These stocks could surge the most if and when US and China reach a trade deal

Fears of a full-on trade war with China have been on top of investors mind for months. The volatile stock market suffered its worst year since the financial crisis in 2018 with the S&P 500 tanking a whopping 14 percent in the fourth quarter. U.S. companies have also sounded alarms on the trade war’s impact on their business.

“Any deal would likely see a relief rally as we believe markets have meaningfully priced in risks of trade tensions escalating,” said Ben Laidler, HSBC’s global equity strategist in a note on Tuesday. He also pointed out that tariff-sensitive stocks have underperformed significantly and their valuations are getting cheap.

To find the best names to buy on a trade-deal pop, HSBC ran a screen looking for stocks with three main attributes:

  • Listed U.S. stocks with revenue exposure to China of more than 20 percent.
  • Underperformance during this three-month market pullback on trade deal concerns.
  • Cheap valuation on a forward price-earnings basis.

The names that came up were focused in tech including Skyworks Solutions, Broadcom, Micron Technology and Marvell Technology Group.