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Trump Keeps Trade War Tensions Alive: 4 Stocks to Play Safe
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The chances of a trade war are unlikely to wane any time soon. There was a sign of relief for U.S. companies after Treasury Secretary Steve Mnuchin said on Sunday that the U.S.-China trade conflict has been put on hold and a negotiation is in progress that would reduce the massive trade deficit United States has with China.
But just when the markets thought that the risk has subsided, President Donald Trump reignited uncertainty, stating that the current framework makes it “too hard to get done.”
“Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion”, he tweeted early on Wednesday.
Further, with a surprise announcement later in the day, the Trump administration launched a national security investigation into whether automobile imports are harming U.S. national security.
The investigation, under Section 232, is the same tactic used by the Trump administration before it imposed global tariffs on steel and aluminum import earlier this year.
Given the latest developments, tensions over trade policy are most likely to escalate again in the coming months.
A Sector That’s Showing Resilience
The business services sector is gaining strength because it is firmly tied to manufacturing and non-manufacturing activities that are currently benefiting from all-round strength in the economy. The sector added 54,000 jobs in April and 518,000 in the past 12 months, the highest among all sectors.
Economic activity in the manufacturing sector expanded in April as the PMI measured by Institute of Supply Management (ISM) touched 57.3%. This shows strong growth in manufacturing for the 20th consecutive month, driven by continued increase in new orders, production activity and employment and inventories. Of the 18 manufacturing industries, 17 reported growth in April.
Non-manufacturing clocked ninety-ninth month of growth in April as the NMI measured by ISM touched 56.81%. This expansion was driven by continued increase in business activity, new orders and employment. All 18 non-manufacturing industries reporting growth. Any reading above 50 indicates that the said sector is expanding.
Although U.S. economic growth decelerated in the first quarter to an annualized pace of 2.3%, after averaging higher than 3% in the previous three quarters, the economy is likely to rebound in the coming quarters.
Lower corporate and individual tax rates along with increased government spending are expected to push annual economic growth to the 3% target. The current 18-year low unemployment rate of 3.9% recorded in the month of April further raises optimism about the economy.
Top Picks
Given the promising developments in the service sector, buying sound stocks from the space should safeguard your portfolio amid trade war fears.
The search was narrowed down by taking into consideration stocks with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Based in California, Robert Half International Inc. (RHI - Free Report) is one of the largest human resource consulting firms in the United States.
Robert Half carries a Zacks Rank #2 and has a VGM Score of A. The company’s expected earnings growth rate the current quarter and year is 32.8% and 29.6%, respectively.
The Zacks Consensus Estimate for the current quarter improved 4.9% to 85 cents per share over the last 60 days. For the current year, the consensus estimate moved up 4.3% to $3.37.
The company’s earnings surpassed the consensus estimate in two of the previous four quarters, with an average positive surprise of 2.4%.
Based in Texas, BG Staffing, Inc. (BGSF - Free Report) is a national provider of temporary staffing services across a diverse set of industries.
BG Staffing has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth rate of 24% and 33.7%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter remained unchanged at 31 cents per share over the last 60 days. For the current year, the consensus estimate moved up 3.1% to $1.35 in the same time frame.
The company surpassed the consensus estimate in three of the previous four quarters, delivering an average positive surprise of 30%.
Based in Florida, Kforce, Inc. (KFRC - Free Report) is a professional staffing services firm.
Kforce has a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth rate of 45.5% and 40.1%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter improved 4.9% to 64 cents per share over the last 60 days. For the current year, the consensus estimate moved up 3.3% to $2.20.
The company’s earnings surpassed the consensus estimate in two of the previous four quarters, delivering an average positive surprise of 0.8%.
Based in Ireland, Accenture plc (ACN - Free Report) is a provider of consulting, technology, and outsourcing services worldwide globally.
Accenturehas a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth rate of 12.5% and 13%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter remained unchanged at $1.71 per share over the last 60 days. For the current year, the consensus estimate moved up 0.1% to $6.68 in the same time frame.
The company surpassed the consensus estimate in all the previous four quarters, delivering an average positive surprise of 3.8%.
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Image: Bigstock
Trump Keeps Trade War Tensions Alive: 4 Stocks to Play Safe
The chances of a trade war are unlikely to wane any time soon. There was a sign of relief for U.S. companies after Treasury Secretary Steve Mnuchin said on Sunday that the U.S.-China trade conflict has been put on hold and a negotiation is in progress that would reduce the massive trade deficit United States has with China.
But just when the markets thought that the risk has subsided, President Donald Trump reignited uncertainty, stating that the current framework makes it “too hard to get done.”
“Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion”, he tweeted early on Wednesday.
Further, with a surprise announcement later in the day, the Trump administration launched a national security investigation into whether automobile imports are harming U.S. national security.
The investigation, under Section 232, is the same tactic used by the Trump administration before it imposed global tariffs on steel and aluminum import earlier this year.
Given the latest developments, tensions over trade policy are most likely to escalate again in the coming months.
A Sector That’s Showing Resilience
The business services sector is gaining strength because it is firmly tied to manufacturing and non-manufacturing activities that are currently benefiting from all-round strength in the economy. The sector added 54,000 jobs in April and 518,000 in the past 12 months, the highest among all sectors.
Economic activity in the manufacturing sector expanded in April as the PMI measured by Institute of Supply Management (ISM) touched 57.3%. This shows strong growth in manufacturing for the 20th consecutive month, driven by continued increase in new orders, production activity and employment and inventories. Of the 18 manufacturing industries, 17 reported growth in April.
Non-manufacturing clocked ninety-ninth month of growth in April as the NMI measured by ISM touched 56.81%. This expansion was driven by continued increase in business activity, new orders and employment. All 18 non-manufacturing industries reporting growth. Any reading above 50 indicates that the said sector is expanding.
Although U.S. economic growth decelerated in the first quarter to an annualized pace of 2.3%, after averaging higher than 3% in the previous three quarters, the economy is likely to rebound in the coming quarters.
Lower corporate and individual tax rates along with increased government spending are expected to push annual economic growth to the 3% target. The current 18-year low unemployment rate of 3.9% recorded in the month of April further raises optimism about the economy.
Top Picks
Given the promising developments in the service sector, buying sound stocks from the space should safeguard your portfolio amid trade war fears.
We have selected four stocks that should make meaningful additions to your portfolio. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The search was narrowed down by taking into consideration stocks with a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.
Based in California, Robert Half International Inc. (RHI - Free Report) is one of the largest human resource consulting firms in the United States.
Robert Half carries a Zacks Rank #2 and has a VGM Score of A. The company’s expected earnings growth rate the current quarter and year is 32.8% and 29.6%, respectively.
The Zacks Consensus Estimate for the current quarter improved 4.9% to 85 cents per share over the last 60 days. For the current year, the consensus estimate moved up 4.3% to $3.37.
The company’s earnings surpassed the consensus estimate in two of the previous four quarters, with an average positive surprise of 2.4%.
Robert Half International Inc. Revenue (TTM)
Robert Half International Inc. Revenue (TTM) | Robert Half International Inc. Quote
Based in Texas, BG Staffing, Inc. (BGSF - Free Report) is a national provider of temporary staffing services across a diverse set of industries.
BG Staffing has a Zacks Rank #2 and a VGM Score of A. The company has expected earnings growth rate of 24% and 33.7%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter remained unchanged at 31 cents per share over the last 60 days. For the current year, the consensus estimate moved up 3.1% to $1.35 in the same time frame.
The company surpassed the consensus estimate in three of the previous four quarters, delivering an average positive surprise of 30%.
BG Staffing Inc Revenue (TTM)
BG Staffing Inc Revenue (TTM) | BG Staffing Inc Quote
Based in Florida, Kforce, Inc. (KFRC - Free Report) is a professional staffing services firm.
Kforce has a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth rate of 45.5% and 40.1%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter improved 4.9% to 64 cents per share over the last 60 days. For the current year, the consensus estimate moved up 3.3% to $2.20.
The company’s earnings surpassed the consensus estimate in two of the previous four quarters, delivering an average positive surprise of 0.8%.
Kforce, Inc. Revenue (TTM)
Kforce, Inc. Revenue (TTM) | Kforce, Inc. Quote
Based in Ireland, Accenture plc (ACN - Free Report) is a provider of consulting, technology, and outsourcing services worldwide globally.
Accenturehas a Zacks Rank #2 and a VGM Score of B. The company has expected earnings growth rate of 12.5% and 13%, respectively, for the current quarter and year.
The Zacks Consensus Estimate for the current quarter remained unchanged at $1.71 per share over the last 60 days. For the current year, the consensus estimate moved up 0.1% to $6.68 in the same time frame.
The company surpassed the consensus estimate in all the previous four quarters, delivering an average positive surprise of 3.8%.
Accenture PLC Revenue (TTM)
Accenture PLC Revenue (TTM) | Accenture PLC Quote
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>