Investing in Your Backyard: Memphis

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're putting on our blue suede shoes to go walking in Memphis. Yes, indeed, a muddy river runs through it, and the ghosts of Graceland, Sun Studio, and Beale Street keep on rockin' in the land of the Delta blues. Let's see whether the rain is pouring today.

If you happen to live in southwestern Tennessee, you already have a few advantages when it comes to evaluating the local market, such as access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know whether the business rhythms match the local tune climate -- a rockin' area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are the largest companies headquartered in Memphis:

In the eyes of our Motley Fool CAPS community, Memphis is a mixed bag. Stock Advisor selection FedEx picked the city as its base of operations because of its conveniently central location (founder Fred Smith having grown up there might have had a little something to do with at as well), and has made the Memphis International Airport the world's busiest cargo hub. Electrical component maker Thomas & Betts, with its industry-leading combination of excellent net margins and explosive earnings growth, operates with a lower profile, but our CAPS watchdogs have marked it as a potential superstar.

On the flip side of that coin, community member hiddenflem explains AutoZone's problems thusly:

Herb Greenberg makes a compelling case that AZO's growth is engineered through buybacks and affronting the customer by buying cheaper parts in Asia and selling them for more (is this sustainable?); in the most recent quarter, same store sales were down, sales per square foot down. I think that we will see lower prices in the short term.

Below the top echelon, there are some promising smaller businesses in town. Take small-cap metal parts manufacturer Mueller Industries (NYSE:MLI), for example -- a five-star stock with excellent growth prospects, trading at just 7.1 times trailing earnings today. Or how about regional airline Pinnacle Airlines (NASDAQ:PNCL), a short-range capacity provider for Northwest Airlines? Let CAPS member HighCap explain why this is a four-star stock:

Regional airline that is currently undervalued due to the general condition of the U.S. airline industry, but with cash reserves and sustained high performance. Partnering with a restructured Northwest Air will continue to drive OCF and eventual multiple expansion.

The Memphis area has a solid geographical advantage, nestled at the crossroads of several major interstates and the mighty Mississippi river, smack in the middle of America. The manufacturing industries have a strong position and a long history in the area, because shipping products anywhere in the United States is fast and easy whether you're going by boat, plane, truck, or railroad.

All things considered, this is a market full of opportunity, but you have to be willing to do your homework. It's not all gravy like the mammoth market makers in the Twin Cities, but Memphis definitely has rhythm in its blood, and you can find some great investment opportunities here.

Do you agree? Disagree? Feel free to weigh in on the Memphis market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if the Delta isn't your 'hood, maybe we'll come around where you live next time.

Further Foolishness:

• Is Lumber the New Gold?
• AutoZone's Low-Gear Advance
• A Huge Investment Opportunity

Fool contributor Anders Bylund holds no position in any of the companies discussed here, but he knows all the chords -- strictly rhythm; he doesn't make it cry or sing. You can check out Anders' holdings if you like. Foolish disclosure is no hound dog.