No matter what you may think of Trump, or his difficult to follow political calculations, there is one thing I’m confident of. This is that he, like all politicians, are always looking to maximize their own political survival. The current global/US economic climate, in addition to the stock market’s recent correction (largely driven by trade war fears), is creating ever large pressure to cut a deal soon. No, a final resolution won’t be announced at the G20, but a handshake deal to prevent the worst effects of the trade war could. And even if such an agreement can’t be reached, simple economic realities mean that in early to mid-2019 at the latest, both the US and China are likely to be forced to end the tariff war. If only because not doing so would threaten the political futures of both Xi and Trump.

So, how can you profit from the potential end of the trade war in the coming weeks or months? By buying Apple and A.O Smith, two undervalued blue-chips poised to soar when such a deal is announced.

2 Great Undervalued Dividend Growth Stocks You’ll Want To Buy Before The Trade War Ends

Apple (AAPL)

Yield: 1.6%

Estimated Fair Value: $200

Discount To Fair Value: 10%

10 Year Analyst EPS/Dividend Growth Consensus: 13.1%

10 Year CAGR Total Return Potential: 15% to 16%

Apple’s plunge into a bear market actually had nothing to do with the trade war at all. That’s because while iPhones are assembled in China, thus far Tim Cook was able to negotiate a complete lack of tariffs on the US side. Similarly, China has not imposed retaliatory tariffs on iPhones, which is why Apple’s sales in that country continue to grow at double-digits.

So what makes Apple a potentially great trade sensitive coiled spring ahead of a potential trade deal? The fact that on November 26th President Trump specifically singled out Apple as an example of the kind of 10% to 25% tariffs that might be put in place in the coming months. That would mean that iPhones, whose average selling price is already at an all-time high, would become 10% to 25% more expensive for US consumers. Or alternatively, the company could just eat the tax and see its margins take a big hit. Bernstein’s Toni Sacconaghi estimates that 25% of Apple total revenues could be subject to the threatened tariffs, which could potentially result in a $1.5 billion to $3.8 billion hit to Apple’s profits. That equates to a 2% to 6% hit to the bottom line which would be significant given that next year analysts are expecting about 10% earnings growth from the company.

Worse is that if China did finally retaliate with tariffs on its own against Apple then the disruption to its supply chain might be even more damaging than the tariffs because they would affect products sold all over the world.

Here’s what it means for Apple…

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