Worried About China Trade Issues? 5 Stocks to Buy With Zero Exposure

Back when Saturday Night Live was in its heyday, and arguably actually funny, the late and great Gilda Radner played a character called Rosanne Rosannadanna, who would lament on current situations both locally and nationally, and her go-to phrase was “It’s always something.” That could easily be a Wall Street slogan, as long-time investors are well aware of that and were reminded this week after the president unleashed a tweet that threatened to upend trade talks with China.

The president reportedly has become frustrated with the Chinese on trade talks, especially concerning the critical areas of information technology and intellectual property, as well as protection of foreign technology. These are valid concerns, but with a large trade contingent on its way to the United States from China, the deal is certainly not off.

One thing is for sure, investors concerned over the potential fallout may want to move to stocks with very little or no exposure to China. We found five that make sense now, and all are rated Buy at Merrill Lynch.


This is a telecom component on the prestigious Merrill Lynch US 1 list. AT&T Inc. (NYSE: T) is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE.

This telecom giant also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions. Trading at a very cheap 9.4 times estimated 2019 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

The company reported a mixed bag for the first quarter and the Merrill team said this:

On a consolidated basis, first quarter revenue, EBITDA, and EPS were all pretty much in line with consensus estimates. Entertainment EBITDA was ahead of both us and the Street, as AT&T was able to bend the cost curve and drive up video average revenue per user. Due to definitional changes, AT&T’s implied capex guidance is $20 billion and not $22 billion where the Street consensus is today.

Investors receive a 6.67% dividend. The Merrill price target for the shares is $37, and the Wall Street consensus target is $33.88. Shares ended trading on Monday at $30.59.

Allegiant Travel

This low-cost carrier flies to many cities, but none of those destinations are in China. Allegiant Travel Co. (NASDAQ: ALGT) has a unique business strategy: flying where other airlines do not. The company connects 136 city-pairs and typically flies each leisure route only a few times a week, using older planes with low capital costs. An early unbundler, the company generates more fees per passenger than any U.S. airline. Allegiant’s largest market is Las Vegas, followed by Orlando and Phoenix.

Because of the hefty recurring fees the company generates, Merrill has remained positive on the shares and noted this when the company reported results:

Despite raising its full year fuel outlook by 5-10%, Allegiant Travel managed to reiterate its 2019 EPS outlook of $13.25-14.75. With no changes to the 2019 unit cost outlook, we believe this points to solid revenue momentum in the core airline business. We are raising our 2019E EPS to $13.25, and our price objective. We reiterate our Buy rating.

Merrill Lynch has a $146 price target, which is surprising given the $157 consensus target. The stock was last seen trading at $147.09.

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