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4 Business Services Picks Amid Rising Trade War Tensions

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Tensions between the world’s top two economies intensified on Monday when the Trump administration announced fresh 10% tariff on $200 billion of imports from China and threatened additional tariff son $267 billion worth of goods in case China takes retaliatory action.

China, saying that it had "no choice" but to retaliate, announced tariffs of up to 10% on $60 billion of U.S. goods on Tuesday. Both tariffs will be implemented from Sep 24.

The new tariffs cast a cloud over plans to send Chinese President Xi Jinping's top economic adviser to the United States for trade talks. The situation is likely to worsen in the near term, hurting the global economy. It could also trigger a deeper dispute between the two nations. According to Timme Spakman, an economist at Dutch bank ING, trade war has already impacted on 2.5% of world trade.

Bloomberg estimates that the trade war will take away around 0.5% of China’s GDP growth this year. The loss will rise to 0.9% a year once tariffs rise from 10% to 25% in 2019.

Jack Ma, the founder of Chinese e-commerce giant Alibaba, has expressed concerns that the US-China trade war could last 20 years.

Where to Invest Amid Uncertainties?

Markets have so far shrugged off trade war fears. But with the new wave of trade tensions and the possibility of it aggravating in the near future, stock markets are likely to remain volatile.

In such circumstances, it will be a wise decision to bet on stocks from the business services sector that has been growing significantly in recent times despite rising trade war tensions and stock market volatility. The sector continues to benefit from a strong U.S. economy, reduced tax rates, robust manufacturing and non-manufacturing activities.

In fact, the Zacks Business Services Sector has gained 23%, over the past year, significantly outperforming the S&P 500’s rally of 16.4%.

Further, the group’s  Zacks Sector Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Its Zacks Sector Rank #7 places it at the top 44% of 16 Zacks sectors.

4 Solid Picks

Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.

So, we have narrowed down our search to the following stocks as they fit the criteria.

Business process services provider Conduent Incorporated (CNDT - Free Report) sports a Zacks Rank #1 and has a VGM Score of A. The company’s projected growth rate for the current year is 35.3%. The Zacks Consensus Estimate for the current year has improved 12.7% over the past 60 days.

Conduent Incorporated Net Income (TTM)

Executive search, culture shaping, and leadership consulting services provider Heidrick & Struggles International, Inc. (HSII - Free Report) also carries a Zacks Rank #1 and has VGM Score of A. The company expects earnings growth of 84.4% for the current year. The Zacks Consensus Estimate for the current year has improved 11% in the past 60 days.

Heidrick & Struggles International, Inc. Net Income (TTM)

Leading provider of environmental, energy and industrial services Clean Harbors, Inc. (CLH - Free Report) has a Zacks Rank #1 and a VGM Score of B. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 37.5% over the past 60 days.

Clean Harbors, Inc. Net Income (TTM)

Human resources solutions provider TriNet Group, Inc. (TNET - Free Report) carries a Zacks Rank #2 and has a VGM Score of A. The company’s expected earnings growth rate for the current year is 39.2%. The Zacks Consensus Estimate for the current year has increased 2.2% in the past 60 days.

TriNet Group, Inc. Net Income (TTM)

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