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Wynn Tops BofA List of US Stocks with China Exposure

The risk of a war between China and Taiwan threatens U.S. stocks much more than the war in Ukraine, BofA said.
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There is plenty to worry about if you’re investing in China -- from deteriorating relations with the U.S., to supply-chain turmoil, to slowing economic growth.

Bank of America strategists raise another point. “Russia's invasion of Ukraine may have increased the risk of a potential China-Taiwan conflict,” they wrote in a commentary.

“China-Taiwan poses a much bigger threat to the S&P 500 and global economy, given Taiwan's role in supplying over 90% of the world's advanced semiconductors.”

So BofA formed a list of the S&P 500 companies with the highest sales exposure to China as of 2020.

Here are the top 10 on the list.

1. Wynn Resorts  (WYNN) - Get Wynn Resorts Limited Report, a casino company. Revenue exposure to China: 70%.

2. Las Vegas Sands  (LVS) - Get Las Vegas Sands Corp. Report, a casino company. Revenue exposure to China: 63%.

3. Qualcomm  (QCOM) - Get QUALCOMM Incorporated Report, a semiconductor company. Revenue exposure to China: 60%.

4. Texas Instruments  (TXN) - Get Texas Instruments Incorporated Report, a semiconductor company. Revenue exposure to China: 55%.

5. IPG Photonics  (IPGP) - Get IPG Photonics Corporation Report, a laser maker. Revenue exposure to China: 42%.

6. Western Digital  (WDC) - Get Western Digital Corporation Report, a data storage company. Revenue exposure to China: 40%.

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7. NXP Semiconductors  (NXPI) - Get NXP Semiconductors N.V. Report. Revenue exposure to China: 39%.

8. Qorvo  (QRVO) - Get Qorvo Inc. Report, a semiconductor company. Revenue exposure to China: 34%.

9. Broadcom  (AVGO) - Get Broadcom Inc. Report, a semiconductor company. Revenue exposure to China: 33%.

10. Corning  (GLW) - Get Corning Incorporated Report, a ceramics company. Revenue exposure to China: 33%.

Morningstar’s Take on Wynn Resorts

Morningstar analyst Dan Wasiolek assigns the company a narrow moat and puts fair value for the stock at $104. It recently traded at $59.51.

“The Macao government continues to heavily regulate VIP play, elevating long-term operational risk,” he wrote in a commentary.

“Wynn has outsize exposure to the expected long-term shift away from VIP gaming revenue toward non-gaming and mass play. Still, we see an attractive long-term growth opportunity in Macao, with Wynn's high-end iconic brand positioned to participate.”

Morningstar’s Take on Las Vegas Sands

Wasiolek gives this company a narrow moat too and puts fair value for the stock at $50. It recently traded at $34.51.

“Although the pandemic and government regulation continue to materially affect near-term demand in Macao (66% of estimated 2024 EBITDA), we still think Las Vegas Sands and the gaming enclave are well positioned for long-term growth,” he wrote in a commentary.

Morningstar’s Take on Qualcomm

Morningstar analyst Abhinav Davuluri assigns the company a narrow moat and puts fair value for the stock at $163. It recently traded at $131.60.

“We expect Qualcomm’s licensing business, the driver of the firm’s narrow moat rating, to continue generating solid cash flows, due to the ongoing ramp of 5G,” he wrote in a commentary.

“However, government investigations into the business model have increased the possibility of negative effects on royalty revenue.”