The capital expenditures of companies are often crucial to their growth. So this is a metric that investors should keep in mind when looking at stocks.
Bank of America strategists evaluated the S&P 500 company for the highest sensitivity of sales growth to non -residential fixed investment in structures (capital spending).
BofA includes all three elements of non-residential fixed investment: structures, equipment and intellectual property products. Strategists only include stocks with at least 10 years of data.
Here are the top 10 companies on the BofA list, where first listed the company whose sales growth is most sensitive to capital expenditures.
1. Kinder Morgan (KMI) – Get Kinder Morgan Incan energy infrastructure company;
2. Twitter (TWTR) – Get Twitter Inc. Reportthe social media company;
3. SolarEdge Technologies (SEDG) – Get a Report of SolarEdge Technologies Inc.which makes solar inverters;
4. Intercontinental Exchange (ICE) – Get Intercontinental Exchange Incoperating financial exchanges;
5. Sales (VTR) – Get a Ventas Inca health care -related real estate investment trust;
6. Service Today (NOW) – Get a ServiceNow Inca business software company;
7. Nasdaq (NDAQ) – Get Nasdaq Inc. Reporta stock exchange operator;
8. Bank of New York Mellon (BK) – Get The Bank of New York Mellon Corporation Reporta bank;
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9. Arista Networks (ANET) – Get a Report from Arista Networks Inc.a computer networking company;
10. WestRock (WRK) – Get a Westrock Company Reporta corrugated packaging company.
Morningstar’s Take on Kinder Morgan
Morningstar analyst Stephen Ellis assigns the company a narrow moat and puts a fair value for the stock at $ 17.50. It recently traded at $ 16.63.
“Kinder Morgan’s assets cover natural gas, liquid natural gas, oil, and liquefied natural gas,” he wrote in a commentary. “The company’s U.S. gas pipeline business is particularly impressive.”
Kinder said daily gas transportation capacity is equivalent to 40% of average gas consumption in the US. “Kinder Morgan’s size is both opportunity and challenge,” Ellis said.
Morningstar’s Take on Twitter
Morningstar analyst Ali Mogharabi does not give the company a moat and puts a fair value for the stock at $ 47. It recently traded at $ 36.67.
In the legal battle with Elon Musk, “we believe Twitter could have a stronger case,” Mogharabi wrote in a comment. “Plus, … other parties may have an interest in Twitter.”
In any case, “we remain confident that the company will continue to raise revenue (albeit at a lower rate than we assumed before Musk’s offer) and expand margins,” Mogharabi said.
Taking Morningstar to Solar Edge
Morningstar analyst Brett Castelli assigned the company no moat and put a fair value for the stock at $ 254. It recently traded at $ 269.
“SolarEdge is the largest global solar inverter manufacturer, based on revenue,” he wrote in a commentary. The inverter is the brain of a solar system, which converts direct current produced by solar panels into alternating current used by households.
“SolarEdge has proven itself as a market share leader with the ability to achieve consistent profitability in the distributed solar inverter market,” Castelli said.
The author of this story owns shares of Ventas and Bank of New York Mellon.
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