3 Big Brand Stocks To Lean On During Tariff Troubles

After a week of massive market losses tied to Team Trump's polarizing tariff policy, U.S. consumers are understandably worried.

As of April 10, the S&P 500 Index was down 2.20% over the past five trading days, including a big pop of over 1,400 points on April 9 and a 9.52% gain for SPX—the index’s 10th biggest day ever. 

That hasn't pacified investors or consumers, even as other economic markers are trending positive. Exhibit "A" is inflation, with the US consumer price index falling by 0.1% in March, the lowest monthly rating since the COVID-19 pandemic.

Yet the widely-used University of Michigan consumer sentiment February survey showed consumer confidence falling to a 29-month low, a signal that US households are struggling right now.

However, some U.S. consumer sectors have proved immune to the worst of tariff hikes.

These three US consumer brands, in particular, are well-positioned to prosper during these trade wars.

Looking For Stabilizing Consumer Stocks

"The March inflation number was nice, but don't get used to it," said Greg McBride, chief financial analyst at Bankrate. "The headline Consumer Price Index for March decreased – aided by lower gasoline prices – and the annual increase in the core rate posted a 4-year low of 2.8 percent, which shows how tough it has been for household budgets during that time. But consumers, businesses, and even the Federal Reserve are bracing for higher prices in the months ahead."

With everything from Buicks to Barbie Dolls rising in price during the trade wars, and even with President Trump's April 9 call to pause the tariff hikes, consumers are scrambling for cover and spending less on goods. That's bad news for consumer stocks, as the S&P 500 Consumer Staples index is only up 2.21% for the year to date and down 3.27 % over the past five days.

“New loan and bond issuance has come to a halt (as have M&A and IPOs), as nobody wants to go to market right now given all the uncertainty," said John Bringardner, executive editor at Debtwire. "Air freight companies, airlines, retailers importing goods from China, and Indian pharmaceutical companies are among those we’ve written recently that are trading down following the latest tariff activity."

The tariff hikes haven’t affected some US consumer sectors much, though.

"Retailers, warehouses, and consumer staples companies are good examples of some sectors that are actually holding up fine, despite the issues," said Fabio Ruggeri, founder & CEO of MenthorQ, a TradeTech company that specializes in developing advanced quantitative models for active investors. "They sell essential items and are less exposed to tariff-driven price swings. That makes them more resilient in these kinds of markets."

It’s all about geography right now when tracking consumer stocks.

"While global consumer brands are navigating these increased costs, U.S.-focused sectors that have already localized their sourcing are feeling less pain and, in some cases, gaining ground as competitors are still trying to figure out what to do next," Ruggeri said.

Three Stocks to Stabilize A Portfolio

In particular, these three consumer brands seem well-positioned during the trade wars.

TJX Companies TJX, a major retailer, is a "safe place" for investors in turbulent economic cycles. "TJX Companies is built for this kind of environment," said  Joseph Camberato, CEO at the private lending firm National Business Capital. "They source goods from other retailers typically inside the U.S., so they don't have to pay tariffs. And when prices rise everywhere else, more shoppers start hunting for deals. Stores like these tend to do very well in these times.”

TJX shares are up 5.51% for the year.

Or consider Coca-Cola KO. Even if Trump is on the money and tariff deals with over 50 nations can be negotiated, that process will still take a while and may lead to supply chain disruptions, a weaker dollar and potentially big layoffs, especially at China-exposed companies.

Consumer staples can carry investors through periods of massive volatility, and there are few larger consumer companies than Coca-Cola and its $304 billion market cap. The stock has been up over 13% year to date and up 1.5% over the past trading week when many stocks lost significant ground. In a recent research note, Morgan Stanley issued an overweight call on KO, citing Coke "as increasingly in a league of their own."

Coca-Cola's big advantage over consumer goods giants like PepsiCo is that it doesn't produce snack foods and thus doesn't have to worry as much over supply chain woes or consumer demand. In turbulent times, when it pays to be lean and mean, having a Coke and a smile is a tempting proposition for stranded investors, especially with KO's robust 2.88% dividend yield.

Finally, Monster Beverage MNST is on a tear right now, with the share price up 15.6% over the past three months and up 4.9% over the past month.

The company recently reacted swiftly to an allegation from a short-selling firm of trading improprieties. Monster issued a letter aggressively denying the charges, saying the document was "released by a self-interested activist short seller is filled with and based on inaccuracies and aspersions that appear to be designed to distort the Company's record and share price for its own gain." The response seemed to calm shareholder anxieties and signaled that the company management would quickly tamp down any potential negative news.

Analysts are bullish on the stock, with Citi's Filipo Falorni reaffirming a buy rating on MNST with a one-year price target of $64.00 (the stock is currently trading at $57 per share.

Morgan Stanley followed suit, with an overweight call on the stock, "driven by a resurgence in US sales behind rebounding category growth (gas/convenience recovery), the positive impact of price increases, sequential MNST US market share improvement with building innovation, and easier comparisons," the firm noted in a recent research note.

Be Prepared

Choosing any stock in harsh market climates is a tall task, and that's where reasonable due diligence can save the day.

“If you're eyeing consumer stocks, do your homework," Camberato advised. "Figure out where the company sources its products. If the company is sourcing from China, that's a red flag. Even if the company is big enough to dictate terms, it’s most likely still going to have a tough time."

High-yield bonds are a decent place to park money if you’re more conservative. "Just don't assume cash is safe," Camberato added. "Cash is more dangerous than anything due to inflation. Volatility spooks people, but knee-jerk reactions kill long-term gains.”

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