Throughout his presidency, Donald J. Trump has consistently waged an aggressive policy toward China. Later, this aggressiveness culminated in a trade war between the word’s top two economies. But with the novel coronavirus pandemic, the President has ratcheted up both his words and actions. Because of the unprecedented nature of this simmering feud, it will almost certainly impact decisions on companies to invest in.
Further, if President Trump wins reelection — and that is not out of the question given the vulnerabilities of his feeble opponent — it’s practically guaranteed that U.S.-China relations will suffer. While not a popular opinion, I believe Trump has no choice at this point but to pressure China. As well, it’s a brilliant move and I’m not surprised the former business tycoon is making it.
The reality is, many people don’t appreciate Trump’s intelligent moments because they’re wrapped up in their myopic hatred of him. Sure, he has made some gaffes — quite a bit of them. But as a non-politician, he has a fresh take on global affairs. Personally, I think he sees weakness in China, which is why he’s so confident in his determination, such as the shuttering of the Chinese consulate office in Houston.
Primarily, the Trump administration is not alone in reconsidering overly reliant economic relations with China. For instance, Australia’s relationship with the Asian juggernaut has been on the decline for years. And the coronavirus pandemic has only worsened Australians’ perspective of Chinese business practices. Certainly, this should influence which companies to invest in.
As well, the Japanese are no fans of China at this point either. Indeed, the coronavirus not only postponed the 2020 Summer Olympics, but it could cancel it outright. Then, Beijing gets to host the Winters Olympics in 2022, when the coronavirus gets under control? That is all kinds of messed up. Thus, collective international animosity toward China may impact these companies to invest in:
- Huntington Ingalls Industries (NYSE:HII)
- Raytheon Technologies (NYSE:RTX)
- Booz Allen Hamilton (NYSE:BAH)
- Sony (NYSE:SNE)
- Smith & Wesson Brands (NASDAQ:SWBI)
- Teva Pharmaceutical Industries (NYSE:TEVA)
- Manpower Group (NYSE:MAN)
- Newcrest Mining (OTCMKTS:NCMGY)
- AgEagle Aerial Systems (NYSEAMERICAN:UAVS)
Finally, it’s not just international markets that could see waves from souring U.S.-China relations. Our own domestic sectors, including defense and cybersecurity industries, may enjoy a renaissance. So, here are nine companies to invest in should U.S.-China relations sour from here on out.
Companies to Invest in Now: Huntington Ingalls Industries (HII)
As America’s largest military shipbuilding company, Huntington Ingalls Industries is always a relevant, long-term idea. In part, what makes the U.S. the greatest superpower in human history is naval superiority. Logically, this makes sense — the Earth is approximately 71% water. So, if you want to project power, you’ve got to have a robust navy. And that right there is one of your key reasons to consider HII stock.
Of course, U.S.-China relations deteriorating could be a pivotal, though admittedly cynical reason to put Huntington Ingalls in your list of companies to invest in. Again, with its military shipbuilding prowess, demand will only increase. Particularly, brewing conflict in the South China Sea means that naval superiority is an absolute priority for the U.S. military. So, we should see longer-term bullishness in HII stock.
However, one risk factor to point out is that technically, HII appears pensive. Nevertheless, that could change. Because China impacts the global economy, a reduction in international trading could spark desperation in developing countries, leading to criminal activities at sea. This is net positive for demand from the U.S. Coast Guard and other border protection agencies.
Raytheon Technologies (RTX)
Although we’ve had multiple “cold” conflicts in the past, none have resulted in an outright declaration of war. One of the reasons why is very simple: unlike the Russians, our military superiority has substance behind it. Our enemies know this, which is why the Russians and Chinese are so great at trolling.
Deep down, our adversaries and enemies know that if they go beyond trolling, the U.S. military will give them a Teddy Roosevelt-style beat down. This brings me to Raytheon Technologies.
Although Raytheon has a rather sanitized name, make no mistake about it: RTX stock is an investment in a savage business.
Furthermore, Raytheon is one of the most relevant companies to invest in should U.S.-China relations sour because its products represents both offensive and defensive measures. Plus, with our allies utilizing advanced U.S. military hardware, China will think very carefully about its next step.
But just in case, the U.S. and pro-democracy nations in the Pacific theater must be prepared. Therefore, you can have confidence in RTX stock.
Booz Allen Hamilton (BAH)
When the coronavirus forced the world to shelter in place, it was a massive, unprecedented disruption to our daily lives. But for cybercriminals, the pandemic expanded the field of play, so to speak. Mainly, because people and businesses had to shift their operations online, this dynamic created increased opportunities for nefarious digital activities. Therefore, cybersecurity firms represent some of the most relevant companies to invest in.
Of course, deteriorating U.S.-China relations will only make this sector more pertinent. With China, it’s not just about low-level concerns, such as trolling and attempting to cause divisions within American society. Rather, the Chinese government has a vested interest in espionage and intellectual property theft. Therefore, I like Booz Allen Hamilton and BAH stock as part of the counterespionage narrative.
As one of our top defense companies, Booz Allen Hamilton has substantial experience defending against state-sponsored cyberattacks and terrorism. Surely, these activities will only increase with worsening U.S.-China relations. Further, I like BAH stock for its other underlying military-related businesses should things get spicier.
Although China has been a pivotal economic partner to Japan, the Japanese government has long worried about excessive dependence on Chinese supply chains. However, the Covid-19 pandemic really brought this over-reliance to the forefront. In response, Japanese Prime Minister Shinzo Abe introduced an initiative to incentivize his country’s corporations to diversify away from China.
But for Sony, the consumer technology firm was a step ahead of the game. Last year, Sony began the process of moving some production to Thailand. For SNE stock, the transition made sense on multiple levels. First, Japan does not have consistently warm relations with China. Second, China’s dramatic economic rise means that doing business there isn’t the bargain it once was.
Also, SNE stock is one of the most popular securities on trading app Robinhood. Initially, I was surprised to see this. Then, I realized that Sony’s brand is mostly associated with the PlayStation. With the new PS5 scheduled to be released near the end of this year, this association isn’t a bad gig. So, even if geopolitical tensions rise, you’ll want to keep Sony on your list of companies to invest in.
Smith & Wesson Brands (SWBI)
In a segment about the Justice Department finding that Yale University discriminated against Asian and white undergraduate applicants, Fox News’ Tucker Carlson blasted the left for selective racism. In part, Carlson argued that liberal media outlets used terms like “Wuhan virus” or “Chinese coronavirus.” But when President Trump joined in, those same news agencies called Trump racist.
Carlson is one of the few rational people left at Fox News, in my opinion. But this particular example is a bad faith argument. Early in this crisis, news agencies referred to the origin of the virus because it was centered in China. But when it spread to the U.S., these agencies responsibly referred to the coronavirus in scientific terms to avoid stigmatization.
They know that many people lack interracial etiquette and will use any opportunity to lash out against other races. And this is part of the reason why Smith & Wesson is one of the top companies to invest in.
What makes the DOJ’s accusation against Yale significant is that it could knock out affirmative action. If so, this may permanently damage race relations in America. Think about it: we’re already at a point where everybody has some twisted justification to hate each other. Therefore, the only sure investment in this case is SWBI stock.
Look, I don’t necessarily want Smith & Wesson to be among the best companies to invest in. But add the U.S.-China conflict into our already volatile social environment and you’ll see SWBI stock skyrocket due to firearms demand.
Teva Pharmaceutical Industries (TEVA)
Prior to the pandemic, U.S. national security analysts sounded the alarm on our reliance on Chinese manufacturing. Exports from China involve much more than just cheap junk that we buy at Walmart (NYSE:WMT). Over the years, our medical supply chain has been inexplicably offshored to China, making us vulnerable. This vulnerability came to a head during this pandemic.
But this health calamity has been at least somewhat beneficial for Teva Pharmaceutical Industries. Once plagued with scandals, no one is talking about that anymore. Instead, all eyes are on China. Should we have further tensions with this economic powerhouse, I imagine this will be a positive development for TEVA stock.
Beyond the PR implications, Teva was fortunate enough to diversify its supply chains. Therefore, when the coronavirus first impacted China, Teva reported no disruptions. Moving forward, this makes the generic drug maker one of the key companies to invest in.
Eventually, the Covid-19 pandemic will fade away. When it does, the broader healthcare space will normalize, which should help TEVA stock. Additionally, the diversified supply chain insulates shares from geopolitical rumblings.
Manpower Group (MAN)
Given the progress of progressivism, this staffing agency will likely change its name to Peoplepower Group, and its ticker perhaps changed to PEPL. For now, it’s Manpower Group. And it could become one of the surprising companies to invest in should geopolitics take a turn for the worst.
Prior to the pandemic, the labor market clearly favored jobseekers, so much so that we invented a new term, ghosting. This refers to the phenomenon where job applicants accepted to an interview will simply not show up. In the recent years leading up to the pandemic, it was not uncommon for employers to lament being ghosted.
Of course, such an environment isn’t helpful to MAN stock. But man, have things changed! Although the unemployment rate has significantly improved, millions of Americans face eviction. You don’t have to be an economist to realize that there’s a disconnect here.
Moreover, poor relations with China imply additional economic pain. Because of the coronavirus and its associated events, the labor market suddenly favors employers. Once we work through this funk, this circumstance should help MAN stock. If anything, ghosting will no longer be a headwind.
Newcrest Mining (NCMGY)
Initially, when the coronavirus first hit us, Americans were mostly concerned about the negative health implications. Quickly, though, it became apparent that the Covid-19 pandemic brought about associated troubles, namely economic pain and social unrest. While a terrible situation overall, this has been a trifecta of bullishness for precious metal miners like Newcrest Mining.
Headquartered in Melbourne, Australia, Newcrest has many viable assets, including a gold mining project in the resource-rich Pilbara region of western Australia. Although NCMGY stock has taken a few hits recently due to the correction in the underlying gold market, I think this is a discounted opportunity for patient investors.
All the evidence suggests that we have a monumental task to get our economy back on track. Additionally, if Trump wins reelection, this could spark another round of protests and general unrest. But it’s this type of uncertainty in which the yellow metal thrives.
Further, tensions between the U.S. and China also extend to Australia. The people from Down Under share our pain in terms of exploitative Chinese business practices. Overall, I see gold prices rising significantly higher, which bodes well for NCMGY stock.
AgEagle Aerial Systems (UAVS)
Before this corona mess, I’d say very few people knew about AgEagle Aerial Systems. Starting off as an agricultural services specialist, AgEagle manufactured drones for surveying crops — hardly sexy stuff. However, the company pivoted toward drone-based deliveries to cut down on the expenses related to the last mile problem. With the seemingly perpetual rise of Amazon (NASDAQ:AMZN) and the need for contactless delivery, UAVS stock quickly garnered massive support.
Additionally, what makes AgEagle one of the more interesting companies to invest in is that this is a homegrown organization. As you may have heard, the U.S. government considers Chinese-made drones a security threat. That’s a problem because China dominates the retail drone market. While AgEagle will likely not budge the needle in this department, it helps that the company’s interests are fully aligned with American values and principles.
Still, UAVS stock is a speculative investment. So, don’t go too crazy.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long SNE and gold bullion.