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3 Stocks to Consider After US Reaches Partial Trade Deal With China

Christopher Vargas

Investor optimism surged today after President Trump announced that a partial trade deal was reached with China today. The president went on to say that the new trade deal would be coming in phases and that it would delay the tariff hikes that were set to go into effect next week. As part of this phase, China will purchase between $40 billion and $50 billion worth of US agricultural products. The major indexes rallied as a result: the DJIA gained over 300 points, the S&P 500 jumped over 1%, and the NASDAQ Composite climbed over 1.3%. Let’s take a look at some stocks that can be solid additions to a portfolio as market optimism grows.

Zumiez ZUMZ is a stock that has been on an absolute tear in 2019 thus far as its shares are up over 60% YTD. The apparel retailer is coming off a second quarter where it saw its earnings more than double on a year over year basis and its net sales hit $9.4 million for a 4.3% gain. The spike in revenue was driven by the 3.6% growth in comp sales and the addition of seven stores since the end of Q2 2018.

Our Q3 consensus estimates forecast the company’s bottom line to pop 7.27% to $0.59 per share and for sales to hit $260.37 million for a 4.65% leap. Looking ahead to their full fiscal year figures, our estimates project earnings to reach $2.16 per share for a 20.67% hike and for revenue to increase 4.45% to $1.02 billion. Estimate revisions have trended higher across the board for Zumiez, giving it a Zacks Rank #1 (Strong Buy).

Cirrus Logic CRUS is a leader in high performance, low-power ICs for audio and voice signal processing applications. With trade war worries simmering down after the president’s announcement, adding a chip stock to a portfolio may finally be viable. The audio chipmaker’s shares have soared almost 70% in 2019 thus far, thanks in part to investor optimism about the company’s relationship with Apple AAPL.

Apple makes up more than 60% of Cirrus Logic’s revenue, which makes its relationship with the tech giant crucial. According to a Stifel research report, the new iPhone 11 includes three Cirrus Logic chips. If phone sales take off, then it would bode well for the semiconductor.

Our next quarter consensus estimates project the company’s revenue to jump 3.59% to $335.93 million and for earnings to climb 12.09% to $1.02 per share. The company has an average EPS surprise of a whopping 108.08% and sits at a Zacks Rank #1 (Strong Buy).

Arbor Realty Trust ABR is a specialized real estate finance company investing in real estate-related bridge and mezzanine loans, preferred equity, mortgage-related securities, and other real estate-related assets. The REIT’s shares have risen 30% in 2019 thus far and is currently trading at a forward multiple well below the industry average, which can provide a solid entry point for investors looking for an opportune time to get into the industry. REITs also typically perform well in low rate environments, which further cements the stock as a solid bet to make in today’s market.

Our consensus estimates for the next quarter forecast Arbor to see a 15.73% gain in revenue and for FFO to climb 17.24% to $0.34 per share. Our fiscal 2019 figures predict the company’s sales to rally 28.57% to $323.7 million and for its FFO to increase 9.92% to $1.33 per share. The firm has surpassed our earnings estimates the past four quarters with an average EPS surprise of 12.57%. Arbor Realty Trust also sports a hefty 8.8% dividend yield and a beta ratio of 0.6. Estimate revisions have trended higher for ABR, earning it a Zacks Rank #1 (Strong Buy).

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