INVESTING
60 KIPLINGER’S PERSONAL FINANCE^ 05/2017ISTOCKPHOTO.COMcabinetry (KraftMaid, Merillat); and
windows (Milgard). Some 79% of sales
are domestic.
A big part of Masco’s appeal lies
in a corporate overhaul undertaken
in 2014, says Morningstar. New leader-
ship has built a “stronger and more
consistent” business by cutting costs,
focusing on the company’s most prof-
itable lines and expanding sales of
Behr paint to professional painters,
Morningstar says. Excluding one-time
items, profits surged by 27% in 2016,
to $1.51 per share, as sales rose 3%, to
$7.4 billion. Analysts expect earnings
to rise 23% in 2017 and 12% in 2018,
further strengthening the firm’s
already-solid balance sheet.7
RAYTHEON (RTN, $154) Trump’s
America First plan has two pieces
that are bullish for defense contractor
Raytheon: a pledge to pump up U.S.
military outlays and a promise to boost
U.S. exports. Raytheon faced four years
of slowly declining revenue from 2011
through 2014 amid Pentagon cutbacks.
But a turnaround began in 2015, and
Trump and Congress are expected
to feed the recovery by increasing
defense spending, including for such
Raytheon specialties as missiles, elec-
tronics, radar and cybersecurity. With
foreign business accounting for 30%
of its sales, Raytheon isn’t as pure of
an America First play as the other com-
panies on this list. But brokerage RBC
Capital says that the company should
benefit from continued “intense de-
mand” from foreign governments for
its missiles and anti-missile systems.
In 2016, Raytheon’s earnings rose
10.2%, to $7.44 per share, as sales edged
up 3.5%, to $24.1 billion. Analysts
expect f lat earnings in 2017, but they
see profits rising to a record $8.30 per
share in 2018, due in part to Raythe-
on’s order backlog of nearly $37 billion.
What’s more, RBC notes, Raytheon
has a long history of rewarding share-
holders with dividend increases and
stock buybacks, which should con-
tinue thanks to the company’s healthy
finances. ■year raised its dividend for the first
time since 2008 and pledged a “return
to consistent dividend growth.”6
MASCO CORP. (MAS, $34)
Like Home Depot, Masco is
a bet that Trump will find a way to
get more money into the pockets of
American consumers. Masco is a
major producer of home-improvement
and building products, so it should
benefit from policies that underpin
economic growth and lift incomes.
Masco’s Behr house-paint line is the
number-one brand for do-it-yourself-
ers, with 28% of the market. The
company is also a leader in plumbing
products, under the Delta, Peerless,
Hansgrohe and other brand names;should provide a “solid demographic
driver” of home-improvement sales
long term, CFRA Research says.5
MARTIN MARIETTA (MLM, $216)
This could be the ultimate
Trump stock. The company is the sec-
ond-largest U.S. producer of “aggre-
gates”—the cement, asphalt, sand and
other raw materials used in construc-
tion. Nearly all of Martin Marietta’s
2016 net sales of $3.6 billion were made
in the U.S. The firm has been riding
high for the past four years as demand
from infrastructure projects has surged.
Earnings per share reached $6.63 in
2016, up from $1.83 in 2012. The stock
has doubled since February 2016.
The question now is whether
growth can remain stellar far enough
into the future to justify a higher share
price. The controversial U.S.–Mexico
border wall would be one source of
demand. But bulls are also betting that
Trump is serious about funding a huge
new program to fix roads, bridges, air-
ports and other infrastructure. That
could mean a long growth streak for
Martin Marietta. One project already
under way: Congress in 2015 funded a
jump in highway construction through- If Trump and Congress agree on
much more of the same, Martin Mari-
etta should win big. The company last
■ HERSHEY MAKES
MOST OF ITS CANDY
IN PENNSYLVANIA
AND SELLS MOST
OF IT IN THE U.S.HOME IN ON THESE STAY-AT-HOME STOCKS
America FirstOnly one of our choices trades for less than the overall stock market’s price-earnings
ratio of 17. But none of the stocks carry outrageously high P/Es, and all pay dividends.Company SymbolShare
priceMarket
value
(billions)Revenue
(billions)*% of
revenue
from U.S.Price-
earnings
ratio†Dividend
yield
Bank of America BAC $25 $246.7 $91.5 88% 14 1.2%
Cintas CTAS 118 12.4 5.1 90 26 0.9
Hershey HSY 108 16.5 7.4 83 23 2.3
Home Depot HD 145 176.5 94.6 90 20 2.5
Martin Marietta MLM 216 13.6 3.6 99 26 0.8
Masco Corp. MAS 34 10.8 7.4 79 18 1.2
Raytheon RTN 154 45.2 24.1 69 21 1.9
Through February 28. *Based on revenue for the past 12 months. †Based on estimated earnings for the next four quarters.
SOURCES: Yahoo, Zacks Investment Research.