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5 Stocks With Domestic Focus to Evade Trade War Fears

Ritujay Ghosh
Absolute Software Corporation (ALSWF) delivered earnings and revenue surprises of 200.00% and -0.08%, respectively, for the quarter ended June 2018. Do the numbers hold clues to what lies ahead for the stock?

On Jul 10, President Donald Trump escalated fears of a trade war further by threatening to impose 10% tariffs on an additional $200 billion of Chinese goods. The move comes within days of the two countries imposing tit-for-tat tariffs on goods worth $34 billion. This once again made investors jittery, leading to huge selloffs on Tuesday.

Trade war fears have been keeping markets volatile for some time now and there seems to be no sign of the Trump administration pulling back anytime soon. Given this scenario, there are still a few sectors with domestic focus that seem to be safe from the ongoing U.S.-China trade spat.

Trade War Fears Escalate Again

On Tuesday, Trump once again raised his stake in the trade dispute, with China threatening to impose additional 10% tariffs on goods worth $200 billion. The new list contains more than 6,000 items that include food items, tobacco, chemicals, steel and aluminum, minerals and consumer goods. Per Bloomberg, the new list could be released by the end of this week.

However, China’s commerce ministry didn’t say how it would retaliate but stated that it was “shocked” and would complain to the World Trade Organization. Understandably, China too is taking measures to retaliate to Trump’s threats, which will only extend the already-hostile relation between the two countries.

Situation Worsens for U.S Companies

U.S. companies have been feeling the heat for quite some time now, with Trump constantly threatening to impose tariffs on a host of Chinese goods. Finally, on Jul 6, the United States imposed tariffs on $34 billion worth of Chinese goods. Consequently, China retaliated with tariffs on a similar amount of U.S. goods.

Trump had already said that the United Stated could impose tariffs on goods worth as much as $500 billion if China retaliated. Understandably, Trump is going by what he had said and has hit back with tariffs on an additional $200 billion worth of Chinese goods. 

Many U.S. companies generate a significant portion of their revenues from China. Trade war fears had kept U.S. companies under pressure for the last few months. The markets finally took a beating on Tuesday, with Trump announcing a new set of tariffs. It goes without saying that fresh tariffs are a clear indication that the trade war is unlikely to come to a halt anytime soon.

Our Choices

Trade war fears are unlikely to ebb which and U.S. companies’ revenues from China are likely to decline from the raging trade storm. And a second wave of tariffs has only escalated these fears. Given this scenario, U.S. companies with a domestic focus look a lot safer as these remain insulated from the trade tensions.  So it makes sense to add stocks with domestic focus to your portfolio right away.

However, picking winning stocks may be difficult. We have narrowed down our search to the following stocks based on a good Zacks Rank and other relevant metrics.

Lennar Corp. LEN is the leading builder of quality new homes in the most desirable real estate markets across the nation.

The company has an expected earnings growth of 37.5% for the current year. The Zacks Consensus Estimate for the current year has improved by 12.2% over the last 60 days. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carrols Restaurant Group, Inc. TAST Carrols Restaurant Group is the largest BURGER KING franchisee in the U.S., with over 800 restaurants and has operated BURGER KING restaurants since 1976. 

Carrols Restaurant Group sports a Zacks Rank #1 and has expected earnings growth of 70% for the current year. The Zacks Consensus Estimate for the current year has improved by 30.8% over the last 60 days.

WellCare Health Plans, Inc. WCG focuses exclusively on providing government-sponsored managed care services, primarily through Medicaid, Medicare Advantage and Medicare Prescription Drug Plans, to families, children, seniors and individuals with complex medical needs.

WellCare Health Plans has a Zacks Rank #2 (Buy). The company has an expected earnings growth of 20.5% for the current year. Moreover, the Zacks Consensus Estimate for the current year has improved 0.9% over the last 60 days.

CareTrust REIT, Inc. CTRE is a real estate investment trust. It is primarily engaged in the ownership, acquisition and leasing of healthcare-related properties. 

CareTrust REIT has a Zacks Rank #2. The company has an expected earnings growth of 12.1% for the current year. Moreover, the Zacks Consensus Estimate for the current year has improved 0.8% over the last 60 days.

Humana Inc. HUM is committed to helping their millions of medical and specialty members achieve their best health. 

Humana has a Zacks Rank #2. The company has an expected earnings growth of 19.5% for the current year. Moreover, the Zacks Consensus Estimate for the current year has improved 0.3% over the last 60 days.

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Lennar Corporation (LEN) : Free Stock Analysis Report
 
Humana Inc. (HUM) : Free Stock Analysis Report
 
WellCare Health Plans, Inc. (WCG) : Free Stock Analysis Report
 
Carrols Restaurant Group, Inc. (TAST) : Free Stock Analysis Report
 
CareTrust REIT, Inc. (CTRE) : Free Stock Analysis Report
 
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