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Invest in 5 Mega Trends to Overcome Trade War Jitters
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Trade war fears, time and again, have rattled the stock market this year. And that same fear has again erupted after many believe that Trump tariffs on imports of European cars would be economically calamitous. Needless to say, Trump is also willing to put tariffs on all $505 billion of Chinese goods the United States imports.
But, there are still stocks that are on an upswing regardless of a flare-up in the trade war. These stocks provide stability during tough times and their quest for next big thing will fuel growth. These companies are involved in artificial intelligence, e-commerce, mobile payments, biotechnology and gaming.
Trump Threatens EU With Tariffs on Automobile
Trump stood by his commitment to impose sweeping tariffs on imports of European cars and car parts. Tariffs worth around 50 billion euros a year may be levied on auto dealers and auto-parts manufacturers. The United States had earlier applied levies of up to 25% on imports of European-made steel and aluminum.
Trump, in fact, warned “tremendous retribution” against the European Union, especially regarding auto tariffs, provided his upcoming meeting with EU officials doesn’t yield any fruitful outcome. Trump did face a lot of opposition from the auto industry and the Congress. A bipartisan group of 149 House members requested him not to impose such tariffs.
European Commission Warns
The EU, in the meanwhile, expressed concern that Trump’s initiative to extend his trade war to imported cars will have a negative impact on the global economy. The EU’s trade commissioner, in a speech to the German Marshall Fund in Brussels, said that “at least on steel and aluminum, the world is undeniably facing challenges as a result of global over-capacity – the root cause of which is China. But similar moves on cars would be disastrous.”
Trump’s plan to impose tariffs on European cars will ultimately hurt U.S. automotive manufactures, per European Commission analysis. The U.S. GDP will shrink by nearly $14 billion but such levies won’t spare European car firms either. BMW, Volkswagen, Daimler and Volvo which export heavily to the U.S. market will feel the heat of auto tariffs.
Mega Trends That Produce Soaring Stocks Regardless of Tariffs
With such tariffs increasing the threat of afull-blown recession and eventually squeezing corporate profits, investors naturally should turn bearish. But, there are so-called mega trends that are sure to reshape the global economy in the years to come and are unperturbed by tariff issues. Let’s take a look at the trends and a few stock ideas —
Artificial Intelligence
Corporates will continue to deploy artificial intelligence (AI) solutions in order to streamline operations and increase sales. Spending on cognitive and AI systems will hit $19.1 billion this year, an increase of 54.2% over the amount spent last year, according to International Data Corporation estimates.
One way to play AI is via big tech firms that are finding ways to play this trend widely. Notable, among them is Google parent Alphabet Inc. (GOOGL - Free Report) , which acquired AI startup DeepMind in 2014, for $500 million. Other major tech bigwigs like Microsoft Corporation (MSFT - Free Report) and International Business Machines Corporation (IBM - Free Report) are also expanding into AI functions.
Investors can at the same time play the hardware side. AI applications promise to drive huge demand for Micron Technology, Inc’s (MU - Free Report) memory products like DRAM and NAND flash. This memory specialist has seen nine earnings estimates move north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 6.2% in the same period. If this wasn’t enough, Micron currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
E-commerce
Money is definitely flowing from brick-and-mortar merchants into online players. After all, the broad e-commerce sales went up 16% last year compared to prior year, the highest growth rate since 2011. But, this trend isn’t cyclical; instead it is a global phenomenon. As per research firm eMarketer, Asia-Pacific e-commerce increased 31% last year, while broader retails sales just ticked up 7%.
So, how do you play this trend? Amazon.com, Inc. (AMZN - Free Report) is the obvious answer with a stock market value that recently touched $900 billion. But the universe of e-commerce is huge. And one of the better buys is Groupon, Inc. (GRPN - Free Report) . The company operates online local commerce marketplaces and currently has a Zacks Rank #1. To top it, in the last 30 days, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings improved 4.3% in the same period.
Groupon’s proper mix of products, ongoing brand awareness programs and partnership with Grubhub and ParkWhiz will certainly boost revenues in the near future.
Mobile Payments
Digital payment trend has of late gained popularity. From coffee shops to food trucks, people are swiping more credit cards than paying cash. Consultancy firm Capgemini estimated that more than 720 billion digital payments are about to be processed globally by 2020. In fact, the United States is actually second to China in this trend. The Asian nation registered about $9 trillion in mobile payments in 2016, way more than $112 billion for the United States the same year.
When it comes to China, Alibaba Group Holding Limited (BABA - Free Report) and its Alipay are targeted plays internationally. On the domestic front, mobile payment giant Square, Inc. (SQ - Free Report) is an obvious choice. The company has a positive record of earnings surprises in recent quarters. Companies with positive earnings surprise are more likely to come up with positive results in the near term.
Biotechnology
There is always huge demand for life-saving drugs and it has got nothing to do with what is happening in the geopolitical front. And with ageing baby boomers in the United States, demand for such drugs is skyrocketing. Biotech firms, in particular, are researching on the next-generation of life-saving drugs, using modern technology.
This encouraging trend calls for investing in such a space. Illumina, Inc. (ILMN - Free Report) is one such firm that is striving to improve the quality of human health. The company saw four earnings estimates move north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings advanced 0.8% in the same period. To top it, Illumina currently possesses a Zacks Rank #1.
Gaming
Video games have evolved beyond geeks and currently have no age or gender bar. In the United States, an average male video player is 32 years of age, while the average female player is even older, at 36. This is, in fact, the prime age of spending. Moreover, in the U.S. two-third of families has a parent who plays video games.
On an average $36 billion was spent in gaming in the United States last year alone and more than $108 billion worldwide. So, how will you play this trend? There is one dedicated gaming company, Activision Blizzard, Inc. , whose shares are up above 25% so far this year. To top it, Activision Blizzard currently carries a Zacks Rank #2 (Buy) and has seen positive earnings surprises in recent quarters.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Invest in 5 Mega Trends to Overcome Trade War Jitters
Trade war fears, time and again, have rattled the stock market this year. And that same fear has again erupted after many believe that Trump tariffs on imports of European cars would be economically calamitous. Needless to say, Trump is also willing to put tariffs on all $505 billion of Chinese goods the United States imports.
But, there are still stocks that are on an upswing regardless of a flare-up in the trade war. These stocks provide stability during tough times and their quest for next big thing will fuel growth. These companies are involved in artificial intelligence, e-commerce, mobile payments, biotechnology and gaming.
Trump Threatens EU With Tariffs on Automobile
Trump stood by his commitment to impose sweeping tariffs on imports of European cars and car parts. Tariffs worth around 50 billion euros a year may be levied on auto dealers and auto-parts manufacturers. The United States had earlier applied levies of up to 25% on imports of European-made steel and aluminum.
Trump, in fact, warned “tremendous retribution” against the European Union, especially regarding auto tariffs, provided his upcoming meeting with EU officials doesn’t yield any fruitful outcome. Trump did face a lot of opposition from the auto industry and the Congress. A bipartisan group of 149 House members requested him not to impose such tariffs.
European Commission Warns
The EU, in the meanwhile, expressed concern that Trump’s initiative to extend his trade war to imported cars will have a negative impact on the global economy. The EU’s trade commissioner, in a speech to the German Marshall Fund in Brussels, said that “at least on steel and aluminum, the world is undeniably facing challenges as a result of global over-capacity – the root cause of which is China. But similar moves on cars would be disastrous.”
Trump’s plan to impose tariffs on European cars will ultimately hurt U.S. automotive manufactures, per European Commission analysis. The U.S. GDP will shrink by nearly $14 billion but such levies won’t spare European car firms either. BMW, Volkswagen, Daimler and Volvo which export heavily to the U.S. market will feel the heat of auto tariffs.
Mega Trends That Produce Soaring Stocks Regardless of Tariffs
With such tariffs increasing the threat of afull-blown recession and eventually squeezing corporate profits, investors naturally should turn bearish. But, there are so-called mega trends that are sure to reshape the global economy in the years to come and are unperturbed by tariff issues. Let’s take a look at the trends and a few stock ideas —
Artificial Intelligence
Corporates will continue to deploy artificial intelligence (AI) solutions in order to streamline operations and increase sales. Spending on cognitive and AI systems will hit $19.1 billion this year, an increase of 54.2% over the amount spent last year, according to International Data Corporation estimates.
One way to play AI is via big tech firms that are finding ways to play this trend widely. Notable, among them is Google parent Alphabet Inc. (GOOGL - Free Report) , which acquired AI startup DeepMind in 2014, for $500 million. Other major tech bigwigs like Microsoft Corporation (MSFT - Free Report) and International Business Machines Corporation (IBM - Free Report) are also expanding into AI functions.
Investors can at the same time play the hardware side. AI applications promise to drive huge demand for Micron Technology, Inc’s (MU - Free Report) memory products like DRAM and NAND flash. This memory specialist has seen nine earnings estimates move north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings rose 6.2% in the same period. If this wasn’t enough, Micron currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
E-commerce
Money is definitely flowing from brick-and-mortar merchants into online players. After all, the broad e-commerce sales went up 16% last year compared to prior year, the highest growth rate since 2011. But, this trend isn’t cyclical; instead it is a global phenomenon. As per research firm eMarketer, Asia-Pacific e-commerce increased 31% last year, while broader retails sales just ticked up 7%.
So, how do you play this trend? Amazon.com, Inc. (AMZN - Free Report) is the obvious answer with a stock market value that recently touched $900 billion. But the universe of e-commerce is huge. And one of the better buys is Groupon, Inc. (GRPN - Free Report) . The company operates online local commerce marketplaces and currently has a Zacks Rank #1. To top it, in the last 30 days, one earnings estimate moved north, while none moved south for the current year. The Zacks Consensus Estimate for earnings improved 4.3% in the same period.
Groupon’s proper mix of products, ongoing brand awareness programs and partnership with Grubhub and ParkWhiz will certainly boost revenues in the near future.
Mobile Payments
Digital payment trend has of late gained popularity. From coffee shops to food trucks, people are swiping more credit cards than paying cash. Consultancy firm Capgemini estimated that more than 720 billion digital payments are about to be processed globally by 2020. In fact, the United States is actually second to China in this trend. The Asian nation registered about $9 trillion in mobile payments in 2016, way more than $112 billion for the United States the same year.
When it comes to China, Alibaba Group Holding Limited (BABA - Free Report) and its Alipay are targeted plays internationally. On the domestic front, mobile payment giant Square, Inc. (SQ - Free Report) is an obvious choice. The company has a positive record of earnings surprises in recent quarters. Companies with positive earnings surprise are more likely to come up with positive results in the near term.
Biotechnology
There is always huge demand for life-saving drugs and it has got nothing to do with what is happening in the geopolitical front. And with ageing baby boomers in the United States, demand for such drugs is skyrocketing. Biotech firms, in particular, are researching on the next-generation of life-saving drugs, using modern technology.
This encouraging trend calls for investing in such a space. Illumina, Inc. (ILMN - Free Report) is one such firm that is striving to improve the quality of human health. The company saw four earnings estimates move north in the last 60 days, while none moved south for the current year. The Zacks Consensus Estimate for earnings advanced 0.8% in the same period. To top it, Illumina currently possesses a Zacks Rank #1.
Gaming
Video games have evolved beyond geeks and currently have no age or gender bar. In the United States, an average male video player is 32 years of age, while the average female player is even older, at 36. This is, in fact, the prime age of spending. Moreover, in the U.S. two-third of families has a parent who plays video games.
On an average $36 billion was spent in gaming in the United States last year alone and more than $108 billion worldwide. So, how will you play this trend? There is one dedicated gaming company, Activision Blizzard, Inc. , whose shares are up above 25% so far this year. To top it, Activision Blizzard currently carries a Zacks Rank #2 (Buy) and has seen positive earnings surprises in recent quarters.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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