Another historic moment to mark on the calendar: The U.S. national debt has eclipsed the entire U.S. economy.
The amount of money the federal government owes to its creditors, including the money owed to itself, such as IOUs to government retirement, social security and other programs, has hit $15.23 trillion.
The total money owed is equivalent to the estimated value of all goods and services the U.S. economy produces in a year, an amount valued at $15.17 trillion as of September. This comes across as a troubling sign.
"Long-term projections suggest the debt will continue to grow faster than the economy, which would have to expand by at least 6% a year to keep pace," reports USA TODAY.
The U.S. joins five other advanced nations with debt greater than their economies: Greece, Iceland, Italy, Japan, and Portugal.
Perceptions of debt
National debt can be a difficult thing to understand. The government owes approximately $4.7 trillion of the debt to itself, and that payment is less of an immediate issue.
By discounting the U.S. government to U.S. government debt, the debt is roughly $10.5 trillion, about 70% of the national economy. This is still very high.
The size of the debt also minimizes the importance of Congress' August agreement to cut $1 trillion from federal agencies over 10 years. An additional $1.2 trillion in automatic spending cuts will begin next year if Congress cannot agree to better ways to curb more spending.
Business section: Investing ideas
Bearish investors are worried that debt growth will outpace economic growth. With this in mind, we wanted to take a closer look at low-debt companies that are expected to grow rapidly over the next five years.
As a start, we collected data on institutional money flows, and identified low-debt, high-growth stocks that have seen significant buying from big money managers over the last three months.
To further refine the quality of the list, we collected data on insider transactions and identified a list of stocks that have seen significant insider buying over the last six months.
Theoretically, insiders know more about their companies than anyone else. So if they're using their own cash to buy the shares of their employers, you'd better pay close attention.
Insider executives and big money managers, aka "smart money investors," are optimistic about the outlook of these companies -- do you agree? (Click here to access free, interactive tools to analyze these ideas.)
1. NeoPhotonics
2. Carbonite: Provides online backup solutions for consumers and small and medium sized businesses. Earnings-per-share growth projected at 27.50% over the next 5 years. The company's LongTermDebt/Equity ratio stands at 0%, while the TotalDebt/Equity ratio stands at 0%. Net institutional purchases in the current quarter at 6.5M shares, which represents about 71.04% of the company's float of 9.15M shares. Over the last six months, insiders were net buyers of 2,066,920 shares, which represents about 22.59% of the company's 9.15M share float.
3. 8x8
4. Aruba Networks
5. Universal Display
6. Lannett Company: Develops, manufactures, packages, markets, and distributes generic pharmaceutical products sold under generic chemical names in the United States. Earnings-per-share growth projected at 22.50% over the next 5 years. The company's LongTermDebt/Equity ratio stands at 7%, while the TotalDebt/Equity ratio stands at 9%. Net institutional purchases in the current quarter at 1.0M shares, which represents about 6.84% of the company's float of 14.61M shares. Over the last six months, insiders were net buyers of 29,267 shares, which represents about 0.2% of the company's 14.61M share float.
7. American Public Education
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
List compiled by Eben Esterhuizen, CFA. Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Institutional data sourced from Fidelity, insider data sourced from Yahoo! Finance, accounting data sourced from Google Finance.
