Tensions between the US and China could become a major headwind for the stock market in the coming weeks if the war of words between Washington and Beijing intensifies.
Trade, the treatment of the COVID-19 pandemic and that of China to implement are all possible catalysts for further deteriorating the already difficult relationships between the two economic superpowers.
The main concern is that the US and China could resort to a new wave of fares, which would be a major blow to both economies, have already been devastated by the corona virus pandemic.
With the prospect of the US-China trade war looming, companies unaffected by higher tariffs have a competitive advantage. Here are three such names that should be on your radar:
1. Facebook
With a potential trade war between the US and China that will have more implications for goods manufacturers with significant exposure to China, Internet content companies, which are not so much dependent on supply chains and production, should suffer less, making Facebook (NASDAQ 🙂 a good bet in the future.
Shares of the world's largest social media network outperformed the 6% gain in the same period last year. On Tuesday, the stock rose to a record high of $ 240.90 and then closed at $ 232.20, generating a market capitalization of $ 661.5 billion.
For the most part, Facebook and many apps, such as Instagram and Facebook Messenger, are banned in China. Still, the social media giant is still growing its user base. According to the company, approximately 3 billion first-quarter users interacted with one or more of its apps every month, compared to 2.9 billion in the previous quarter.
The Menlo Park, California-based social media company beat analysts' estimates when it reported results for the first three months of the year on April 29.
Facebook said that ad revenues in the first three weeks of April were roughly the same as in the same period last year, which boosted optimism. advertising business recovered after a sharp drop in revenues in March, when worldwide lockdowns were put in place to stem the rapid spread of COVID-19.
Another reason to be optimistic: Earlier this month, Facebook announced it would launch stores, a service that will enable small businesses to display and sell products on the world's largest social networking platforms, as it strengthens its e-commerce offering.
2. Square
Payment processor, Square (NYSE :), is one of the best Chinese names to consider as tensions escalate. Not only does the US account for the company's largest market, but Square also has limited exposure to China, serving only the US, Canada, Australia, Japan and the UK.
Run by Twitter CEO Jack Dorsey, Square & # 39; s The stock has risen nearly 26% in the past 12 months and performed well above the S&P 500 in the same period. The shares ended at $ 80 last night 79, not far from their recent 52-week high of $ 87.25, earning the company a valuation of $ 35.5 billion.
While the San Francisco-based mobile payment service reported in the first quarter on May 6, the consumer-focused Cash app gave a fresh boost. The point-of-sales service provider generated 112% annualized profit growth by offering the largest number of net new active new customers.
The digital payment processor took advantage because people chose to have their government-stimulated checks deposited directly into the Cash app, driving Square to boost the highest monthly direct deposit volumes ever in April. since users using the service are "among the most involved on the platform"
3. Electronic Arts
Electronic Widely regarded as one of the leading video game publishers, Arts (NASDAQ 🙂 also has limited sales in China and generates most of its sales within the US
Video game sales have been over the past two skyrocketed for months as the COVID-19 pandemic led millions to stay at home. The result: U.S. sales in March peaked in over a decade.
The stock, which came in at $ 116.64 last night, has risen about 26% last year, earning him a market cap of $ 33.7 billion. . It recently reached a new 52-week high of $ 121.75 on May 20.
Electronic Arts Daily Chart
The Redwood City, California-based company announced revenues and revenues that easily exceed consensus estimates as of May 5 as on-the-spot measures to reduce the spread of COVID-19 stimulated digital sales.
Earnings per share were $ 1.07, for earnings per share of $ 0.97. Net bookings, which are a common non-GAAP figure used by video game companies to record digital and physical sales, were $ 1.21 billion, surpassing estimates of $ 1.18 billion.
The company said that live service revenues, including subscription-based "," in-game purchases and other items, increased by about 17% from a year ago to $ 832 million.
The positive results prompted EA to improve its guidance for the coming year. The video game giant said it expects earnings of $ 3.35 per share in 2021 and a net booking of $ 5.55 billion, exceeding the average analyst estimate of $ 5.37 billion.
