By James Dennin for Kapitall.
The trade gap unexpectedly shrank this quarter, which is
even more unexpected given
the serious cash
sent overseas for rights to the World Cup.
US imports fell off, mostly a result of a decline in energy imports, prompting some to argue the US is moving more quickly than previously thought toward energy independence.
That being said, the surprise drop off makes a spike in imports more likely, particularly given that US consumer and industrial spending is expected to rise over the next several months.
That, and a relatively competitive US economic position compared to other advanced nations means that overseas companies with extra US exposure could benefit.
With that in mind we screened American Deposit Receipts (ADRs, foreign stocks that trade on US exchanges) that were either in consumer spending or industrial markets. We then found undervalued companies that fill this bill using the
levered free cash to enterprise value ratio
This suggests that the company has a lot of extra cash relative to other companies its size, after accounting for tax and debt payments.
Do you think rising US imports could boost these overseas names? Use the list below to begin your analysis, and let us know what you think in the comments.
Click on the interactive chart to view data over time.
1. China XD Plastics Company Ltd.
): China XD Plastics Company Limited, through its subsidiary, Harbin Xinda Macromolecule Material Co. Market cap at $261.84M, most recent closing price at $5.38.
Levered free cash flow at $29.48M vs. enterprise value at $192.82M (implies a LFCF/EV ratio at 15.29%).
2. Industrias Bachoco S.A.B. de C.V.
): Operates as a poultry producer in Mexico. Market cap at $2.72B, most recent closing price at $54.21.
Levered free cash flow at $249.93M vs. enterprise value at $2.11B (implies a LFCF/EV ratio at 11.85%).