Drenched in Lovely Domestic Sales

 | May 05, 2013 | 6:00 PM EDT  | Comments
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Stock quotes in this article:

tpc

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cvrr

From the beginning of this earnings season, one of the most prevalent trends has been the incidence of disappointing results from just about any company that gets a good portion of their sales overseas. Whether it's because of lower-than-expected sales, negative foreign-exchange impacts from the free falling Japanese yen or other currency hits -- such as the devaluation of the Venezuelan bolivar -- firms that rely on foreign-based operations have not delivered as expected.

This trend has impacted well-known American multinationals, such as General Electric (GE), IBM (IBM), Procter & Gamble (PG) and a slew of others. It is also one of the primary reasons that, for the first time since the second quarter of 2009, the average quarterly revenue figure for S&P 500 companies is on track to be either flat or slightly down vs. the prior year. Meanwhile, at this point Europe is likely to be in a contraction or see low growth for years to come; more central-bank easing is probable in Japan; and a China slowdown is possible, so this sales trend overseas is likely to run for at least another quarter, if not more.

So if investors wish to ensure this punk worldwide growth doesn't impact their investments, one way they can do so is to allocate more funds to domestically focused companies that will not see their sales affected by what is going on globally. The U.S. economy may not anything to write home about, but at least it is showing steady if tepid growth. With that in mind, here are a couple of domestic "hidden gems" that do not get much play in the press, but which are delivering results that are delighting their shareholders.

Tutor Perini (TPC) -- I first profiled this heavy construction firm on the cusp of the presidential election, when it was trading at $13 a share. The shares have since risen to just under $18, but I see no reason to sell despite its run-up. The company just delivered earnings that easily beat on both the top and bottom lines. It also is poised to be awarded a contract worth more than $900 million, through a joint venture for the design and construction of the initial Madera-to-Fresno segment of the California high-speed rail system.

Tutor Perini is projected to grow revenue around 10% annually in both 2013 and 2014. Further, regarding price-to-earnings relative to growth (PEG), the stock sports a five-year projection of 0.75 -- in the desired area of less than 1. The equity, moreover,is still cheap at 74% of book value and under 10x this year's expected earnings.

CVR Refining (CVRR) -- This entity came public earlier in the year. It owns a couple of refineries and several hundred miles of feeder pipelines. This yield play first came to my attention in late March via a mention by "El Capitan" Jim Cramer on "Mad Money." I was lightening up on refiners at the time, as they had become a huge and uncomfortable percentage of my portfolio after their enormous run in 2012. I was concerned about some new federal mandates as well, but I kept this ticker on my radar. I bought my first position at $31 earlier in the week, when the market was experiencing a significant selloff.

CVR just reported its first earnings as a public company, and the numbers were solid across the board. The company more than doubled adjusted earnings before interest, taxes, depreciation and amortization vs. the prior year, and operating income nearly tripled. Operating expenses per barrel of output also came down significantly. The firm announced its first dividend payout of $1.58 a share, significantly higher than it had previously guided as it came public.

The stock is also selling for less than 5x expected earnings this year. Given its distribution policy, this means the company will deliver a better-than-15% dividend yield to shareholders this year, provided it meets projections.

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