Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Starbucks Corporation (SBUX), Las Vegas Sands Corp. (LVS), Yum! Brands, Inc. (YUM): Stocks to Watch on a Chinese Slowdown

Late last week a preliminary survey of Chinese factories showed that manufacturing activity shrank for the first time in seven months after both new domestic and export orders fell. Fears of an accelerated slowdown once again shook the markets as a slew of banks, including Bank of America, BNP Parabas, Credit Suisse, and ING, revised growth estimates to just above 7.5%. The slowdown is being driven by severely diminished wage growth, slowing global demand, and the Chinese government starting to tighten its wasteful spending policies. All eyes are on the government’s growth target of 7.5% for this year, as growth hasn’t fallen below this level in over two decades. In this brief article, I will highlight a few names vulnerable to an accelerated slowdown.

Starbucks CorporationLike the coffee, Starbucks Corporation (NASDAQ:SBUX) has taken a bold approach to its Chinese expansion. The company has aggressively grown its store base to meet the rising caffeine demand in the region. By 2015, it is expected that there will be over 1,500 Starbucks Corporation (NASDAQ:SBUX) locations in 70 different cities, making China the second largest market for the company. Should we continue to see weak economic data, price to earnings multiple contraction would be likely in the short term. The company has done a good job diversifying its growth in Asia by recently focusing greater attention on its Thailand and Vietnam markets. The company recently opened its flagship store in Ho Chi Minh City, which was received with huge demand. As a result the company is looking to establish a strong presence in the country’s metropolitan areas.

Las Vegas Sands Corp. (NYSE:LVS) owns and operates an array of luxury casinos in the heart of the Macau district of China. Up to this point, the gambling numbers out of Macau have remained stable, but going forward all eyes will be watching for hints of a meaningful slow down. The company does draw a chunk of its revenues from the country’s VIP patrons, but the mass market does remain a key component for sustained growth. However, positive revenues have started coming out of the company’s Las Vegas properties in tandem with the economic recovery here at home. This unexpected growth and following profits may cushion the impact of slowing growth out of China.

In 2012, Yum! Brands, Inc. (NYSE:YUM) saw 42% of its profits come from its Yum! Brands, Inc. (NYSE:YUM) China operations. In recent years the company has drastically expanded its operations to meet the demand for its KFC and Pizza Hut products. Should we see wage growth falter further, fears of a revenue slowdown from this region should surface. With a relatively high price tag, consumers will turn to cheaper alternatives. Chinese consumers have already cut back as a result of safety scares earlier this year, so it will be interesting to see if the cutback is exasperated as a result of the slowdown.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.