Seven U.S.-Based Stocks Defying China's Slowdown

Slower economic growth in China has been hard on many U.S. multinational corporations, and a lot of those companies continue to warn that business conditions there remain challenging. But financial results from several major corporations so far this earnings season are painting a much rosier picture of the region. For many U.S. corporations, China is once again a key component of growth.

Apple (AAPL) results presented some of the more reassuring evidence of a Chinese recovery. For the fiscal year reported Monday, Greater China generated more than $27 billion in sales, up 14% from a year earlier. Revenues from there were up 6% in the past quarter, year-over-year, following declines in the previous two quarters. Those sales helped Apple beat overall revenue forecasts with its latest results.

AAPL Revenue (Quarterly) Chart

AAPL Revenue (Quarterly) data by YCharts

Strong Chinese sales are encouraging and should send interested investors looking at available investment research tools.

United Technologies (UTX), maker of elevators and jet engines, reported sales gains in China that far outstripped its overall growth. Overall sales in China were up 11%, which included double-digit gains at its Otis elevator unit.

UTX Revenue (Quarterly) Chart

UTX Revenue (Quarterly) data by YCharts

Carmakers Ford Motor (F) and General Motors (GM) both named China as a bright spot for sales. Ford reported that wholesale volume there was up 51% in the first nine months of the year. General Motors reported that it’s rushing completion of four new plants there to keep up with demand.

F Chart

F data by YCharts

Proctor & Gamble (PG) wasn’t specific on China sales but expects the country to be “a source of growth” the rest of the year. Management at Coca-Cola (KO) declared China’s slowdown over and recovery well underway. It reported 9% volume growth there last quarter. PepsiCo (PEP) reported double-digit organic sales growth in China.

PG Chart

PG data by YCharts

To be sure, China remains a problematic region for some notable companies. At International Business Machines (IBM), sales in China were down 22% overall last quarter; down 40% in its massive hardware business there. That news helped push down its share price after announcing results on Oct. 16, as seen in a stock chart. The company doesn’t expect demand in China to pick up until the first quarter of 2014.

IBM Chart

IBM data by YCharts

Caterpillar (CAT) shares have been hit hard by weakness in mining operations that rely on Chinese buying. Caterpillar reported gaining market share in China last quarter, but doesn’t expect recovery in the business for another one to three years.

CAT Chart

CAT data by YCharts

Also, YUM! Brands (YUM) shareholders continue to feel the pain of slow consumer spending in China, which is reflected in the share price chart above. For YUM, that problem was exacerbated by an avian flu outbreak that hurt business at its tens of thousands of KFC restaurants there.

And Microsoft (MFST) reported revenues across its businesses down in China. Like other tech companies, it describes the business climate there now as “challenging.”

Overall, the signals from China remain too mixed to declare business there back on track. For example, recent reports show that Chinese manufacturing is gaining strength, but also that Chinese banks are writing off big loan defaults and shaking up markets with worries about it. Those positive earnings season reports may be giving us a glimpse of what’s possible when a steady recovery settles in.

Dee Gill, a senior contributing editor at YCharts, is a former foreign correspondent for AP-Dow Jones News in London, where she covered the U.K. equities market and economic indicators. She has written for The New York Times, The Wall Street Journal, The Economist and Time magazine. She can be reached at editor@ycharts.com. Read the RIABiz profile of YCharts. You can also request a demonstration of YCharts Platinum.

Read more articles about: Economic Watch  economy   china   

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