While economic growth in the United States has slowed, the reality is that growth has been better than in China coming into 2019. China’s economy officially is still growing faster than the U.S. economy, but China needs to have much more rapid growth to keep creating the millions of new jobs each year needed. It has become more obvious that China actually has more to lose in the world of trade wars and tariffs than the United States does.
The international trade deficits in actual goods prove that point: China exported $375 billion more in goods to the United States than the United States shipped to China in 2017, and the most current data showed that deficit figure was already $344 billion in the first 10 months of 2018 alone.
As China’s economic numbers continue to tank, U.S. investors are looking for companies with little to no exposure to how fast China’s economic growth rate is coming down. This does not imply that a business might not have exposure from Chinese suppliers in some cases, and it has grown increasingly difficult to find companies that have no supplier risks from China. Technology, apparel and household goods have become prime examples of where there is too much exposure to China in sales and supplier-risk to ever count as 100% domestic.
24/7 Wall St. has identified 10 companies with large market capitalizations and billions of dollars in revenues that should have little to no direct worries about how China’s economic readings come out. That said, it is a global economy, whether there are trade wars or not, and very few companies have stocks that will be considered great ones if the market as a whole slides 10%, 15% or more as a result of a slower global economy.
American Electric Power Co. Inc. (NYSE: AEP) is not the largest U.S. electric utility, but its 5.4 million U.S. customers are considered to be mostly in-land in the middle of the United States. For all practical purposes, its China exposure is nonexistent. American Electric Power has a $36 billion market cap.
American Water Works Co. Inc. (NYSE: AWK) is the king of water utilities in America and has some minor exposure to Canada. That said, it serves 15 million people with a presence in 46 states with zero known exposure to China. It has a $16 billion market cap and is considered to be one of the most defensive investments for investors during any period of economic uncertainty.
Chipotle Mexican Grill Inc. (NYSE: CMG) has recovered handily from its woes about making customers sick, and the Mexican casual diner has effectively zero exposure to China. Chipotle’s most recent earnings showed more than 2,400 restaurant locations with only 37 international stores, located in Canada, France, Germany and the United Kingdom. Its market cap is $14 billion.
Crown Castle International Corp. (NYSE: CCI) has become a real estate investment trust (REIT) covering cell and data tower communications locations across the United States. If you use a cellphone or wireless device in any city, chances are almost 100% that your call went through one of their towers, among other tower owners contracted by your telecom carrier. Its exposure to China is basically nonexistent. The words “China,” “Asia” and “Chinese” were not ever mentioned in the basic materials of the more than 100 pages making up Crown Castle’s 2017 annual report. Its market cap was $44 billion on last look.