Back to top

Image: Bigstock

5 Stocks to Buy as U.S.-China Locks Phase One of Trade Deal

Read MoreHide Full Article

The 18-month long trade tussle between the United States and China finally seems to have eased, with both countries signing the phase one agreement effective within three weeks. The United States has held off its tariff hike on Chinese products in exchange of a deal that China will buy more farm products and enter into a currency pact.

Finally, trade bellwethers and specially companies that have been deeply affected by the trade war see some silver lining. As the markets rallied on Oct 11 we have shortlisted five stocks that can boost your portfolio.

A Substantial Phase One Deal

After nearly two years of trade tussle and slapping of higher tariffs on each other, both the United States and China reached an initial agreement on Oct 11. The “Phase One” — as termed by both countries — includes a substantial increase in U.S. agricultural product purchase by China worth between $40 billion and $50 billion. The United States in exchange would hold off tariff hikes that were supposed to be effective from Oct 15.

President Donald Trump met Chinese vice premier Liu He in the White House and said that the phase one will be signed in the next three weeks and it will address issues over intellectual property and financial services along with agricultural trade. However, Trump also mentioned that “Phase two will start almost immediately.”

The cancellation of tariff hike and sales of more agricultural products have led farmers and investors heave a sigh of relief . Big tech shares that were impacted deeply due to the U.S.-Sino trade war cheered up on the news and pushed the S&P 500 Technology Select Sector up by 1.3%. 

The billions of dollars worth of tariff hike and blacklisting of Chinese companies had impacted the retail and semiconductor sectors, with trade bellwethers like Caterpillar Inc. (CAT - Free Report) dropping to an all-time low. But Caterpillar’s shares rose 4.7% after the initial agreement news came out.

5 Stocks to Buy

With phase one in implementation, markets seem to move toward newer highs. The Dow and the S&P 500 rose more than 1% on Oct 11. This progress in trade deal between the economic giants definitely boosted the markets and specifically sectors like retail and semiconductors, as these are the most effected by the trade war and increasing tariffs.

We have shortlisted five stocks that flaunt a Zacks Rank #1 (Strong Buy) and 2 (Buy) and have outperformed the S&P 500 on a year-to-date basis.

Cirrus Logic, Inc. (CRUS - Free Report) is a publicly traded company that develops manufactures and markets analog, mixed-signal, and audio DSP integrated circuits (ICs). Cirrus Logic’s expected earnings growth rate for the current year is 5.7% in contrast the industry’s projected decline of 0.5%. 

The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. The company has gained 69.1% on a year-to-date basis compared to the S&P 500 that has gained 18.5%. Cirrus Logic currently carries a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zumiez Inc. (ZUMZ - Free Report) is a publicly traded specialty retailer that sells a range of apparel, footwear and accessories. It also offers hard goods for youngsters like snowboards, skateboards, bindings and other equipment. Zumiez’s expected earnings growth rate for the current year is 20.7%, beating the industry’s projected rally of 1.2%.

The Zacks Consensus Estimate for current-year earnings has improved 14.3% over the past 60 days and shares have gained 62.7% on a year-to-date basis. Zumiez carries a Zacks Rank #1.

Inphi Corporation (IPHI - Free Report) is a publicly traded company that provides high-speed analog semiconductor solutions for the communications and computing markets. Inphi’s expected earnings growth rate for the current year is 72.1% in contrast to the industry’s projected decline of 15.3%.

The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 90 days and shares have gained 98% on a year-to-date basis. Inphi carries a Zacks Rank #2.

Power Integrations, Inc. (POWI - Free Report) is a publicly traded company that supplies high-performance electronic components used in high-voltage power-conversion systems specifically in electronic products like mobile devices, TVs, PCs, appliances, smart utility meters and LED lights. Power Integration’s expected earnings growth rate for the current year is 37%, while the industry is projected to decline 28.6%.

The Zacks Consensus Estimate for current-year earnings has improved 3.8% over the past 90 days and shares have gained 49.4% on a year-to-date basis. Power Integrations carries a Zacks Rank #2

Target Corporation (TGT - Free Report) is a publicly traded company that operates as a general merchandise retailer delivering goods ranging from household essentials and electronics to toys and apparel for men, women and kids. Target’s expected earnings growth rate for the current year is 14.1%, beating the industry’s projected rally of 9.8%.

The Zacks Consensus Estimate for current-year earnings has improved 3.9% over the past 60 days and shares have gained 69.2% on a year-to-date basis. Target carries a Zacks Rank #2.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>