Two of the world’s biggest economies, the United States and China, have been involved in a trade skirmish since March. Both countries have since imposed tit-for-tat import tariffs on each other worth $50 billion. Moreover, delegations from both countries have met on two different occasions but have failed to reach a resolution.
Just when trade war fears seemed to be aggravating, China, in a rather surprising move, announced that it was planning to purchase more agricultural and energy products from the United States. This move is largely being seen as China’s efforts to forfend Trump’s multi-billion tariffs on its imports. Whatever be the reason, such developments are poised to boost both the sectors.
Investors looking to make the most of such an opportunity should look no further than investing in agricultural and energy stocks from the United States.
China’s Offer to Buy $70 Billion Worth of US Goods
During talks with US Commerce Secretary Wilbur Ross last weekend, China’s Vice Premier Liu He offered to purchase $70 billion worth of U.S. agricultural as well as energy products. Such purchases are aimed at ending rising trade tensions between China and the United States.
This development follows a series of multiple talks between delegations of both the countries. On May 21, a deal was reached between the countries wherein China would purchase more of U.S. products but did divulge any details. In return, the United States promised to delay import tariffs worth $50 billion on Chinese products.
However, President Trump’s decision to move ahead with the tariff escalated tensions. The administration had pended further discussions with China to reach an even deal. Trump had earlier requested that China should help United States reduce the size of its trade deficit with the Asian country. In the event of China buying up more of U.S. products, the size of this trade imbalance is likely to dwindle.
Terms of the Package
The deal offered by China states that it would increase its purchase of soybeans, corn and other agricultural goods from the United States. Further, it also plans to ramp up its purchase of crude oil and natural gas from America in order to meet its ever-rising demand for energy.
China’s He issued an official statement after talks with Ross. He stated that both the countries had “good communication in various areas such as agriculture and energy.” He also stated that further details were “yet to be confirmed by both sides.”
4 Hot Choices
China’s offer to purchase more of U.S. agricultural and energy products would most certainly reduce U.S.-China trade deficit. This is going to broadly improve fortunes of both sectors.
In this context, we have selected four stocks that are expected to gain from these factors. These five stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Stocks to Buy As China Offers to Raise U.S. Imports: Titan International Inc (TWI)
Titan International Inc (NYSE:TWI) is a manufacturer and seller of wheels, tires, undercarriage systems and other related equipment for agricultural as well as construction sectors.
The company is based out of Quincy, IL and has a Zacks Rank #1. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 71.4% over the last 60 days.
Stocks to Buy As China Offers to Raise U.S. Imports: Bunge Ltd (BG)
Bunge Ltd (NYSE:BG) is a processor, transporter and seller of agricultural commodities and commodity products such as soybeans, rapeseed, canola, and sunflower seeds.
The company is based out of White Plains, NY and has a Zacks Rank #2. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 27.8% over the last 60 days.
Stocks to Buy As China Offers to Raise U.S. Imports: Anadarko Petroleum Corporation (APC)
Anadarko Petroleum Corporation (NYSE:APC) is an explorer, developer and producer of oil and gas in United States as well as other countries.
The company is based out of The Woodlands, TX and has a Zacks Rank #1. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 59.7% over the last 60 days.
Stocks to Buy As China Offers to Raise U.S. Imports: WildHorse Resource Development Corp (WRD)
WildHorse Resource Development Corp (NYSE:WRD) is an exploiter, developer and explorer of oil, natural gas, and natural gas liquid resources.
The company is based out of Houston, TX and has a Zacks Rank #1. The expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the current year has improved 24.8% over the last 60 days.
Will You Make a Fortune on the Shift to Electric Cars?
Here’s another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It’s not the one you think.