The United States runs a trade deficit over $500 billion per year, which means that we buy more goods and services from the rest of the world than they buy from us. In the short run, this doesn't mean much. Our currency is attractive, and so are our financial assets.
Over the long run, however, a trade deficit means that more and more of our dollars pile up overseas. Eventually, the situation will have to fix itself, either by our currency falling -- thus making our goods cheaper and foreign goods more expensive -- or by changing global trade flows.
Data Source: U.S. Bureau of Economic Analysis.
That's not to say that America is no longer an economic powerhouse. Many products "Made in America" are the envy of the world. By focusing on advanced manufacturing, a plethora of U.S.-based companies are thriving in a relentlessly competitive global economy, which is just what America needs to close the trade deficit and succeed in the 21st Century.
For investors, this also has important implications: U.S.-based companies with sizable international exposure are likely to outperform as investments.
Image Source: Getty Images.
The reason for this is twofold. First, emerging markets are growing faster than our own advanced economy. Second, if a company has the ability to compete in a much bigger pond, it's doing something right.
This trend is obvious in the Q3 earnings estimates for S&P 500 components as compiled by FactSet. Companies with more than 50% of their sales generated abroad are expected to report year-over-year earnings growth of 7.9%. Companies with the majority of their sales at home, on the other hand, are expected to average a slight earnings decline of 0.10%.
On a global basis, a number of industries represent America well:
The United States exports over $2 trillion in goods every year. Data Source: U.S. Census Bureau and the U.S. Department of Commerce.
After doing a little digging and weighing individual business fundamentals, I've located the top three U.S. exporting stocks for investors to consider buying today.
1. National Oilwell Varco
Countries like Saudi Arabia and Russia may produce more oil than the U.S., but when they need advanced drilling equipment, there's one company they turn to that stands above the rest: National Oilwell Varco (NOV 0.54%). The company manufactures, sells, and services basically any equipment needed to drill for oil. The company has, unsurprisingly, had a rough few years amid an industrywide downturn in the oil sector. Fortunately, thanks to production declines and an OPEC that's determined to drive oil prices up, there appears to be a light at the end of the tunnel. That means a lot of National Oilwell's customers will be calling the company for equipment and parts.
National Oilwell is a top representative of American engineering in global oil fields. As of September 30, 2017, around 80% of its capital-equipment backlog was from international customers. With shares yielding 0.57% and trading at less than one times book value, National Oilwell Varco is a top stock for U.S. investors looking for international exposure.
2. Moog
Started as a parts manufacturer for military missiles and aircraft, Moog (MOG.A) has expanded into the engineering and manufacturing of products for everything from race cars to medical pumps. Last year, international sales made up 44% of its sales. Whether you're a country in need of parts for medical devices, or an army looking to build out your radar-system capabilities, Moog is there.
Its diverse portfolio of niche products makes it a solid choice that will benefit from increased global use of advanced technology. Net sales for fiscal-year 2017 were just under 2.5 billion, up from $2.41 billion. Sales for the three months ended September 30, 2017 were $649 million, a steady rise from $626 million in the same period last year. The tale repeats itself on the bottom line for the quarter. Net income came in at $38.6 million, up 16.47% from last year. Moog is sure to be a winning American company for years to come.
3. Ecolab
It may have surprised the reader to learn that chemical products are the second-largest product category that the United States exports. Ecolab (ECL 0.43%), which provides a huge suite of sanitation and cleaning products and solutions to places like restaurants and hotels, continues to see strong demand anywhere its products are sold.
Where does Ecolab operate? Practically everywhere. Its 25,000 field reps work with customers to ensure a safe and sanitary environment in over 170 countries.
Ecolab is based in St. Paul Minnesota, and half of its sales are from international customers. As we've seen, that's where the growth is -- and its recent Q3 earnings report bears this out. Revenues rose to 3.5 6 billion, up from $3.39 billion last year. Earnings per share continued to trend upward, rising 5.5%, to $1.34 per share.
The only division that saw negative growth on a constant-currency basis was its energy division, where it offers drilling operators things like anti-corrosion chemicals. This isn't surprising given energy's broad downturn. Shares are a little pricey at around 30 times forward earnings per share estimates, but the dividend yield 1.13%. For investors willing to pay up for quality, Ecolab is a top American business with exceptional product demand abroad.
