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Chinese President Xi Jinping (right) and US President Donald Trump attend a welcoming ceremony at the Great Hall of the People in Beijing on November 9, 2017.
Nicholas Asfouri | AFP | Getty Images
Trade tensions show no sign of easing, but that does not prevent badysts from finding hidden treasures to strengthen your portfolio. While the United States and China continue trading, badysts say there are many ways to invest.
CNBC reviewed the latest research conducted on Wall Street to find stocks to invest in and around the ongoing trading battle. Companies with purchase ratings include Best Buy, Fabrinet, Big Lots, Zebra Technologies, Dover Corporation and Cabot.
The tariff battle has certainly had a negative impact on the markets. Since the storm of President Donald Trump in the tweet of May 5, the Dow Jones Industrial Average and the S & P 500 have both lost more than 6%. Sales worsened on Friday after Trump threatened to freeze a 5% tariff on all Mexican imports.
When Best Buy announced its second quarter results last week, badysts focused on the impact that rates would have on the electronics retailer. The retail sector has attracted the interest of many badysts because of its broad exposure to customs duties.
The company not only recorded a strong quarter, but Raymond James badysts said the impact of tariffs was "minimal" – for now. "The main risk in the short term, however, is what elements could potentially be on a new list of tariffs of about $ 100 billion that could be announced in June or July," they wrote. . The company has maintained its strong buy on the stock.
Best Buy shares are down 3.74% over the week.
Big Lots announced Friday a profit above expectations and raised its forecasts. The discount retailer has also been caught in the tariff war with a 25% drop in inventory this month.
"In our opinion, this represents a particularly interesting buying opportunity," said Bank of America. The badyst is also optimistic about "the underestimated opportunity for transformation of the discount retailer with its" store of the future "renovation program.
An badyst recently heard something that surprised him at a recent investor conference. According to Gordon Haskett's badysts, the CEO of Dover Corporation did his best to say that his company was actually taking advantage of the tariff battle.
"This is the only company we've heard in the multi-industry sector to call this," said John Inch, an badyst, at Dover, an industrial products manufacturer.
"Dover is gaining more customers, Chinese products have become more expensive – mainly component-type products (example: pumps) – and North American companies are looking for alternative suppliers (in China) .Dover is not much exposed ) to Chinese tariffs because it relies on domestic production, "Inch told CNBC.
Dover is down 1.03% over the week
Here are some buying opportunities in the trade war between the United States and China:
Raymond James – Best Buy – Strong purchase note
"The current impact on tariffs is minimal, but the main short-term risk is what could be on a new $ 100 billion tariff list (list 4) that could be announced in the near future. In June or July, they are actively discussing with the Trump administration in order to eliminate as many consumer products as possible from the list – thus minimizing the adverse wind for consumers.
Needham- Fabrinet, buy note
"Although it seems unlikely that China and the United States are entering into an agreement so soon, we believe that an agreement will be reached at some point." We note that the ZTE ban does not exist. Lasted only 3 months We believe that Huawei's ban could easily extend at least twice as far.We think it is very likely that Huawei will be included in any final settlement. In this scenario, we plan to restore our Fabrinet estimates and see the reserve increase. "
Bank of America- Big Lots, buy note
"We believe that if tariffs of 25% were applied to all products imported from China and BIG was able to share that cost on a par with its suppliers, it would reduce our estimate of EPS by 2020 by 36%, all Other things being equal: BIG's stock price dropped 29% last month (vs. S & P 500 – 4%), suggesting that the potential impact of tariffs has already been taken into account in the course of action, which represents, in our opinion, a particularly interesting buying opportunity.The opportunity of underestimated transformation of BIG with its renovation program "the store of the future". "
Baird-Zebra Technologies, outperformance rating
"Recently, the main concerns of short-term investors were about the implications for ZBRA if the United States applied list 4 tariffs. ZBRA recently commented on List 4 tariffs and the potential action plan in To date, ZBRA's ZBRA has had marginal impact on ZBRA, which the company was able to counter / absorb without materially affecting financial services or demand. a "list 4" can be a bigger challenge / requires more action, as ZBRA manufactures a percentage of China that would likely be on list 4 (than list 1-3). "
Gordon Haskett- Dover Corporation, buy note
Since Dover's presentation to the EPG on Wednesday (5/22), the company's shares have sold at just over 4%, although Dover has offered one of the best presentations of the In our opinion, the managing director, Rich Tobin After a canned presentation, the buccaneer gave way to a series of questions and answers, including several positive catalysts, including the reduction of selling costs, administrative and administrative expenses. (approximately $ 50 million) (25-30 cents per share) resulting from the streamlining of initiatives, while noting that the mergers and acquisitions portfolio is relatively comprehensive and Tobin also noted that the company did Customs – the only company we have heard in the multi-industry sector to announce.At all, we continue to consider Dover as one of the best opportunities. s d & # 39; investment in the & # 39; multi-industry self-help. , characterized by a substantial margin on track and a future contribution in mergers and acquisitions. "
Loop Capital- Cabot Corporation, purchase note
"With this report, we are adjusting our estimates on Cabot Corp. to reflect the company's recent quarterly results, as well as the downward revision to the forecasts that came with the release of CBT on F2Q. the reduction in forecasts may not have been as surprising, given the disappointing trends of many other players in the entire polymer sector, reflecting direct or indirect exposure to key end markets in China. and / or the European car industry, where the pronounced weakness was quite obvious: carbon black pricing in China, weak demand (including destocking of the plastics industry chains) and the decline in margins in its specialty sector, as well as unfavorable commodity differences during the quarter … We are reducing our focus on TCC price of $ 77 to $ 69, but given the inexpensive valuation of the security, even on reduced estimates, we maintain our purchase rating. The impact of a resolution on trade with China and / or economic recovery in China, more generally, would probably serve as a catalyst and give us greater conviction. We still consider that CBT is undervalued. "
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