This $6 Stock Could Be a Key Contrarian Pick in 2019

This European stock could cash in on trade tensions.
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Remember a time before iPhones? It was likely last period of time where Nokia (NOK) - Get Report was a good stock pick.  

However, that trend has shifted according to Tematica Research CIO Chris Versace.

As the trade war has ramped up over the past year and news that President Trump will not meet with Chinese Premier Xi Jinping hits newswires, many are looking for the stocks that will be hurt by the news.

Versace instead keyed in on Nokia as one stock that might actually be helped as a crackdown on its key competitor in Chinese telecom giant Huawei could open a window of opportunity for Nokia to regain market share in developed markets and seize on the opportunity offered by the shift to 5G.

Related: Here's Why I'm Bullish on Nokia Over the Coming Year

He cited the recent decision by Vodafone (VOD) to halt buying Huawei gear; BT Group, the British telecom giant, to rip out part of Huawei's existing network; and the move by France's Orange mobile operator to not use Huawei equipment in its core 5G network. The momentum builds on the decision by the Australian government to ban the use of equipment from Huawei and ZTE (ZTCOY) in 2018.

Related:Nokia Has Corrected Back to What Should Be Good Support

That could stand to foment should the European Union place restrictions on Huawei more broadly through legislation,

Of course, after the arrest of Huawei CFO Meng Wanzhou in Canada in December 2018, its unlikely Huawei will be much trouble in North America either.

So, for those expecting some drag on the trade war and continued pressure on Huawei for its suspected spying and dubious sales tactics, Nokia could emerge as a solid pick for the first time in a long time.

 To be sure, Nokia generates more than half of its revenue in mainland China, so it does not escape the current trade climate unscathed. However, its more secure status as a European company and the opening of numerous lucrative markets facing westward could eclipse that impact.

Related: Chart of the Day: A Timeline of Nokia's Rise and Fall

In summation, New Street Research analyst Pierre Ferragu estimates Nokia and its Nordic compatriot Ericsson (ERIC) - Get Report  have 2.9 billion potential revenue to lose in China, but $3.5 billion to win in Europe.

Versace added on to that the forecast of continued margin expansion in the market closer to home.

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