Investing Club: Here's how much each company in our portfolio is exposed to China

3 yıl önce

There's a debate on Wall Street right now that centers around whether the earnings and supply chain problems from Covid-related lockdowns in China, which began in Shanghai in late March, are priced into stocks. On one hand, a semiconductor analyst at Piper Sandler believes that most stocks in the group are already pricing in a "healthy" cut to earnings based on historical average valuations. Semiconductor companies are some of the names that are most at risk from the lockdowns due to sales and supply chain issues. To the analyst's credit, a handful of chip stocks like Advanced Micro Devices (AMD) have started to act much better despite the declines in the market this week. But the counter to the priced-in argument is Dow stock Cisco Systems (CSCO), which is seeing its stock pull back about 14% on Thursday afternoon after the computer networking hardware and software maker issued guidance well below expectations , mainly because it could not get the components it needed out of China to ship its products. Clearly, the full impact of the lockdowns were not priced into Cisco. China exposure among our holdings To help Investing Club members better understand how the events in China impact the companies in our portfolio, we are providing a breakdown of the revenue exposure to China and the potential supply chain ramifications of every name we own. All revenue percentages are based on FactSet data over the last 12 month. We've ranked the holdings from most exposed to least. Apple (AAPL) Revenue from China : 17.5% Supply chain impact due to China : The tech giant manufacturers in China. In total, management has quantified a $4 billion to $8 billion headwind in the current quarter due to supply constraints and disruption. We believe it's prudent to assume that the impact will be closer to the high end of that range. AbbVie (ABBV) Revenue from China : 1.5% Supply chain impact due to China : The drugmaker does not have any exposure. Advanced Micro Devices (AMD) Revenue from China : 24.3% Supply chain impact due to China : We think there are some risks here but on the first quarter earnings call May 3, CEO Lisa Su said that lockdowns have not had any significant impact on the chip designer's shipments in its own supply chain. Amazon (AMZN) Revenue from China : 3.8% Supply chain impact due to China : The e-commerce and cloud giant has exposure on its retail side of the business. Bausch Health (BHC) Revenue from China : 5.7% Supply chain impact due to China : There's not much impact for the health-care company. Costco (COST) Revenue from China : 6.5% Supply chain impact due to China : There should be some impact as Costco needs to get merchandise out of China, but we think Costco has the ability to weather the storm better than peers. Last quarter management discussed how it has chartered seven ocean vessels to help with shipping. Salesforce (CRM) Revenue from China : 5.4% Supply chain impact due to China : The customer relationship management systems company does not have exposure. Cisco Systems (CSCO) Revenue from China : 3.2% Supply chain impact due to China : There are significant issues as we learned Wednesday night. Coterra Energy (CTRA) Revenue from China : 0% Supply chain impact due to China : The oil and natural gas company has no exposure. Chevron (CVX) Revenue from China : 27.5% (This number looks high to us but the energy giant does have operations in the country through several subsidiaries.) Supply chain impact due to China : We don't see much of an issue here. Danaher (DHR) Revenue from China : 13.2% (The medical diagnostics and life sciences company has said it expects a 200- to 300-basis-point headwind to growth in its second quarter, but management believes their business with recover in the second half of the year. That explains why they maintained their full-year guide last month.) Supply chain impact due to China : The company's issue in China is more related to customer accessibility in hospitals and labs. Disney (DIS) Revenue from China : 4.8% Supply chain impact due to China : This isn't so much a supply chain issue. It's more about the reopening of Shanghai Disney and movie theaters. Devon Energy (DVN) Revenue from China : 0% Supply chain impact due to China : No impact. Ford (F) Revenue from China : 4.6% Supply chain impact due to China : Ford's principal concern is getting the semiconductor chips it needs to put into new cars, so there could be some impact from the lockdowns. Meta Platforms (FB) Revenue from China : 2.6% Supply chain impact due to China : Not a concern. Alphabet (GOOGL) Revenue from China : 3.8% Supply chain impact due to China : Not a concern. Halliburton (HAL) Revenue from China : 1.6% Supply chain impact due to China : Not a concern. Honeywell (HON) Revenue from China : 4.2% Supply chain impact due to China : There are some supply chain challenges in China that the company is working through. The company's second quarter sales outlook assumed the lockdowns in China alleviate in May. Humana (HUM) Revenue from China : 0% Supply chain impact due to China : None Johnson & Johnson (JNJ) Revenue from China : 3.1% Supply chain impact due to China : We think minimal. Eli Lilly (LLY) Revenue from China : 5.7% Supply chain impact due to China : We think minimal. Linde (LIN) Revenue from China : 10.9% Supply chain impact due to China : Not so much of an issue because part of the business is done on-site. Marvell Technology (MRVL) Revenue from China : 43.1%..this is something to watch but most of Marvell's sales are to non-consumer customers and the Chinese consumer is more on an issue. Supply chain impact due to China : Something to monitor but Marvell has done a great job managing its supply chain. Morgan Stanley (MS) Revenue from China : 2.6% Supply chain impact due to China : None Microsoft (MSFT) Revenue from China : 11.7% Supply chain impact due to China : Yes, a small impact here due to PC sales. Nvidia (NVDA) Revenue from China : 25.8%. This is a high figure but we already took drastic action to cut our exposure in April when the stock traded at about $220. We don't like trading around core positions like Nvidia, so we do not plan to sell any more shares. Supply chain impact due to China : Something to monitor. Procter & Gamble (PG) Revenue from China : 13%, China is the company's second largest market. Supply chain impact due to China : The company had two plants that were shut down for weeks because of the lockdowns, but as of May 17 th both plants were back in operation. PayPal (PYPL) Revenue from China : 8.9% Supply chain impact due to China : not an issue Pioneer Natural Resources (PXD) Revenue from China : 0% Supply chain impact due to China : None Qualcomm (QCOM) Revenue from China : 65.5%--the company was in the cross-hairs of the lockdowns due to smartphone sales (China is 20% of the global market), but we can make a case that a lot of this risk is priced in with the stock trading at 10x earnings. Supply chain impact due to China : something to monitor Constellation Brands (STZ) Revenue from China : 0% Supply chain impact due to China : None Wells Fargo (WFC) Revenue from China : 0% Supply chain impact due to China : none Walmart (WMT) Revenue: 2.4% Supply chain impact due to China : The issue here is Walmart's ability to get merchandise from overseas. Wynn Resorts (WYNN) Revenue from China : 40.1% but that number has come down due to past restrictions on travel to Macau. In 2019, Macau represented approximately 70% of total company revenue. Supply chain impact due to China : Not an issue. Wynn just Macao to fully reopen. (See here a full list of the stocks in Jim Cramer's Charitable Trust, whose holdings are the basis for the Investing Club's portfolio.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Shanghai and Beijing have retained, if not tightened, many Covid-related restrictions on business and travel. In this picture, workers disinfect a residential community on May 11, 2022, in Beijing, China.

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