Investing in Your Backyard: Dallas

Break out the Tex-Mex chalupas and some frozen margaritas -- it's a backyard investing barbecue in northern Texas!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're taking a DC-9 at night to the heart of Texas -- Dallas, to be precise.

If you happen to live in Oak Lawn or Deep Ellum, 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 weather matches the business climate -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here's a selection of companies headquartered in the Dallas-Fort Worth metroplex:


Market Cap (billions)

CAPS Rating

Bull Ratio

ExxonMobil (NYSE:XOM)




Texas Instruments (NYSE:TXN)




Kimberly-Clark (NYSE:KMB)




Burlington Northern Santa Fe (NYSE:BNI)




GameStop (NYSE:GME)




Titanium Metals (NYSE:TIE)




Blockbuster (NYSE:BBI)




Data taken from Motley Fool CAPS on 8/17/07.

As you can see, the Dallas market is quite vibrant and spans all capitalization sizes and industries. The table above represents cherry-picking a few of the better-known names in town, but there's plenty more where that came from -- my Capital IQ screen found 141 publicly traded companies here, which is among the highest counts I've seen in this series. It's more than the 73 tickers in Seattle, the 102 entries in Minnesota's Twin Cities, or the 108 tradable businesses within 75 miles of downtown Atlanta.

And there are some unusual trends among these cowboy stocks. For example, large-cap stocks usually get the cold shoulder from our CAPS community, and the top of the market-cap list usually is sparsely decorated with stars. Not here. There are just four one-star stocks bigger than a $2 billion market cap, and none above $6 billion. Big boys Exxon and TI are sniffing around for their fifth stars. Railroading giant Burlington Northern Santa Fe -- which has little to do with either Burlington, the North, or Santa Fe these days -- already found star number five.

If you've read Jim Collins' Good to Great, you might think that Kimberly-Clark deserves some better-than-average love, too. It seems, however, as though our players have given the consumer paper-product giant the cold and soggy shoulder, mainly on valuation concerns, as the stock is trading at higher multiples than we've seen for the past five years or so.

Foolish takeaway
So what's behind these scores and their large-cap skew? Is it an excellent large-business environment, or do our CAPS users just love Texas, or is it a little bit of both?

I thinks it's mostly the former. Dallas holds a storied place in American business history. As always, great business starts with great transportation lines, and this city lies on a crucial river crossing and on one of the first rail-line intersections in the nation. Success begets success, and once the Texas tea started flowing out of the surrounding plains, many of the finest business minds saw fit to relocate to northern Texas.

The early progress in this crucial crossroads town meant that the city could afford to invest in itself -- much like any upstart company might -- and soon there were several major universities and a cadre of new businesses born from local funding and business smarts. And so it goes. The firebug phase is now long gone, and most of the Dallas industries have matured.

Oil and other energy businesses remain a mainstay of the local economy, and Texas Instruments anchors a strong high-tech contingent. Austin may be known as the Silicon Hills, but Dallas is the Silicon Prairie. Again, though, there's a little bit of everything here.

In short, whatever you like, you'll probably to find it in Dallas. If you lean toward large, high-quality companies, this might be the ideal place to start looking for your next investment.

Do you agree? Disagree? Feel free to weigh in on the Triple D 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 Lone Star State isn't your 'hood, maybe we'll come around where you live the next time.

Other backyards we've visited:

Fool contributor Anders Bylund is a Netflix shareholder but holds no other position in any of the companies discussed here. He loves Texas Toast and looks good in a 10-gallon hat. You can check out Anders' holdings if you like, or follow him around the world on these Foolish local-business treks. GameStop is aStock Advisor recommendation. Foolish disclosure is always red-hot.

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8/4/2010 3:59 PM
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