Investing

Worried About Coronavirus? 5 Stocks to Buy With Zero China Exposure

AT&T

This is a top telecom and entertainment play. AT&T Inc. (NYSE: T) is the largest U.S. telecom company and provides wireless and wireline service to retail, enterprise and wholesale customers. The company’s wireless network serves approximately 124 million mobile connections, with 77 million postpaid subscribers.

While AT&T’s traditional wireline voice business has undergone a period of secular decline due to wireless substitution and cable competition, the company through WarnerMedia has become a diversified media and entertainment business.

Merrill Lynch noted this when discussing the 2020 potential for the communications giant:

Our price objective is based on a P/E multiple of 12 times our fiscal year 2020 EPS estimate, which is in the middle of AT&T’s historical relative multiple range vs the S&P 500. We think this is warranted based on challenging operating trends within AT&T’s television business, higher leverage, and integration risk, but offset by higher earnings estimates and faster growth after baking in the impact of the company’s stock buyback and cost savings initiative.

Investors receive a significant 5.44% dividend. Merrill Lynch has a $43 price target, which compares to the consensus target of $39.31. AT&T stock closed Monday’s trading at $38.25 a share.

Jack in the Box

This is a top fast-food offering for investors to consider. Jack in the Box Inc. (NASDAQ: JACK) is a San Diego-based quick-service restaurant chain that has transformed in recent years from a mostly company-operated to predominantly franchised business model. There are Jack in the Box restaurants in more than 20 states, but with heavy concentration in California (41% of the total) and Texas (27%).

The company has been very solid, and the Merrill Lynch analysts noted this when it reported fiscal fourth-quarter results last year:

JACK has performed well, taking comps from two years of no growth to up 2%-3% for two quarters, an important reversal after new product misses, some executive changes, a lack of resonating value, and franchisee unrest increased pressure on CEO Lenny Comma. JACK’s improvement has been helped by a better promotional success, franchisee buy-in with a bit of momentum, and high check growth at competitors that give JACK some room with a premium positioning.

Shareholders receive a 1.95% dividend. Merrill Lynch has set its price objective at $100. The consensus target price is $92.69, and the shares closed at $81.97 on Monday.

Kroger

This top grocer does virtually all its business in the United States. Kroger Co. (NYSE: KR) is the second-largest U.S. food supermarket retailer and generates $120 billion in annual sales. Kroger operates roughly 2,800 supermarkets throughout 35 states and under two dozen banners. Kroger also sells fuel at 1,450 supermarket fuel centers and operates 2,268 pharmacies and 274 jewelry stores.

The analysts note that the company’s price leadership, strong management team, store execution, and impressive leveraging of technology partnerships and investments (including a recently announced partnership with Ocado) should support Kroger’s revenue outlook and help drive efficiency in 2020 and beyond.

Kroger shareholders are paid a 2.26% dividend. The Merrill Lynch price target is $31. The consensus figure was last seen at $27.95, and the shares closed most recently at $28.33 apiece.

While the coronavirus is certainly a concern, this is hardly the first time this kind of contagion has worried the markets and investors. Severe acute respiratory syndrome (SARS), which was also caused by a coronavirus, appeared in 2002 in China. It spread worldwide within a few months, though it was quickly contained. No known transmission has occurred since 2004.

The bottom line for worried investors is to avoid stocks for a while that have heavy China exposure and focus on companies like these five that do most or all their business right here at home.

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