Amidst a slowdown in global growth in places such as Europe and China, investors seeking the relative “safety” of U.S. stocks might be disappointed. It all depends on which sector and/or company you invest in: While Utilities, Real Estate and Regional Banks, for instance, have very little to no overseas exposure, companies in Technology, Health Care, and Industrials typically derive 30% or more of their revenues from outside the U.S.
And right now, those companies with overseas sales are feeling the brunt of the global slowdown. In the chart below, S&P 500 companies with >50% of sales inside the U.S. have posted 1Q revenue and earnings growth of 6.5% and 1%, respectively. This far exceeds the same figures for those companies with >50% outside the U.S. at 0.7% and -11.2%, respectively. Just because a company is located in the U.S. does not mean it is immune from economic slowdowns elsewhere in the world.