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MILLBURN, N.J. (
Stockpickr) -- American companies are in a unique position relative to their counterparts in Europe and those in some emerging markets. Cash generation, repayment of debt, low interest rates and record earnings are combining to lower American corporate cost of capital, improve their balance sheets and return more value to shareholders.
With that in mind, I decided to seek out companies with low WACC (weighted average cost of capital), high Altman Z-Scores (a measure of balance sheet health), high ROCE (return on common equity) and above-market-average dividend yields.
After I performed the analytic screen, I examined the top-rated companies for their fundamental outlook and eliminated any stocks I did not believe were worthy of an investment.
What I arrived at was a portfolio of
stocks with low WACC and strong financial health. These stocks will provide both moderate growth opportunities along with financial protection and strong cash flow.
In addition, these firms can leverage their already strong balance sheets at low costs in order to expand existing business capability and make acquisitions while still returning cash to investors.
Philip Morris InternationalPhilip Morris International(PM - Get Report) is a leading manufacturer of cigarettes outside of the U.S. The company owns the top-selling Marlboro and L&M cigarette brands, among others.
In 2010, the company sold nearly 300 billion Marlboro cigarettes, which was greater than the next two international competitors combined. Earnings per share for Philip Morris International grew by 24% in 2011 and are expected to grow by a steady 9% in 2012. The stock sells as a reasonable 15 times current year's earnings.