforming where it counts most: on the bottom line… and the top line too. We can clearly prove this now that nearly all the S&P 500 companies have reported quarterly results. Companies with the highest international sales exposure actually posted the best results, according to data from FactSet researchers.

power earnings

As you can clearly see in the graph above, overseas business is booming for the big caps. In fact, S&P companies that generate 50% or more of their sales from overseas markets posted earnings growth of 29.4% year over year during Q2. That compared with profit growth of just 22% for domestic-oriented businesses that have more than 50% of their sales inside the U.S.

The same is true of the top line: Total sales for S&P multinational stocks were 13.5%, compared with just 8.6% for domestic companies. What’s driving this divergence in sales and profit performance, against all odds?

It’s the “usual suspects,” mainly technology stocks in the S&P 500, which generate the majority of sales and profits from overseas markets. In spite of a few high-profile misses from Facebook (NASDAQ: FB) and Twitter (NYSE: TWTR), business is booming for high-tech companies globally. Another big assist in terms of strong international sales and profit growth during Q2 came from one of my favorite sectors, energy.

Bottom line: Don’t believe everything you hear from the talking heads on CNBC. Large-cap multinational stocks are posting the highest profit and sales growth right now, in spite of the trade and strong-dollar head winds blowing against them.

And I expect things to stay good and maybe get even better for large-caps as we march towards 2019.

Here’s to growing your wealth,

Mike Burnick

Mike Burnick
Chief Income Expert, Mike Burnick’s Wealth Watch

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Mike Burnick

With over 25-years of professional investment experience, Mike Burnick was a Registered Investment Adviser and portfolio manager responsible for the day-to-day operations of a mutual fund. Mike joined Weiss Research in 2002 as an analyst and writer, and in 2008 was named Director of Research and Client Communications at Weiss Capital Management, where he assisted...

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