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6 US-Focused Stocks to Survive Trump's Trade War

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On Jun 24, President Trump fired the latest salvo in what is fast developing into a full-fledged trade war. The President sent out a stern warning to the United States’ trading partners, urging them to dismantle barriers to trade or face retaliatory action.

Meanwhile, reports have emerged that the Trump administration is preparing to impose fresh restrictions on Chinese investments in U.S. technology. Additionally, fresh tech exports to China will be halted.

Such a series of actions is only likely to raise trade tensions further. Given this backdrop, investing in U.S. focused industries such as regional banks, homebuilders and oil companies with a domestic focus looks like a smart option.

“Fair Trade” or “Reciprocity”

On Sunday, Trump reiterated his demand for “fair trade,” urging all U.S. trading partners to abolish tariffs and other barriers to trade. The President warned that “all countries” that have resorted to protectionism must abolish these barriers. In case they fail to do so, they would “be met with more than Reciprocity” by the United States.

This fresh warning comes on the back of heightened tensions between the United States and China over the imposition of retaliatory tariffs. Only last week, the Trump administration imposed a 10% tariff on Chinese goods worth $200 billion. This prompted Chinese authorities to reduce bank reserves by $100 billion in order to cushion the impact of this move.

Fresh Restrictions on Chinese Tech Likely

Meanwhile, reports have emerged that the Trump administration is planning new measures to curb China’s growth in the technology domain. According to a report by The Wall Street Journal, the U.S. Department of Treasury is crafting a set of rules that prevents companies with at least 25% Chinese ownership from investing in U.S. companies which deal in “industrially significant technology.”

Further, the Department of Commerce and the National Security Council are chalking out strict curbs on the export of such technology to China. A report from Reuters confirmed that restrictions on Chinese investment in such technological areas are being discussed.

Additionally, the precise percentage of Chinese ownership was still being debated and could end up below 25%. These measures are designed to blunt "Made in China 2025," which is Beijing’s blueprint to emerge as a global leader in cutting-edge technologies like robotics, aerospace and electric cars.

Our Choices

Trump’s latest tweet indicates that trade tensions are unlikely to die down in a hurry. Further, plans to curb tech exports to China and Chinese investment in U.S. tech firms indicates the current administration’s resolve to further its protectionist agenda.

Investing in stocks of U.S.-focused companies such as homebuilders, regional banks and oil companies with a domestic focus would be prudent in such an environment. They would likely provide better returns compared to their peers with higher overseas exposure. However, picking winning stocks may be difficult.

This is where our VGM Score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score. 

We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM Score.

Talos Energy Inc. (TALO - Free Report) engages in exploration, development and production of oil and natural gas properties. It operates primarily in the Gulf of Mexico and in the shallow waters off the coast of Mexico.

Zacks Rank #1 (Strong Buy) Talos Energy has a VGM Score of A. The company’s expected earnings growth for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved by 60.4% over the last 60 days.

Continental Resources, Inc. (CLR - Free Report) is an independent oil and natural gas exploration and production company with operations in the Rocky Mountain, Mid-Continent and Gulf Coast regions of the United States.

Continental Resources has a Zacks Rank #1 and 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 by 16.6% over the last 30 days.

First Financial Northwest, Inc. (FFNW - Free Report) is the parent company of First Financial Northwest Bank that offers commercial banking services in Washington.

First Financial Northwest has a VGM Score of B. The company has expected earnings growth of 77% for the current year. The Zacks Consensus Estimate for the current year has improved by 21.2% over the last 30 days. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BancorpSouth, Inc. (BXS - Free Report) operates as a financial holding company for BancorpSouth Bank. It provides commercial banking and financial services to individuals and businesses through its principal bank subsidiary.

BancorpSouth has a Zacks Rank #2 (Buy) and VGM Score of B. The company has expected earnings growth of 33.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.3% over the last 30 days.

Beazer Homes USA, Inc. (BZH - Free Report) designs, builds and sells single family homes.

Beazer Homes has a Zacks Rank #2 and VGM Score of A. The company has expected earnings growth of 95.3% for the current year. The Zacks Consensus Estimate for the current year has improved by 3.1% over the last 60 days.

Meritage Homes Corporation (MTH - Free Report) is a designer and builder of single-family homes in the United States.

Meritage Homes carries a Zacks Rank #2 and has a VGM Score of B. The company has expected earnings growth of 42.6% for the current year. The Zacks Consensus Estimate for the current year has improved by 5.3% over the last 60 days.

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