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'Own stocks that have nothing to do with China,' says Karen Firestone

Key Points
  • Everyone is wondering whether the U.S. and China make progress on a trade deal at the G-20 this weekend — a development that could have huge ramifications for the market.
  • In terms of investing, Karen Firestone of Aureus Asset Management recommends, "We don't have to bet [if] there's a deal or no deal because there are other places to go."
  • Firestone suggests a blend of growth stocks and stocks that have little or no exposure to China
Buy stocks that have nothing to do with China, says Karen Firestone

All eyes are on Osaka, Japan for the G-20 summit, where the meeting between Presidents Donald Trump and Xi Jinping could lead to progress on a U.S.-China trade deal. Such a deal would likely have huge ramifications for the markets, which have already been moving in anticipation of the meeting on Saturday.

But Karen Firestone of Aureus Asset Management recommends that you shouldn't spend too much time trying to figure out whether a deal does emerge from the weekend. On Thursday's "Halftime Report," she said, "We don't have to bet [if] there's a deal or no deal because there are other places to go."

Firestone's strategy is to "play it both ways." Instead of going all in one way or another, "you can both own some of the growth stocks — some of the names like Facebook, Amazon, Paypal, Visa — that have worked. But you can also own stocks that have nothing to do with China."

Waste Connections, Sherwin-Williams, and Zoetis are among Firestone's top stock picks in that second group. These picks make up an odd trio of companies in waste management, home construction, and animal health — but the strategy connecting them is: "You can own all sorts of names that are not related to the China deal that are still growing earnings 10 percent."

Sherwin-Williams is up 8.5 percent week-to-date and remains on pace for its best week since November 2018. Waste Connections and Zoetis recently reached all-time highs.

Why traders are still staying away from Micron, despite the recent surge

Investing in stocks unconnected to China is a theme Firestone carried over from Wednesday's "Halftime Report," when she cautioned against getting too deeply invested in the semiconductors. The sector recently surged on Micron's strong earnings report but may remain volatile because a large portion of its revenue is tied to Chinese companies like Huawei. That's why Firestone said Wednesday, "There are many other places to go in the market without the risk of whether you really get the trade resolution that you need for the chips to really work."

So, while a lot hinges on the meeting between the leaders of the world's two biggest economies, a diversified portfolio is a good investment strategy. Firestone says, "If the question is, do we have to make an all-in bet — do we have to bet one way or the other — the answer is no."

Disclosure: Karen Firestone owns shares of Facebook, Amazon, PayPal, Visa, Sherwin-Williams, Waste Connections, and Zoetis.