As we celebrate the 242nd anniversary of our nation's independence this Wednesday, I am reminded of the plethora of companies that have been a part of the country's fabric and growth for a significant portion of our history. Many have had their struggles along the way and may be facing some issues in the current economic environment, but I'd like to look at three uniquely American names that have stood, and I believe will continue to stand, the test of time.
Corning Inc. (GLW) was founded in 1851 as Corning Glass Works, just 75 years since independence, more than a decade prior to the Civil War, when none other than Millard Fillmore was president. The company certainly has changed over the years, divesting its consumer businesses in 1998 and moving into fiber optics during the tech bubble. That nearly sunk the company, and the stock hit the $1 level in 2002. The company recovered, and today's Corning is a leader in specialty glass and ceramics, perhaps best known for its Gorilla Glass, used in cell phones.
Corning's recovery since 2002 has been a quiet one; the company has re-established itself as a highly profitable dividend payer, with a solid balance sheet. Currently trading at about 13.5x next year's consensus estimates, GLW yields 2.6%, and has doubled the dividend since 2013. Still headquartered in Corning, New York, the company is a multinational, but has deep American roots.
The Hershey Co. (HSY) , which was founded in 1894 (Grover Cleveland was president), is deeply ingrained into our culture, manufacturing sweet treats that many of us consumed as children and still do today. The list of products is long, from Hershey's chocolate bars to Reese's Peanut Butter Cups, to Twizzlers, Kit Kat Bars, and beyond. The company is still headquartered in Hershey, Pennsylvania, which was named after the company, not vice versa.
Hershey's stock has struggled in recent years, and without considering dividends, it trades at the same level it did in 2013. Sales have grown slowly, and the company has had to contend with rising and volatile cocoa prices. Some analysts believe Hershey will suffer from fewer grocery store impulse purchases as more shopping is done online. Indeed, Credit Suisse downgraded the stock to underperform earlier this month.
Currently yielding 2.8%, Hershey has increased its dividend for nine consecutive years, a streak that would be longer had it not held the dividend flat for 10 consecutive quarters from 2007 to 2009. Down 16% year to date, Hershey currently trades at about 16.5x next year's consensus estimates, which is on the low side for the company. Many are down on Hershey, but I would not count it out; it remains a solid defensive play.
Harley-Davidson Inc. (HOG) , an iconic motorcycle name, traces its founding to 1903, when President Teddy Roosevelt was speaking softly and carrying a big stick. The company did not go public until 1986, a move that came after a period during which quality issues nearly drove the company into the ground. The stock was a major winner over the next 20 years before falling sharply between late 2006 and early 2009. From there, it rose more than 700% into April 2014, but has struggled since. HOG now trades at the same level it did six years ago as revenues have fallen.
Recently, Harley-Davidson has been hurt by tariff talk. President Trump has attacked the company directly about plans to build bikes for European customers overseas in order to avoid an estimated $2,200 in additional costs from European Union tariffs. Harley-Davidson estimates that tariffs could cost it $90 million to $100 million per year and thus is seeking the corrective action of moving some production overseas.
Harley-Davidson currently trades at just 11.5x next year's already-reduced consensus estimates and yields 3.5%. The current tariff situation may overhang the stock for a while, but ultimately it is just noise and the damage done to the stock may provide an attractive entry point. The name is definitely on my watch list.
There you have it: Three uniquely American names, all of which return money to shareholders via dividends, and all that have had struggles but that have risen above them, much like our great country.
-- This article was originally published July 2 on Real Money.
