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One of Wall Street's Top Analysts Warns Against Trade War
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With the trade war looming upon us, Goldman Sachs chief U.S. equity strategist David Kostin warned investors about how it will affect U.S. Companies. According to Kostin, if trade tensions worsen, and a 10 percent tariff were imposed on all U.S. imports, Goldman would lower its 2019 S&P 500 EPS estimate by 15 percent.
Though tariffs may benefit some domestic industries, they still pose an immense threat to S&P 500 earnings through lower revenues due to reduced exports, as well as weaker margins related to higher costs of raw materials.
The industries that rely heavily upon imports are the greatest victims, as tariffs will cause a disruption in the supply chain. Petroleum and coal products, transportation, and computer and electronic products have the highest share of imported cost of goods sold, Kostin said.
There are ways to combat these challenges though, such as investing in companies with higher domestic sales, according to Kostin. This strategy makes sense because, as the trade dispute spreads, afflicted companies will be even more challenged, whereas companies with higher domestic sales will not be as afflicted by the tariffs.
Goldman’s domestic sales basket has outperformed the S&P 500 by 130 basis points since May, beating a collection of stocks with high China sales exposure, which had lagged the market by 570 basis points since May.
Retailers from the domestic sales basket include Target (TGT - Free Report) , CVS Health (CVS - Free Report) , Wells Fargo (WFC - Free Report) , Suntrust (STI - Free Report) and Charter Communications (CHTR - Free Report) —these six companies do not have a large portion of overseas sales.
As for financial companies, Charles Schwab (SCHW - Free Report) and U.S Bancorp (SB - Free Report) have supposedly reduced foreign exposure.
Though investors should all see how the trade war turns out, as long as this tit-for-tat dispute goes on, it will never hurt to look out for those companies with larger portion of their sales in the domestic realm.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
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.
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One of Wall Street's Top Analysts Warns Against Trade War
With the trade war looming upon us, Goldman Sachs chief U.S. equity strategist David Kostin warned investors about how it will affect U.S. Companies. According to Kostin, if trade tensions worsen, and a 10 percent tariff were imposed on all U.S. imports, Goldman would lower its 2019 S&P 500 EPS estimate by 15 percent.
Though tariffs may benefit some domestic industries, they still pose an immense threat to S&P 500 earnings through lower revenues due to reduced exports, as well as weaker margins related to higher costs of raw materials.
The industries that rely heavily upon imports are the greatest victims, as tariffs will cause a disruption in the supply chain. Petroleum and coal products, transportation, and computer and electronic products have the highest share of imported cost of goods sold, Kostin said.
There are ways to combat these challenges though, such as investing in companies with higher domestic sales, according to Kostin. This strategy makes sense because, as the trade dispute spreads, afflicted companies will be even more challenged, whereas companies with higher domestic sales will not be as afflicted by the tariffs.
Goldman’s domestic sales basket has outperformed the S&P 500 by 130 basis points since May, beating a collection of stocks with high China sales exposure, which had lagged the market by 570 basis points since May.
Retailers from the domestic sales basket include Target (TGT - Free Report) , CVS Health (CVS - Free Report) , Wells Fargo (WFC - Free Report) , Suntrust (STI - Free Report) and Charter Communications (CHTR - Free Report) —these six companies do not have a large portion of overseas sales.
As for financial companies, Charles Schwab (SCHW - Free Report) and U.S Bancorp (SB - Free Report) have supposedly reduced foreign exposure.
Though investors should all see how the trade war turns out, as long as this tit-for-tat dispute goes on, it will never hurt to look out for those companies with larger portion of their sales in the domestic realm.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
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>>