Last AAA-Rated Stocks in the S&P 500 Look Poised for Long-Term Outperformance
Last week, Fitch downgraded the U.S. debt rating to AA+, which is one notch below the highest rating. This came after Fitch had placed the rating on negative watch back in May due to concerns surrounding the debt ceiling.
Fitch's decision to downgrade was driven by two key factors: the projected fiscal decline over the next three years and the escalating debt burden of the U.S. government.
This situation isn't entirely new. Back in April 2011, a similar event occurred when Standard & Poor's, another rating agency, downgraded the country's credit rating from AAA to AA+.
These actions have faced criticism, including remarks from U.S. Treasury Secretary Janet Yellen, who argued that the decisions were based on outdated data. She defended the country's economic policies and the budget's potential to reduce the deficit by more than $2 trillion.
Established in 1914, Fitch is one of the significant rating agencies alongside Moody's and S&P Global. These agencies employ an alphabetical scale to assess countries' and companies' ability to meet their obligations, essentially their solvency to repay their debts.
Long-term grades are assigned on a scale from 'AAA' (highest) to 'D' (lowest). Intermediate ratings between 'AAA' and 'CCC' are indicated using ± signs.
The graph below illustrates these grades and offers a comparison among the three rating agencies. On the right side are the short-term ratings, and on the right-hand side are the long-term ones.
Others, like Alphabet (NASDAQ:GOOGL) (AA+), Apple (NASDAQ:AAPL) (AA), Amazon (NASDAQ:AMZN) (AA), Berkshire Hathaway (NYSE:BRKa) (AA), and Walmart Inc (NYSE:WMT) (AA), are rated just one level below the highest possible rating score.
Let's take a deeper look into these companies'
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