5 Stocks To Buy As U.S.-China Locks Phase One Of Trade Deal

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. (NYSE:CAT) 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. (NASDAQ:CRUS) 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 Original post

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Written By: Zacks Investment Research