Trade War With China? Here's a List of Companies That Stand to Lose

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(By Rebecca Lipman. Data sourced from Finviz and TheStreet)

A controversial new piece of legislation is gaining ground in the US Senate and House of Representatives that aims to pressure China into raising the value of their currency. Despite bi-partisan support the bill's momentum may have faltered after it was met with objection from Republican Speaker of the House John Boehner on Tuesday morning.

Similar legislation to curtail China's currency undervaluation and competitive edge in the global market has floundered in the past. But given the US's 9% unemployment rate and heightened attention to China's competitive stance, this bill has more momentum behind it than the previous attempts.

Last year's bill received 99 Republican votes, a stark contrast to the new bill which has received more than 200 House co-sponsors this week. It is expected to quickly reach 218, the number needed to pass, reports CNBC.

This particular bill calls for U.S tariffs on imports from countries with undervalued currencies, a deliberate nod towards China. Those in favor of the bill argue it will help level the playing field and bring jobs back to America.

Critics of the legislation argue that the consequences, if not pure retaliation, from China could be highly detrimental to U.S exports and jobs. "If enacted, would risk a trade war with China — one of the fastest-growing markets for U.S. goods — at a time when a sputtering global economy can least afford it."

On Tuesday morning Representative Boehner threw in his two cents: "While I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it," he told reporters. According to Reutersit's worth reminding "house speakers normally get their way on legislation."

China, which has an export-based economy and strong interest in keeping their currency as low and competitive as possible, has not been idle in the debate. "China's central bank and the ministries of commerce and foreign affairs accused Washington of "politicizing" currency issues and putting the global economy at risk of a trade war…China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005." (via Reuters)

If Obama passes the bill into law, China's economy would very likely suffer from a decrease in exports as the United States shifts suppliers. So we were wondering, which companies have a significant exposure to China and the possible currency war?

To help you analyze, here is a list of U.S. companies with significant exposure to China… Use it as a starting-off point for your own analysis.

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1. QUALCOMM Incorporated (QCOM): Communication Equipment Industry. Market cap of $83.03B. Price as of 10/4 at $49.43. Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. The stock has gained 13.42% over the last year. It generated approximately 25% of its revenues in China.

2. Yum! Brands, Inc. (YUM): Restaurants Industry. Market cap of $22.96B. Price as of 10/4 at $49.44. Operates as a quick service restaurant company in the United States and internationally. It's been a rough couple of days for the stock, losing 7.35% over the last week. It generated approximately 37% of its revenues in China

3. Broadcom Corp. (BRCM): Semiconductor Integrated Circuits Industry. Market cap of $17.82B. Price as of 10/4 at $33.31. Designs and develops semiconductors for wired and wireless communications. The stock has lost 6.51% over the last year. It generated approximately 32% of its revenues in China.

4. Wynn Resorts Ltd. (WYNN): Resorts & Casinos Industry. Market cap of $14.84B. Price as of 10/4 at $118.75. Engages in the development, ownership, and operation of destination casino resorts. This is a risky stock that is significantly more volatile than the overall market (beta = 2.52). The stock is currently stuck in a downtrend, trading -16.82% below its SMA20, -17.83% below its SMA50, and -11.63% below its SMA200. It's been a rough couple of days for the stock, losing 15.19% over the last week. It generated approximately 69% of its revenues in China

5. Applied Materials Inc. (AMAT): Semiconductor Equipment & Materials Industry. Market cap of $13.53B. Price as of 10/4 at $10.27. Provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. Might be undervalued at current levels, with a PEG ratio at 0.73, and P/FCF ratio at 7.97. The stock is currently stuck in a downtrend, trading -5.12% below its SMA20, -8.83% below its SMA50, and -24.35% below its SMA200. The stock has lost 11.39% over the last year. It generated approximately 26% of its revenues in China.

6. Analog Devices Inc. (ADI): Semiconductor Industry. Market cap of $9.67B. Price as of 10/4 at $32.31. Engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications. The stock has gained 3.56% over the last year. It generated approximately 20% of its revenues in China.

7. NVIDIA Corporation (NVDA): Semiconductor Industry. Market cap of $7.79B. Price as of 10/4 at $12.9. Provides visual computing, high performance computing, and mobile computing solutions that generate interactive graphics on various devices ranging from tablets and smart phones to notebooks and workstations. It's been a rough couple of days for the stock, losing 6.79% over the last week. It generated approximately 30% of its revenues in China.

8. Jabil Circuit Inc. (JBL): Printed Circuit Boards Industry. Market cap of $3.94B. Price as of 10/4 at $18.03. Provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. This is a risky stock that is significantly more volatile than the overall market (beta = 2.05). Might be undervalued at current levels, with a PEG ratio at 0.83, and P/FCF ratio at 12.77. The stock has had a good month, gaining 10.14%. It generated approximately 20% of its revenues in China.

9. Teradyne Inc. (TER): Semiconductor Equipment & Materials Industry. Market cap of $2.06B. Price as of 10/4 at $11.09. Provides automatic test equipment products and services worldwide. The stock is currently stuck in a downtrend, trading -5.43% below its SMA20, -7.67% below its SMA50, and -25.93% below its SMA200. It's been a rough couple of days for the stock, losing 5.62% over the last week. It generated approximately 8% of its revenues in China.

10. Novellus Systems, Inc. (NVLS): Semiconductor Equipment & Materials Industry. Market cap of $1.90B. Price as of 10/4 at $27.32. Develops, manufactures, sells, and supports equipment used in the fabrication of integrated circuits. Might be undervalued at current levels, with a PEG ratio at 0.67, and P/FCF ratio at 5.84. It's been a rough couple of days for the stock, losing 6.63% over the last week. It generated approximately 40% of its revenues in China. 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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