The Zacks Analyst Blog Highlights: Microsoft, Southwest, Alliant, Unitil And AngloGold

For Immediate Release

Chicago, IL –August 8, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft Corporation (NASDAQ:MSFT) , Southwest Gas Holdings, Inc. (NYSE:SWX) , Alliant Energy Corporation (NASDAQ:LNT) , Unitil Corporation (NYSE:UTL) and AngloGold Ashanti Limited (NYSE:AU) .

Here are highlights from Wednesday’s Analyst Blog:

5 Best Stocks to Ride Out US-China Trade Tensions

President Trump recently threatened fresh tariffs on Chinese imports, provoking China to the extent that it let the yuan sink and has been labelled as a currency manipulator. Aggravating things, the trade deal is showing no signs of progress, hampering the U.S. economy and even endangering Trump’s re-election.

Given the widespread uncertainty, investors should zero in on stocks that can ride out the ongoing trade tensions.

U.S.-China Trade Tensions Mount

Markets somewhat recovered from a terrible Monday after the Chinese government assured that it would take appropriate measures to check the fall of its currency beyond a mark. China had priced yuan at 6.9683 to the U.S. dollar, which is the weakest in almost 11 years. Investors, in fact, were concerned that China would price the yuan below the psychological barrier of 7:1.

Nonetheless, China let its currency value decline in order to make some Chinese goods cheaper and negate the effects of the U.S. tariffs. Meanwhile, Trump accused China of being a currency manipulator. Trump has pledged to levy 10% tariffs on $300 billion worth of Chinese goods beginning Sep 1, while China retaliated by suspending purchases of American farm crops.

But, is it good for the U.S. economy? Certainly not! This time the duties will affect consumer goods, particularly televisions and mobile phones, and not just components used in manufacturing process. Capital as well as intermediate goods are also expected to bear the brunt of tariffs, per the Goldman Sachs (NYSE:GS).

Gregory Daco, chief U.S. economist of Oxford Economics, added that an existing 25% tariff on $250 billion of Chinese imports coupled with tariffs on steel and aluminum will certainly dent economic expansion by 0.3% next year.

And the proposed tariffs on $300 billion Chinese shipments would further impede growth by another 0.1%. What’s more, if the trade war escalates beyond that, with more tariffs on European auto imports, then a recession is on the anvil.

Nobel Prize winning economist, Paul Krugman, noted that tariffs on Chinese goods are now back to levels seen during pre-1930s protectionism period. He warned that the “the trade war is reaching the point where it becomes a significant drag on the U.S. economy.”

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But, White House’s trade tussle with Beijing will likely to drag onto the presidential election in 2020. Unfortunately, trade war has done no good to the United States, with the country running into huge trade deficits with China, including a $419-billion shortfall of goods last year.

How to Play This Trade Ambiguity?

As uncertainty over the outcome of the Sino-American trade deal rises, investors should target tariff-proof stocks that stand to gain from an all-out trade war.

Service firms are safe bets because such firms are unperturbed by trade tensions as they have less foreign sales exposure compared to goods companies. Service stocks also have less foreign input costs that might be subject to tariffs. Such input costs mostly include direct materials, labor and factory overheads.

And the best service firm, no doubt, is Microsoft Corporation. The company, currently, has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has climbed 2.2% over the past 60 days. The company’s expected earnings growth for the current year is 9.7%, higher than the Zacks Investment Research

Written By: Zacks Investment Research