In this article, we discuss the 5 American stocks that can be affected by China’s real estate market crash. If you want to read about some more American stocks that can be affected by China’s real estate market crash, go directly to China’s Real Estate Market Crash Can Affect These 10 American Stocks.
5. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 67
NIKE, Inc. (NYSE:NKE) makes and sells athletic products. The revenues of the company took a major hit in the past few months as a backlash against Western brands in China and shortages of merchandise in the marketplace resulted in macro challenges. The drop illustrated what a crash in the Chinese economy would mean for Nike, which has strong exposure to the Chinese market both in terms of sales and manufacturing. Peers like Adidas and Puma also have exposure to China, but not at the level of Nike.
On July 25, Piper Sandler analyst Abbie Zvejnieks assumed coverage of NIKE, Inc. (NYSE:NKE) stock with a Neutral rating and a price target of $115, noting that the gross margins of the firm have structurally improved.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in NIKE, Inc. (NYSE:NKE), with 6.7 million shares worth more than $905 million.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:
“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still under-indexed to the women’s category, which we see as a significant ongoing catalyst.”
4. QUALCOMM Incorporated (NASDAQ:QCOM)
Number of Hedge Fund Holders: 73
QUALCOMM Incorporated (NASDAQ:QCOM) develops and sells foundational technologies for the wireless industry. The company generates more than 60% of revenue from shipments to China. These shipments are primarily intended for smartphone manufacturers. In light of declining smartphone sales, the revenues of the firm have taken a hit, and it lowered guidance for the fourth quarter recently. A slowdown in the Chinese economy because of a real estate crash would be a major downturn for the shares.
On July 28, Canaccord analyst T. Michael Walkley maintained a Buy rating on QUALCOMM Incorporated (NASDAQ:QCOM) stock and lowered the price target to $225 from $250, noting that the firm could gain strongly from leadership in the 5G space.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in QUALCOMM Incorporated (NASDAQ:QCOM), with 3.5 million shares worth more than $538 million.
3. Micron Technology (NASDAQ:MU)
Number of Hedge Fund Holders: 78
Micron Technology (NASDAQ:MU) makes and sells memory and storage products. The firm is yet another chipmaker that has deep links with the Chinese economy. The firm generates nearly 55% of revenue from sales to Chinese companies. In comparison, revenue from American firms forms only a fraction of this amount. In contrast to Qualcomm, the bulk of Micron contacts in China relate to computer data storage solutions such as USB flash drives and NAND flash memory, in addition to smartphone products.
On August 10, Deutsche Bank analyst Sidney Ho maintained a Buy rating on Micron Technology (NASDAQ:MU) stock and lowered the price target to $68 from $70, noting that the shares of the firm were close to a trough.
At the end of the first quarter of 2022, 78 hedge funds in the database of Insider Monkey held stakes worth $3.4 billion in Micron Technology (NASDAQ:MU), compared to 83 in the preceding quarter worth $5.5 billion.
2. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 80
Tesla, Inc. (NASDAQ:TSLA) markets electric vehicles and clean energy solutions. The firm has manufacturing facilities in China and the country has been one of the main drivers of margins and sales for the company in the past few years. A real estate crash in China would effectively slow down the Chinese economy overall, resulting in problems related to EV sales in China for Tesla. Already, the firm has reported a close to 18% quarterly drop in China revenue due to slowing EV demand.
On August 8, Canaccord analyst George Gianarikas maintained a Buy rating on Tesla, Inc. (NASDAQ:TSLA) stock and increased the price target to $881 from $815, backing the firm to battle price headwinds with EV momentum and competitive lead from manufacturing.
At the end of the first quarter of 2022, 80 hedge funds in the database of Insider Monkey held stakes worth $11 billion in Tesla, Inc. (NASDAQ:TSLA), compared to 91 in the previous quarter worth $12 billion.
Here is what Grantham Mayo Van Otterloo & Co. LLC has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla, Inc. (NASDAQ:TSLA). At its Battery Day last year, Tesla, Inc. (NASDAQ:TSLA) projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is a diversified technology company. Since iPhones, one of the premier products of Apple, are manufactured in China, there is a larger perception that the company has outsized exposure to the Chinese market. However, the China revenue of the firm accounts for less than a quarter of the total revenue for Apple, in contrast to other firms like Qualcomm and Starbucks. This insulates Apple from a market crash in China somewhat but does not absolve it of risk completely.
On July 29, Morgan Stanley analyst Erik Woodring maintained an Overweight rating on Apple Inc. (NASDAQ:AAPL) stock with a price target of $180, noting that the second quarter results of the firm were better than feared.
At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc. (NASDAQ:AAPL), compared to 134 in the preceding quarter worth $186 billion.
In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple Inc. (NASDAQ:AAPL) is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
You can also take a peek at 10 Stocks Reddit’s WallStreetBets is Buying in July 2021 and Top Robinhood Stocks Popular on Reddit.
