Wall Street hunts for cheap tariff-proof stocks after the carnage

Yahoo

04-04-2025

It takes ice water running through your veins to pick stocks to buy at the moment.
But that is where we find a few brave souls on Wall Street following the "Liberation Day" massacre taking place in markets.
By the close of trading on Thursday, the damage was apparent as investors adjusted for possibly sharply lower economic and corporate earnings growth at the hands of bruising Trump tariffs. The S&P 500 (^GSPC) closed Thursday down 4.8%, the Dow Jones Industrial Average (^DJI) dropped 4%, and the Nasdaq Composite (^IXIC) shed 6%.
Stocks of companies that are global in nature cratered.
Nike (NKE) plunged 14%, while Apple (AAPL) and Amazon (AMZN) sank 9%, and Walmart (WMT) fell 3%.
Markets braced for another day of heavy selling on Friday. At the time of this writing, Dow Jones Industrial Average futures were sinking 1,200 points.
Read more about the global market sell-off and today's market action.
Yahoo Finance scoured the Wall Street community's avalanche of research notes from the past 48 hours to see if anyone dared say something bullish about a stock right now. Although bullishness was hard to find, there were a few daredevils on the Street calling out top picks.
The reasons for these top picks ranged from relatively tariff-proof business models to a view the stock had become too cheap, even assuming worst-case scenarios for the global economy.
The fact we didn't find more top picks should be telling.
Pick: Genuine Parts Company (GPC)
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"Auto parts stand out at the top of the list as being relatively well positioned to pass through higher input costs brought about from tariffs," Melich wrote in a note on Friday. Melich upgraded his rating on auto parts play Genuine Parts Company to Outperform from In-Line.
Explained Melich, "We view GPC as one of the better insulated companies in our coverage from a tariff perspective, with the ability to pass through rising prices in both its auto and industrial segments, there is even a possibility that earnings may move higher from tariffs. While we are currently below the Street, with the stock trading at about 14x depressed 2026 EPS and end markets largely depressed, we believe that much of the risk associated with a choppy low-income consumer and tariffs is baked in."
Picks: Microsoft (MSFT), Salesforce (CRM), Intuit (INTU), Workday (WDAY), Adobe (ADBE)
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Materne hedges his picks a bit, acknowledging the broader market backdrop is rife with risk.
"Let's be clear — there is no precedent for what's going on in the markets/economy today, but the last time the macro created a cascade of negative revenue estimate revisions in software was in 2022. And unless things change on the policy front, top line estimates are likely at risk and this pullback is clearly more serious than some of the 'garden variety' hits to software in 2023 and 2024," Materne said.
He added, "While there are no 'safe havens' in this kind of tape and the entire sector is likely to get de-rated as long as demand is in question, we believe companies that are already back to their 2022 trough multiple on enterprise value/free cash flow or price-to-earnings are probably a bit safer (on a relative basis). That would include: Microsoft, Salesforce, Intuit, Workday, and Adobe."
Read more: How to protect your money during economic turmoil, stock market volatility
Pick: O'Reilly Automotive (ORLY)
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Shemesh joins Evercore ISI's Melich in using the pullback in an auto parts seller to issue an upgrade on the stock.
The drivers of Shemesh's upgrade jibe with Melich's.
"We estimate that about 50% of O'Reilly's cost of goods sold is sourced internationally, which is likely to result in incremental cost of about 9%. That being said, we estimate that about 85% of ORLY products fall in the required maintenance/parts bucket, which provides the company pricing power. We note that ORLY is lapping over a reinvestment year and should benefit from new car inflation keeping consumers in current vehicles longer," Shemesh explained.
"Our $1,503 price target is based on 30x (~29x prior) our 2026 EPS estimate of $50.11 (about 1% ahead of consensus estimates for $50.11). Our implied multiple represents peak multiple for the name, which we think is justified given relative attractiveness. While our revised price target represents limited absolute upside, the name should be a relative out-performer," he added.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email [e-mail].