Dealing from Strength
By David Braverman
A company's credit rating -- which gauges its ability to make principal and interest payments on its outstanding debt -- is a good barometer of a its financial strength. A high credit rating means a company can easily withstand brief to moderate downturns in the economy and still have a very high probability of meeting all obligations.
Standard & Poor's Credit Ratings Group scrutinizes a debt issuer's balance sheet to determine if there are ample resources for the company to pay back what they owe. The top rating from S&P is 'AAA', which indicates "an extremely strong capacity to pay principal and interest." A notch below is 'AA', then single 'A', then 'BBB', and so on. Some ratings show a + or - to further differentiate creditworthiness. A bond rating of 'D' indicates payment default or the filing of a bankruptcy petition.
This stock screen is designed to companies with 'AAA' credit ratings. Moreover, these six companies have all outperformed this year by virtue of being up (through May) in a down market.
ExxonMobil (XOM )
General Electric (GE )
Imperial Oil (IMO )
Toyota ADR (TM )
United Parcel (UPS )
Wesco Financial (WSC )
Braverman is a senior investment officer for Standard & Poor's