5 Winners From U.S.-China's "Constructive" Trade Talks

Chinese trade delegates recently cancelled a planned visit to farms in the U.S. heartland. This raised concerns among market pundits about progress on the trade front between two of the world’s most powerful economies.

Chinese officials were expected to visit the farms as a goodwill gesture but cancelled the tour after President Trump said that he wasn’t interested in making “a partial deal” with China. U.S. farming, from apricots to soybeans, had to bear the brunt of China’s retaliatory tariffs along with extreme weather conditions for quite some time now.

But, not all hopes were lost! The countries have agreed to maintain communication and have discussed the details of their next round of trade talks in October. What’s more, the U.S. Trade Representative’s office confirmed that the recent talks with China have been “productive.” China’s Commerce Ministry also added that the talks were “constructive.”

By the way, China’s senior agricultural representative did confirm that Chinese officials did not cancel plans to visit U.S. farms because of challenges in trade negotiations. Chinese officals, in fact, added that talks did achieve a “good outcome.” A report by state-backed media group Yicai stated that “there was a good outcome from the negotiations in the agriculture area too. The two sides had thorough and candid communications.”

Thus, the next obvious question is which are the best stocks to keep an eye on given that the recent China-U.S. trade talks have been productive? Strangely, it’s the same companies that suffered the most when the trade war actually erupted.

Walmart

The world’s largest retailer Walmart Inc. (NYSE:WMT) should be a clear winner when the trade issues finally cool off. After all, almost three-fourths of the merchandise sold in Walmart stores are manufactured in China. And a 10% to 15% increase in the prices of goods it imports from China could easily dent Walmart’s bottom line.

Walmart currently has a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its current fiscal-year earnings has moved up 1.4% in the past 60 days. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Walmart flaunts a Growth Score of A and has outperformed the broader Retail - Supermarkets industry so far this year (+25.6% vs +22.0%).

Deere & Company

One of the biggest problems Deere & Company (NYSE:DE) is facing is diminishing demand from the United States as the company struggles to sell products overseas due to trade tensions.

For instance, the tariff China imposed on U.S.-grown soya beans has affected the crop’s sale in China. As a result, domestic farmers aren’t interested in buying agricultural equipment, including tractors and pickers from the likes of Deere. Therefore, the company will largely benefit from a halt in the tariff war.

Deere currently has a Zacks Rank #3. The company’s expected earnings growth rate for the current year is 6.3%, better than the Manufacturing - Farm Equipment industry’s projected decline of 4.6%. The company has outperformed the broader industry over the past year (+8.3% vs +7.8%).

Ford Motor

Ford Motor Company (NYSE:F) is fighting an uphill battle, thanks to trade-related issues. Tariffs on materials imported from China as well as tariffs on vehicles exported to China are some of the headwinds confronting the company.

CEO James Hackett has warned that steel tariffs have impacted the company’s profits by $1 billion last year. Hence, a trade deal certainly bodes well for the manufacturer of a range of cars, trucks, sport utility vehicles and electrified vehicles.

Ford currently has a Zacks Rank #3. The Zacks Consensus Estimate for its next-quarter earnings has moved up 3.7% in the past 60 days.

The company’s expected earnings growth rate for the next year is 3.1%. The company has outperformed the broader Automotive - Domestic industry so far this year (+19.8% vs +1.6%).

Boeing

And the biggest gainer will certainly be Boeing Company (NYSE:BA) . After all, the aerospace giant sells about a fourth of its commercial aircraft to Chinese customers. And how can we forget that China had threatened to impose tariffs on several American products, including airplanes, if there is no trade truce. But, with tariff scares behind us for now, Boeing has ample reasons to rejoice.

Boeing currently has a Zacks Rank #3. The Zacks Consensus Estimate for its next-year earnings has risen 0.8% over the past 60 days. The company’s expected earnings growth rate for the next year is more than 100%, higher than the Aerospace - Defense industry’s projected rally of 16.4%. The company has outperformed the broader industry over the past month (+5.7% vs +3.6%).

Intel

Intel Corporation (NASDAQ:INTC) in particular is expected to gain immensely. The company more or less generates bulk of its revenues from China, and it’s more than what the semiconductor company makes in the United States. China, in fact, heavily relies on U.S. chipmakers, while semiconductors make up one of its largest import categories in terms of value. Hopes of abatement in U.S.-China trade tensions provided strength to the chip sector.

Intel currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved up 3.3% over the past 60 days. While the company flaunts a Growth Score of B, it has outperformed the broader Semiconductor - General industry over the past month (+11.3% vs +7.7%).

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