If You Love America and Billionaire Warren Buffett, Buy Bank of America

Maintaining a diverse portfolio of stocks can help mitigate risk for investors. Especially appropriate for those still hyped up on July 4th patriotism, some investors prefer to prioritize buying the stocks of companies based in the U.S. Whether you are saving for your retirement or trying to generate extra income, here are six American companies and the outlook on their stocks given by financial advisors and traders. Sometimes it's not just about buying American, but selling American, too.

1. Bank of America (BAC): Buy
1. Bank of America (BAC): Buy

Bank of America (BAC) is a good stock, since it is trading $1 below book value at $23.50 and the payout ratio is 15% of earnings, said C.J. Brott, founder of Capital Ideas, a registered investment advisory in Dallas.

"As interest rates rise and the economy improves, they should be able to raise the dividend and buy in more stock," he said. "Our one year target price is 1.3 times book or $32."

Brott owns shares personally and in his company. Recently, Bank of America has been in the news because of a move by Warren Buffett.

2. Harley Davidson (HOG): Buy
2. Harley Davidson (HOG): Buy

Harley Davidson (HOG) is a quintessentially American brand, said Robert Johnson, president of the American College of Financial Services in Bryn Mawr, Pa. The company's stock is selling at a P/E ratio of 15.4 on trailing 12-month earnings and it is selling well under the 25.5 P/E of the S&P 500.

The company has an attractive current dividend yield of 2.68%, well above the 10-year bond yield of 2.26%. Analysts have become more bearish on Harley Davidson recently and 15 out 21 analysts or 71%, were recommending a "hold" on Harley-Davidson, according to Thomson Reuters. The primary reason was slowing growth in the U.S., leading to shrinking profitability.

"Harley Davidson has enjoyed success and growth overseas and approximately a third of its sales are foreign," he said. "Its 'made in America' image recently took a hit as U.S. steelworkers protested plans for a proposed Harley plant in Thailand, claiming it would put the brand 'in jeopardy.' The long view is that HOG is an iconic brand and truly represents a lifestyle for many Americans."

3. SAIC, Inc. (SAIC): Sell
3. SAIC, Inc. (SAIC): Sell

SAIC (SAIC) company provides technical, engineering, and enterprise IT services for the U.S. military, the U.S. Defense Logistics Agency, the National Aeronautics and Space Administration, the U.S. Department of State and the U.S. Department of Homeland Security. Its price/sales of 0.72 is very strong compared to an industry average of 6.17, said Brent Wilsey, president of San Diego-based Wilsey Asset Management. The company's price/cash Flow of 14.8 looks decent as it is below the industry average of 19.41.

The current P/E of 19.9 is also below the industry average of 46.44, but it is a "little more expensive than I would like to see," he said. "The current price/tangible book value is a big question mark as it is currently not material."

A current ratio of 1.42 looks good, but debt/equity of 308.9% is a big red flag. Looking forward to January 2019, estimated GAAP EPS of $4.11 gives us a target sell price of $67.82."

Wilsey does not own any shares personally or in his company.

4. American International Group (AIG): Buy
4. American International Group (AIG): Buy

AIG (AIG) currently has an extremely high P/E of 182.47. This could be due to accounting or catastrophic losses related to insurance, said Wilsey. The price/sales of 1.09 compares favorably as the industry average is 1.26 and price/tangible book value of 0.78 is also a strength as it is below the industry average of 1.63.

The price/cash flow of 11.6 is a little expensive as it is above the industry average of 9.89. However, the company's debt/equity of 41.5% looks good and there is no current ratio for this company since it is in the insurance business.

"Looking forward to December 2018, estimated GAAP EPS (generally accepted accounting principles earnings per share) of $6.06 gives us a target sell price of $99.99," Wilsey said.

Wilsey does not own any shares personally or in his company.

5. American Eagle Outfitters Inc. (AEO): Buy
5. American Eagle Outfitters Inc. (AEO): Buy

American Eagle (AEO)  is part of the retail industry that has been "beaten down as of late," but the valuation ratios look "phenomenal" for American Eagle Outfitters, said Wilsey. The current P/E of 10.45 is below the industry average of 18.41, the price/sales of 0.55 compares favorably to the industry average of 0.89.

The industry has a price/tangible book value of 4.8, which is more than double the company's 1.88. The price/cash flow of 5.55 also looks appealing as it is below the industry average of 8.20.

The company pays an extraordinary dividend of 4.46% and it only uses 45.7% of its earnings to pay that dividend, said Wilsey. The balance sheet is a major strength for American Eagle as there is no debt and the current ratio of 1.82 provides a good amount of liquidity.

"We are looking forward to January 2019 estimated GAAP EPS of $1.21 which gives us a target sell price of $19.97," he said.

Wilsey does not own any shares personally or in his company.

6. United States Steel (X): Hold
6. United States Steel (X): Hold

U.S. Steel (X) could be a big benefactor if this administration carries out the infrastructure plan and uses steel produced in Americam said Wilsey. The company currently has no P/E ratio, but much of this seems to be attributed to accounting policies.

Their price/sales is 0.35, well below the industry average of 0.68 and has a price/tangible book value of 1.84, which is more than half the industry average of 4.40.

Wilsey does not own any shares personally or in his company.

The current price/cash flow does appear to be a "concern" at 15.66 as it is more than double the industry average of 8.36, he said. The debt/equity of 139.58% is a little higher than "we would like to see, but if we look at the cash flow statement,we can see the company has been reducing its total debt," said Wilsey.

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"U.S. Steel also has a strong current ratio of 1.65, which helps reduce some concern about the high debt/equity," he said. "Looking forward to December 2018, estimated GAAP EPS of $1.57 would give us a target sell price of $25.91."

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