Trade War With China? Here's a List of Companies That Stand to Lose

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A controversial new piece of legislation is gaining ground in the U.S. Senate and House of Representatives that aims to pressure China into raising the value of their currency. Despite bi-partisan support the bill's momentum may have faltered after it was met with objection from Republican Speaker of the House John Boehner on Tuesday morning.

Similar legislation to curtail China's currency undervaluation and competitive edge in the global market has floundered in the past. But given the U.S.'s 9% unemployment rate and heightened attention to China's competitive stance, this bill has more momentum behind it than the previous attempts.

Last year's bill received 99 Republican votes, a stark contrast to the new bill which has received more than 200 House co-sponsors this week. It is expected to quickly reach 218, the number needed to pass, reports CNBC.

This particular bill calls for U.S. tariffs on imports from countries with undervalued currencies, a deliberate nod toward China. Those in favor of the bill argue it will help level the playing field and bring jobs back to America. Critics of the legislation argue that the consequences, if not pure retaliation, from China could be highly detrimental to U.S. exports and jobs. "If enacted, would risk a trade war with China -- one of the fastest-growing markets for U.S. goods -- at a time when a sputtering global economy can least afford it."

On Tuesday morning Representative Boehner threw in his two cents: "While I've got concerns about how the Chinese have dealt with their currency, I'm not sure this is the way to fix it," he told reporters. According to Reuters, it's worth reminding "house speakers normally get their way on legislation."

China, which has an export-based economy and strong interest in keeping their currency as low and competitive as possible, has not been idle in the debate. "China's central bank and the ministries of commerce and foreign affairs accused Washington of "politicizing" currency issues and putting the global economy at risk of a trade war ... China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005." (via Reuters)

If passed, President Obama must decide whether to sign the bill into law. The Obama administration is already in discussion over what the best action is, what their potential consequences may be, and whether the bill violates any international obligations. There has been no news from the Obama administration indicating a stance on the bill.

Should the bill be placed into law, China's economy would very likely suffer from a decrease in exports as the United States shifts suppliers. So we were wondering, which companies have a significant exposure to China and the possible currency war?

To help you analyze, here is a list of U.S. companies with significant exposure to China. Use it as a starting-off point for your own analysis. (Click here to access free, interactive tools to analyze these ideas.)

1. QUALCOMM (NAS: QCOM) : Communication Equipment Industry. Market cap of $83.03B. Price as of 10/4 at $49.43. Engages in the development, design, manufacture, and marketing of digital wireless telecommunications products and services. The stock has gained 13.42% over the last year. It generated approximately 25% of its revenues in China.

2. Yum! Brands (NYS: YUM) : Restaurants Industry. Market cap of $22.96B. Price as of 10/4 at $49.44. Operates as a quick service restaurant company in the United States and internationally. It's been a rough couple of days for the stock, losing 7.35% over the last week. It generated approximately 37% of its revenues in China

3. Broadcom (NAS: BRCM) : Semiconductor Integrated Circuits Industry. Market cap of $17.82B. Price as of 10/4 at $33.31. Designs and develops semiconductors for wired and wireless communications. The stock has lost 6.51% over the last year. It generated approximately 32% of its revenues in China.

4. Wynn Resorts (NAS: WYNN) : Resorts & Casinos Industry. Market cap of $14.84B. Price as of 10/4 at $118.75. Engages in the development, ownership, and operation of destination casino resorts. This is a risky stock that is significantly more volatile than the overall market (beta = 2.52). The stock is currently stuck in a downtrend, trading -16.82% below its SMA20, -17.83% below its SMA50, and -11.63% below its SMA200. It's been a rough couple of days for the stock, losing 15.19% over the last week. It generated approximately 69% of its revenues in China

5. Applied Materials (NAS: AMAT) : Semiconductor Equipment & Materials Industry. Market cap of $13.53B. Price as of 10/4 at $10.27. Provides manufacturing equipment, services, and software to the semiconductor, flat panel display, solar photovoltaic (PV), and related industries worldwide. Might be undervalued at current levels, with a PEG ratio at 0.73, and P/FCF ratio at 7.97. The stock is currently stuck in a downtrend, trading -5.12% below its SMA20, -8.83% below its SMA50, and -24.35% below its SMA200. The stock has lost 11.39% over the last year. It generated approximately 26% of its revenues in China.

6. Analog Devices (NYS: ADI) : Semiconductor Industry. Market cap of $9.67B. Price as of 10/4 at $32.31. Engages in the design, manufacture, and marketing of analog, mixed-signal, and digital signal processing integrated circuits used in industrial, communication, computer, and consumer applications. The stock has gained 3.56% over the last year. It generated approximately 20% of its revenues in China.

7. NVIDIA (NAS: NVDA) : Semiconductor Industry. Market cap of $7.79B. Price as of 10/4 at $12.9. Provides visual computing, high performance computing, and mobile computing solutions that generate interactive graphics on various devices ranging from tablets and smart phones to notebooks and workstations. It's been a rough couple of days for the stock, losing 6.79% over the last week. It generated approximately 30% of its revenues in China.

8. Jabil Circuit (NYS: JBL) : Printed Circuit Boards Industry. Market cap of $3.94B. Price as of 10/4 at $18.03. Provides electronic manufacturing services and solutions in the Americas, Europe, and Asia. This is a risky stock that is significantly more volatile than the overall market (beta = 2.05). Might be undervalued at current levels, with a PEG ratio at 0.83, and P/FCF ratio at 12.77. The stock has had a good month, gaining 10.14%. It generated approximately 20% of its revenues in China.

9. Teradyne (NYS: TER) : Semiconductor Equipment & Materials Industry. Market cap of $2.06B. Price as of 10/4 at $11.09. Provides automatic test equipment products and services worldwide. The stock is currently stuck in a downtrend, trading -5.43% below its SMA20, -7.67% below its SMA50, and -25.93% below its SMA200. It's been a rough couple of days for the stock, losing 5.62% over the last week. It generated approximately 8% of its revenues in China.

10. Novellus Systems (NAS: NVLS) : Semiconductor Equipment & Materials Industry. Market cap of $1.90B. Price as of 10/4 at $27.32. Develops, manufactures, sells, and supports equipment used in the fabrication of integrated circuits. Might be undervalued at current levels, with a PEG ratio at 0.67, and P/FCF ratio at 5.84. It's been a rough couple of days for the stock, losing 6.63% over the last week. It generated approximately 40% of its revenues in China.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.


Kapitall's Eben Esterhuizen does not own any of the shares mentioned above.Data sourced from Finviz and TheStreet.

At the time this article was published The Motley Fool owns shares of QUALCOMM, Yum! Brands, and Applied Materials. Motley Fool newsletter services have recommended buying shares of Yum! Brands and NVIDIA. Motley Fool newsletter services have recommended writing puts in NVIDIA. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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