Dj Netflix Inc, Inst Holders, 3Q 2024 (Nflx)

Predicting the actions of an incoming administration is always tricky, and that's doubly true for someone with a penchant for saber rattling like Donald Trump. While Trump seems committed to another round of tariffs (especially aimed at Chinese imports), the actual size and scope of these moves remains to be seen.

Many business leaders and executives are preparing for new tariffs by readying consumers for increased costs, and the retail sector could be hit hard if the most protective policies come to fruition.

However, not every company stands to suffer from tariff expansion. Some industries, like domestic shippers and specialty retailers, saw a boost in the wake of the election results.

Here are five stocks that stand to benefit from American tariffs on foreign imports.

Methodology

To find stocks that will benefit from tariffs, we need to look for firms with reliable production alternatives outside China and the ability to pass on extra costs to consumers.

If a company’s main competitors have high import costs or lack that kind of pricing power, even better.

Let’s go through the list:

AutoZone Inc.

DIY auto store stocks have soared in the post-pandemic era, and the two clear winners have been AutoZone and Oreilly Automotive Inc. . Both companies have had little issue raising prices during previous tariff implementations, and investors have no reason to assume they won't do the same in the face of the next round.

AutoZone is uniquely positioned to benefit from a higher tariff environment. Even when the first round of tariffs was administered during Trump's initial term, AutoZone still managed to improve its profit margins despite higher costs. Additionally, DIY auto parts stores often hold significant pricing power over consumers since fixing a car is usually a non-negotiable part of life in America (especially in the suburbs). CEO Philip Daniele recently stated that the company intends to pass any tariff increases back onto consumers, which could prompt a flurry of car repair activity before the calendar flips to 2025.

We selected AutoZone over O'Reilly Automotive due to a combination of valuation and analyst ratings. Some of the fundamental valuation factors compared include:

Based on most fundamental metrics, AutoZone is the cheaper stock to own, and analysts seem to agree. Based on reports from 25 different analysts, AZO shares are a consensus Buy, while ORLY is a consensus Hold. AZO’s three most recent price targets indicate more than 12% upside potential, while recent price targets on ORLY shares indicate only a 4% upside.

[OUR BLACK FRIDAY SALE: Copy Trades That Hit Big Gains – Save $1000]

e.l.f. Beauty Inc.

Another company that has previously had success managing trade war battles is e.l.f. Beauty, which sells cosmetic products such as lipstick, eyeliner, foundation, and other skin care products. The company has a solid domestic and international footprint and has products in stores ranging from high-end shops like Ulta Beauty Inc. to drugstores like Rite-Aid.

E.l.f. Beauty relies heavily on Chinese imports but remains on our list because CEO Tarang Amin is confident the company has both the pricing power and supply chain infrastructure to withstand any tariffs until 2026. The company informed customers back in August to expect prices to increase during a potential 2nd Trump term, which could increase sales in the short term as shoppers stock up on their favorite products before the administration can levy new tariffs.

J.B. Hunt Transport Services Inc.

One industry that seems set to benefit from tariffs with minimal downside is domestic shipping and trucking companies. As more retail and consumer discretionary firms move production back to the United States (or at least closer to shore), railways, trucking firms, and other companies focusing on intermodal and last-mile transportation could benefit greatly. One shipping stock that saw a boost in the immediate aftermath of Trump's election was JBHT.

J.B. Hunt is one of the largest domestic transportation companies in the United States. One of its main businesses is loading and unloading shipping containers from railcars. If manufacturers re-shore or near-shore their operations closer to domestic shipping channels, stocks like JBHT could rapidly increase as revenue is boosted by expanding domestic rail usage.

Netflix Inc

If physical goods like electronics, cars, and clothes are going to get more expensive, an excellent place to invest will be services that trade in intellectual property. And after setting records for viewership and gate at the Jake Paul vs. Mike Tyson fight, Netflix is poised to steamroll into one of the few places it hasn't dared tread: live sports. On Christmas Day, Netflix will air two exclusive NFL games with significant playoff implications when the defending champion Kansas City Chiefs visit the Pittsburgh Steelers and the Baltimore Ravens take on the Houston Texans.

To borrow some terms from boxing, Netflix has knocked out its competition in the streaming wars. The company boasts more than 247 million subscribers in 2024, far outpacing Amazon's Prime Video's 200 million (and you don't get the benefits of Prime shipping with Netflix). Disney+ is growing rapidly but still sits nearly 100 million subs behind Netflix.

Hasbro Inc.

Toy maker Hasbro has been a trendsetter when it comes to moving production out of China. The company began moving its operations away from the communist regime in 2012, citing "enterprise risk," the transition has drastically limited the company's exposure to tariffs, showcasing strategic foresight and a proactive approach.

Hasbro makes popular toys, board games, and party favorites under brands like Parker Brothers, Milton Bradley, Kenner, and its own name. While most of its products had traditionally been made in China, the company began its exit in 2012 and reduced Chinese manufacturing to the United States to 50% as of 2020. While the company still depends significantly on Chinese imports, analysts believe the business is better insulated from tariff costs than its peers like Mattel. Plus, many toys were granted a reprieve from the initial tariff blast in 2017, and it’s possible that carveouts could be on deck for companies like Hasbro that moved production out of China.

Now you can trade alongside Matt Maley—the Wall Street veteran featured on CNBC, Bloomberg, and Yahoo Finance over 50 times. His trades in 2024 included 570% on TLT in 24 hours and 460% on GDX in a week.

This Black Friday, save $1000 and get the same guidance institutions pay $50,000/year for. Don't miss out – click to get started now.

Image via Shutterstock

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

The top headline in the semiconductor industry this week was the latest quarterly earnings report from artificial intelligence (AI) chip market leader Nvidia , which traded mixed on Thursday after Q3 results that once again surpassed expectations. Analysts responded positively to Nvidia's results, with most on Wall Street reading the quarterly report as a resoundingly bullish signal for strong AI demand going forward.

NVDA stock set a new high above $152 after earnings before paring gains, and is up about 191% in 2024. Meanwhile, its top rival Advanced Micro Devices remains on negative ground for the year as 2024 draws to a close, down 6% on a year-to-date basis.

Why is AMD Stock Underperforming?

While AMD is up more than 4,800% over the past decade, the shares have failed to impress investors this year. Declining revenues in its gaming and embedded segments have offset enthusiasm over strength in its data center segment, and the company has invested heavily in acquisitions as it attempts to compete with Nvidia in the AI chip market.

As a result, AMD is looking to cut costs, and the stock fell recently on news that the chip specialist plans to trim its workforce by 4%.

While equity benchmarks have rallied to new record highs this month amid broad-based post-election optimism, AMD is down 39% from its year-to-date highs, set in March. But after a “rebuilding” year of strategic investments in AI, should investors consider buying the dip in AMD stock?

AMD Delivers Stronger-than-Expected Q3 Results

On Oct. 29, AMD reported stellar third-quarter results, surpassing estimates across both revenue and earnings. Despite the strong performance, shares plummeted 7% following the earnings release, driven by weak forward guidance.

Net sales reached $6.82 billion, marking an impressive 17.5% year-over-year increase. The data center segment, in particular, posted $3.5 billion, a 122% jump compared to last year. AMD attributes its growth to the surging demand for its EPYC CPUs in the enterprise and cloud sectors. EPYC processors are becoming the industry standard for modern data centers, powering essential services such as Netflix , Microsoft Office 365, and Meta's Facebook.

The semiconductor leader reported a net profit of $771 million, or $0.47 per share, with adjusted EPS of $0.92 arriving roughly in line with estimates.

“Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute,” said AMD Chair and CEO Dr. Lisa Su.

However, management provided a conservative fourth-quarter outlook, which arrived below analysts' expectations. AMD is targeting revenue of $7.5 billion at the midpoint, which is $500 million shy of estimates - even as data center GPU revenue is now expected to exceed $5 billion, compared to management's previous forecast of $4.5 billion.

AMD Shares Pop on AI Pact with IBM

On Nov. 18, AMD announced a collaboration with IBM to deploy the AMD Instinct MI300X accelerators on IBM Cloud. This partnership focuses on bolstering AI workloads and HPC applications. The MI300X, designed with advanced CDNA3 architecture and HBM3 memory, is optimized for AI training and inference. The announcement positively impacted AMD's stock, sending it 3% higher to snap a six-day losing streak.

Earlier this year, AMD also partnered with Microsoft to enhance AI capabilities on Windows PCs. The integration enables Copilot+, Microsoft's AI-powered assistant, on AMD CPU-based AI PCs through an upcoming free upgrade. This collaboration underscores AMD's push into AI-driven consumer and enterprise computing, leveraging its Ryzen AI processors.

Furthermore, AMD has partnered with OEMs like Acer, HP , Lenovo, and Asus to roll out systems powered by the Ryzen AI 300 Series processors. These systems feature AMD’s latest Zen 5 architecture, which the chip giant says is designed to deliver top-tier performance across gaming, content creation, and everyday tasks. These partnerships align with AMD’s strategy to dominate the AI PC market while providing cutting-edge computing solutions for diverse uses.

What Do Analysts Say About AMD Stock?

While even AMD's biggest fans on Wall Street seem to agree that the company is still “chasing Nvidia” when it comes to AI chips, the stock is still a top pick. Overall, the 38 analysts in coverage have a consensus rating of “Strong Buy” for AMD, and the average price target of $190.81 implies expected upside of 37.6% from current levels.

Valued at 0.98 on a forward price/earnings-to-growth (PEG) basis, AMD looks like a reasonably priced AI growth stock to scoop up now.

On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

• Should You Buy AMD Stock on the Latest Dip?
• Disney Stock: Is DIS Still a Buy after Rallying 18% in a Month?
• Should You Buy, Sell, or Skip Semtech Stock Ahead of Q3 Earnings?
• A New Decentralized Paradigm Offers a Super High-Risk, High-Reward Opportunity in Blockmate Ventures