6 Booming U.S. Multinationals With Compelling Growth Prospects

Includes: BA, DWDP, MSFT, PEP, PFE, VZ
by: David Alton Clark

According to the United States Council for International Business (USCIB), US multinationals contribute greatly to the domestic economy and I fervently agree. The following six blue-chip multinationals have excellent prospects for global growth and positive catalysts coming to fruition in the near term. The companies are The Boeing Company (NYSE:BA), Microsoft Corporation (NASDAQ:MSFT), Pfizer Inc. (NYSE:PFE), E. I. du Pont de Nemours and Company (DD), Verizon Communications Inc. (NYSE:VZ), and PepsiCo, Inc. (NYSE:PEP).

With the prospects of a domestic slowdown looming, these multinationals are must-haves for your portfolio prior to earnings. These companies' bottom lines are underpinned by strong emerging markets on the cusp of a multiyear secular growth curve. Eventually, the US economic recovery will be spurred on to healthier growth by these multinational companies.

The USCIB promotes open markets, competitiveness and innovation, sustainable development and corporate responsibility, supported by international engagement and prudent regulation. The following is a short excerpt of a study performed regarding US multinationals' contributions to the domestic economy, followed by a brief review of each company highlighted in this article.

U.S. multinational companies strengthen the American economy through a combination of their domestic activity and their international engagement. Strong U.S. multinational companies that are able to compete effectively in foreign markets will be better positioned to help lead America out of recession. The ability of U.S. multinational companies to stem job losses in the United States and eventually return to hiring more American workers depends on the health, vitality, and competitiveness of their worldwide operations. The strength of the American economy is driven by the productivity and competitiveness of the companies operating in America. Innovative and efficient companies in the United States that profitably create goods and services, in full partnership with their workers and their broader communities, are the foundation of a globally competitive U.S. economy that can deliver productivity growth and rising standards of living. U.S. multinational companies enhance the American economy by their capital investment, their research and development, and by supporting good-paying American jobs.

Company Reviews & Key Statistics

Boeing, together with its subsidiaries, engages in the design, development, manufacture, sale, and support of commercial jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. The company operates through five segments: Commercial Airplanes, Boeing Military Aircraft, Network & Space Systems, Global Services & Support, and Boeing Capital Corporation.

Headquartered in Chicago, Boeing employs more than 158,000 people across the United States and in 70 countries. This represents what it considers to be one of the most diverse, talented and innovative workforces anywhere. More than 123,000 of its people hold college degrees -- including nearly 32,000 advanced degrees -- in virtually every business and technical field from approximately 2,700 colleges and universities worldwide. The enterprise also leverages the talents of hundreds of thousands more skilled people working for Boeing suppliers worldwide.

The company is trading significantly below analysts' estimates. BA has a median price target of $90 by 22 brokers and a high target of $100. The last up/downgrade activity was on Jan. 5, when Argus downgraded the company from Buy to Hold.

Microsoft develops, manufactures, licenses, and supports a range of software products and services for various computing devices worldwide. Microsoft was founded in 1975 and is headquartered in Redmond, Washington. Microsoft recently announced the worldwide availability of Office 365, Microsoft’s next generation productivity service. Office 365 is the culmination of more than 20 years of experience delivering world class productivity solutions to people and businesses of all sizes. It brings together Office, SharePoint, Exchange and Lync in an always-up-to-date cloud service. Customers may try it and buy it at office365.com.

The company is trading below analysts' estimates. MSFT has a median price target of $34 by 27 brokers and a high target of $38. The last up/downgrade activity was on Feb. 17, when Collins Stewart initiated coverage on the company with a Buy rating.

Pfizer, a biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Pfizer Inc. was founded in 1849 and is headquartered in New York, New York.

Pfizer Japan recently announced the top-line results for Lyrica (pregabalin) Study A0081208 – Randomized, Double-Blind, Multicenter, Placebo-Controlled Study to Evaluate Efficacy and Safety of Pregabalin (CI-1008) in the Treatment of Fibromyalgia. The results demonstrated a statistically significant reduction in the endpoint mean pain score, the primary efficacy analysis in the study, with pregabalin compared to placebo. Further analyses will be conducted on these initial results.

The company is trading below analysts' estimates. PFE has a median price target of $23.50 by 16 brokers and a high target of $30. The last up/downgrade activity was on Mar. 14, when Standpoint Research downgraded the company from Buy to Hold.

Du Pont operates as a science and technology company worldwide. It operates in seven segments: Agriculture & Nutrition, Electronics & Communications, Performance Chemicals, Performance Coatings, Performance Materials, Safety & Protection, and Pharmaceuticals. The company was founded in 1802 and is headquartered in Wilmington, Delaware.

DuPont expects strong 2011 growth for its seed business. DuPont expects 55 percent of its Triples switching to new corn refuge products in 2012 and updated its soybean herbicide tolerance pipeline DuPont recently confirmed its seed business, Pioneer Hi-Bred, shows strong early financial results through volume gains and price improvements for this season during a Deutsche Bank Global Industrials and Basic Materials Conference.

"Pioneer is on pace for strong growth in its global business in 2011," said Paul E. Schickler, Pioneer president. "In North America where the planting season is coming to a close, we anticipate an increase in corn and soybean market share coupled with mid-single-digit price increases, in line with our objectives."

The company is trading below analysts' estimates. DD has a median price target of $62.50 by 12 brokers and a high target of $70. The last up/downgrade activity was on July 27, 2010, when BB&T Capital Mkts upgraded the company from Hold to Buy.

Verizon provides communication services. The company operates through two segments: Domestic Wireless and Wire Line. The Domestic Wireless segment offers wireless voice and data services, and sells equipment in the United States. The Wire Line segment provides voice, Internet access, broadband video and data, Internet protocol network, network access, long distance, and other services in the United States and internationally.

Verizon is a global leader in delivering innovation in communications, information and entertainment. Verizon offers voice, data and video services over intelligent wireless, broadband and global IP networks to meet it's customers' growing demand for openness, speed, mobility, security and control. Verizon Communications Inc. was founded in 1983 and is based in New York, New York.

For enterprises and government customers around the world, Verizon is a leading provider of global IT, security, and communication solutions, with one of the world's most connected IP networks. Verizon delivers a broad range of strategic solutions, services and expertise to many of the world's largest organizations, including 96 percent of the Fortune 1000, and governments. Verizon owns and operates much of the infrastructure that comprises the Internet today, including almost half a million fiber miles of backbone networks connecting six continents and more than 150 countries.

The company is trading on par with analysts' estimates. VZ has a median price target of $38 by 27 brokers and a high target of $48. The last up/downgrade activity was on Mar. 28, when Robert W. Baird upgraded the company from Neutral to Outperform.

PepsiCo manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods, PepsiCo Americas Beverages, PepsiCo Europe, and PepsiCo Asia, Middle East and Africa. The company was founded in 1898 and is headquartered in Purchase, New York.

The bulk of PepsiCo's $60 billion in annual revenue comes from products such as Pepsi-Cola and Lay's potato chips that the company describes as "fun for you.'' But it launched a Global Nutrition Group last year and chief executive Indra Nooyi aims to more than double revenue from "good for you'' products to $30 billion by 2020.

Late last year PepsiCo invested $3.8 billion for a stake in a Russian dairy-products company and it spent $488 million on research and development across its businesses in 2010, up from $388 million in 2008. The initiative has been such a major focus that Mrs. Nooyi has been criticized for not paying enough attention to its namesake Pepsi-Cola.

The company is trading significantly below analysts' estimates. PEP has a median price target of $65 by 16 brokers and a high target of $72. The last up/downgrade activity was on Feb. 11, when Davenport downgraded the company from Buy to Neutral.

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