Who gets screwed if the Supercommittee fails to come to an agreement, triggering automatic spending cuts of $1.5 trillion?JPMorgan breaks it down:
We examined the annual filings of S&P 500 companies to identify those companies with significant sales from the US government—31 have significant disclosed sales totaling $280B annually. This is understated as reimbursements from Federal programs are not reflected (Health Care, for instance). The industries with greatest exposure (as % sales) are: Education Services (58%), Electronic Eq. & Instrumentation (48%), and Aerospace & defence (47%).
• The 31 stocks (in order of % sales) are: NOC, SAI, RTN, LMT, LLL, APOL, HUM, GD, HRS, DVA, CVH, FLIR, ITT, CSC, BA, CAN, VFC, JEC, GR, AET, CSCO, AIZ, ESRX, FLR, HES, HON, WIN, CA, BLL, GE, and MSI.
You might want to buy these stocks, however. JPMorgan analyst Thomas Lee says the severity of these cuts is an incentive for the Supercommittee to find an alternative proposal.
Expectations for the Supercommittee are low (Public, Street, Politicians), but we think there are some reasons to potentially expect an upside surprise.
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