I read this about what to buy if you think China is going to have a hard landing this year:
"China is either the first, second or third largest consumer of virtually ALL commodities. It is no exaggeration to say that a big reason why everything has gone up in price over the last decade is because of Chinese demand.
Any slowdown in that demand will have a material, downward impact on wholesale prices. As wholesale prices go down, profit margins go up. It’s a simple thesis: China stumbles, commodity prices drop, profit margins at commodity dependent companies rise.
But what if this thesis doesn’t play out? What then?
This is why the three stocks I’m about to share with you are all blue chip dividend-paying companies. If nothing too bad happens to China, then your risk is boredom. But if we see a hard landing there, these stocks will outperform.
The first stock is the cereal giant General Mills (Symbol: GIS). Earlier this year, management said they were looking for their input costs to rise a whopping 10%! A big drop in agricultural commodity prices could boost this stock from its current price of $39 to the mid $40’s, and while you wait you’ll receive a 3.12% dividend.
The next stock is the bleach and trash bag (Glad) maker Clorox (Symbol:CLX). The stock is at $68.38 and pays a 3.51% dividend. Input costs have taken a heavy toll on Clorox customers as the company has been forced to raise prices by as much as 12%. Any break in chemical and resin costs would flow right to the bottom line and take this one to the $80’s.
The last of the bunch is the global tissue and feminine product giant, Kimberly-Clark (Symbol: KMB). Kimberly-Clark pays a 4% dividend and trades at $73.58. The company is very exposed to commodity prices, and any drop will boost the bottom line, potentially taking this one into the $80’s as well.
On the face of it, these are boring names that haven’t done a whole lot. But remember, you could have said the exact same thing in the late 1990’s about oil as it languished at $10 a barrel... and about gold, which had been stuck between $250 - $350 for decades.
If China is to be the loser this year, then these stocks will be winners. Remember: Always look for which parts of the market will benefit as another part of the market suffers, because it will always be there staring you right in the face."
