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MOVING THE MARKET
The European Central Bank and the European Union recently worked out the details for a second bailout for Greece. The sovereign crisis though, does not appear over for EU member countries. Thus far, Ireland, Portugal and Greece have requested and received “bailout” packages from the ECB and other EU member countries, and now, the focus is shifting to Italy and Spain.
OUR OUTLOOK
In light of the continuing contagion of market jitters over sovereign debt sweeping across the eurozone, Revere examined the U.S.-listed companies that have publicly disclosed revenue exposure to the region, and more specifically at Italy and Spain, in order to see how well these companies and their respective sectors have performed over the past month, 3-months and 12-months compared to S&P 500.
REVERE RESEARCH REVEALS
Despite the increased importance placed on selling goods and services in the international markets over the past 20-30 years, the vast majority of U.S. publicly traded companies still do not breakdown their revenues on a country-by-country basis in the eurozone. In fact, most companies lump Europe, the Middle East, and Africa into one line of their revenue breakouts.
Revere’s coverage universe totals 7,325 U.S. publicly traded companies, including ADRs. We scanned each of the broad first-tier sectors (Business and Public Services, Consumer, Energy, Finance, Healthcare, Industrial & Materials and Technology), which revealed 1,046 publicly traded companies, or roughly 14 percent that have material exposure to the EU.
Sectors with Revenue Exposure to Italy
Our research revealed that there are just eight companies reporting revenue exposure totaling more than 15 percent to Italy, with four of them in the Renewable Energy subsector. Contrary to the push toward renewable energy across the EU, companies in this sector have shown particular weakness during this period of extreme economic uncertainty as both consumers and businesses scrutinize expenditures.
Name
Ticker
% Revenue
YTD Return %
1 Month Return %
3 Month Return %
1 Year Return %
Hierarchy Focused Sector Name
Exposure
JinkoSolar Holding Co., Ltd.
JKS
25%
16%
-7%
-7%
57%
Renewable Energy Photovoltaic/Solar Cells and Systems
Trina Solar Limited (ADR)
TSL
22%
-20%
-8%
-31%
-23%
Renewable Energy Photovoltaic/Solar Cells and Systems
Suntech Power Holdings Co., Ltd. (ADR)
STP
16%
-8%
-3%
-15%
-33%
Rewnewable Energy Photovoltaic/Solar Cells and Systems
Power-One, Inc.
PWER
37%
-31%
-10%
-12%
-31%
Renewable Energy and Distributed Generation
Sectors with Revenue exposure to Spain
When looking into companies with exposure to Spain, we found 18 companies, with four of them also within the Renewable Energy subsector. In addition, we found several large U.S.-listed companies within the Biopharmaceuticals and Industrial & Materials sectors with revenue exposure to Spain.
In comparing these companies’ performance over the past month, three months and one-year periods, we found that only companies within the Biopharmaceuticals and Industrial & Materials sectors have managed to withstand the pressure of the credit and sovereign debt crisis in Spain.
Name
Ticker
% Revenue
YTD Return %
1 Month Return %
3 Month Return %
1 Year Return %
Hierarchy Focused Sector Name
Exposure
Abbott Laboratories
ABT
3%
10%
1%
1%
7%
Healthcare Biopharmaceuticals
ArcelorMittal (ADR)
MT
6%
-16%
0%
-12%
-2%
Industrial & Materials Steel Mills
Freeport-McMoRan Copper & Gold Inc.
FCX
8%
-7%
16%
0%
57%
Industrial & Materials Copper
E.I. du Pont de Nemours & Company
DD
1%
8%
3%
-2%
38%
Industrial & Materials Chemicals
Gilead Sciences, Inc.
GILD
6%
16%
6%
7%
26%
Healthcare Biopharmaceuticals Viral
Cemex SAB de CV (ADR)
CX
4%
-32%
-8%
-16%
-26%
Industrial & Materials Asphalt, Cement and Concrete Products
Hexcel Corporation
HXL
8%
36%
18%
16%
32%
Industrial & Materials Fibers and Polymers
JinkoSolar Holding Co., Ltd.
JKS
2%
15%
-7%
-8%
56%
Renewable Energy Photovoltaic/Solar Cells and Systems
Trina Solar Limited (ADR)
TSL
22%
-20%
-8%
-31%
-23%
Renewable Energy Photovoltaic/Solar Cells and Systems
Suntech Power Holdings Co., Ltd. (ADR)
STP
3%
-8%
-3%
-16%
-33%
Renewable Energy Photovoltaic/Solar Cells and Systems
Ferro Corporation
FOE
16%
-5%
13%
-15%
51%
Industrial & Materials Specialty and Performance Chemicals
JA Solar Holdings Co., Ltd. (ADR)
JASO
1%
-30%
-13%
-25%
-25%
Renewable Energy Photovoltaic/Solar Cells and Systems
CONCLUSION
Perhaps the biggest impediment in determining investment opportunities in the EU is the lack of country-specific data breaking down revenue exposure. Revere was only able to glean some 22 companies, which are listed







Conclusion

Perhaps the biggest impediment in determining investment opportunities in the EU is the lack of country-specific data breaking down revenue exposure.

Within this sample, Revere was able to identify two specific sectors (Biopharmaceuticals and Industrials & Materials) that have shown resiliency despite the crisis and the relative performance of the S&P 500. However, despite governmental preferences to the contrary, companies within the Renewable Energy sector have fared worse than their sector as well as the S&P 500.
Companies to Watch
There are two U.S.-listed companies with significant revenue exposure to either/both Italy and Spain that continue to outperform the S&P 500.
Gilead Sciences, Inc. – (GILD) – Gilead is a biopharmaceutical company that focuses on the development and commercialization of human therapeutics for life threatening diseases—including its HIV treatments. Gilead revealed it earned 36.4 percent of revenue from European sales with a 4.3 percent exposure to Italy and 5.7 percent exposure to Spain.

Hexcel Corporation (HXL)—develops, manufactures and markets composites, including carbon fibers, matrix systems, adhesives and composite structures for use in Commercial Aerospace, Space and Defense and industrial applications. Hexcel’s exposure across the EU is approximately 23.7 percent (with 8 percent coming from Spain). Currently, composite structures comprise approximately 78% of Hexcel’s revenue with growth expected to grow as the aviation industry begins to replace aging fleets.

In terms of companies which are experiencing vulnerability, the sector which has shown the most weakness is Renewable Energy. And, one specific company to watch is Suntech Power Holdings Co., Ltd. (ADR).

Suntech Power Holdings Co., Ltd. (STP)—is engaged in the design, development, manufacturing and marketing of photovoltaic products. Their products provide electric power for residential, commercial, industrial and public utility applications in various markets. Currently Suntech has gained marketshare is Germany, Italy, the US, China, Spain, and the Middle East.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: How U.S.-Listed Companies With Revenue Exposure to EU Countries are Faring Amid the Debt Crisis