U.S. stock markets are witnessing extreme volatility in April due to the imposition of the Trump administration’s “Liberation Day” tariffs. The baseline tariff of 10% was imposed on all imports on April 5.
However, the important thing is that tariff rates go up to as high as 145% for some countries (such as China), depending on the rate at which these governments levy duties on U.S. exports. China retaliated with 84% tariffs on all U.S.-made products effective April 10.
This seems to be the beginning of a global trade war. Economists and financial experts are highly concerned about the impact of these tariffs on U.S. economic growth, especially on inflation, which is already elevated and prolonged. Market participants fear a near-term recession in the U.S. economy.
Although, negotiations between the United States and several other countries including China are ongoing, nothing positive has emerged so far. Meanwhile, the artificial intelligence (AI)-driven technology sector, which skyrocketed in the last two years, has suffered the most this year.
At this stage, we recommend investing in five old economy stocks with a favorable Zacks Rank for short-term double-digit upside potential. These are PG&E Corp. PCG, Comfort Systems USA Inc. FIX, DXP Enterprises Inc. DXPE, The Progressive Corp. PGR and GE Aerospace GE. Each of our picks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Zacks Investment Research
Image Source: Zacks Investment Research
PG&E Corp.
PG&E is engaged in the sale and delivery of electricity and natural gas to customers in northern and central California. PCG generates electricity using nuclear, hydroelectric, fossil fuel-fired, fuel cell, and photovoltaic sources. PCG serves residential, commercial, industrial, and agricultural customers, as well as natural gas-fired electric generation facilities.
PCG has been making steady investments in gas-related projects and electric system safety to strengthen its grid. PCG’s capital expenditure plan to invest $63 billion in infrastructure for the 2024-2028 period should aid its long-term earnings growth.
PG&E is expanding its renewable energy portfolio by enhancing its presence in the electric vehicle charging market. PCG is preparing the grid to quickly and safely power at least 3 million electric vehicles by 2030. PCG also operated 183 MW of battery storage, as of Dec. 31, 2024.
PG&E has an expected revenue and earnings growth rate of 7.4% and 10.3%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.7% in the last 60 days.
The average short-term price target of brokerage firms represents an increase of 17.5% from the last closing price of $17.39. The brokerage target price is currently in the range of $15 to $23. This indicates a maximum upside of 32.6% and a downside of 13.7%.
Comfort Systems USA Inc.
Comfort Systems USA is a national provider of comprehensive heating, ventilation and air conditioning installation, maintenance, repair and replacement services. FIX operates primarily in the commercial and industrial HVAC markets, and perform most of their services within manufacturing plants, office buildings, retail centers, apartment complexes, and healthcare, education and government facilities.
FIX merged with the best regional experts, and now provides nationwide reach through 36 subsidiary companies that are prepared to build, service or retrofit any mechanical, HVAC or electrical system. Whether the project is Design-Build or Plan and Spec, FIX can help from the design phase to construction with qualified professionals, quality products and an experienced contractor team.
Comfort Systems USA has an expected revenue and earnings growth rate of 7.4% and 22.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 6% in the last 60 days.
The average short-term price target of brokerage firms represents an increase of 42.7% from the last closing price of $376.21. The brokerage target price is currently in the range of $440 to $575. This indicates a maximum upside of 52.8% and no downside.
DXP Enterprises Inc.
DXP Enterprises is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada, Mexico and Dubai. DXPE provides innovative pumping solutions, supply-chain services and maintenance, repair, operating and production (MROP) services that emphasize and utilize its vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services.
DXPE's breadth of MROP products and service solutions allows it to be flexible and customer-driven, creating competitive advantages for our customers. DXPE's business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services.
DXP Enterprises has an expected revenue and earnings growth rate of 0.1% and 17.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 22.5% in the last 30 days.
The average short-term price target of brokerage firms represents an increase of 17.4% from the last closing price of $85. The brokerage target price is currently in the range of $95 to $95.
The Progressive Corp.
The Progressive continues to gain on higher premiums, given its compelling product portfolio, leadership position and strength in both Vehicle and Property businesses. PGR’s focus on becoming a one-stop insurance destination, catering to customers opting for a combination of home and auto insurance, augurs well for the company's growth.
PGR’s policies in force and retention ratio should remain healthy. Competitive pricing to retain current customers and address customer needs with new offerings should continue to drive PGR’s policy life expectancy.
The Progressive has an expected revenue and earnings growth rate of 16.5% and 11.7%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last seven days.
The average short-term price target of brokerage firms represents an increase of 12.6% from the last closing price of $265.19. The brokerage target price is currently in the range of $266 to $324. This indicates a maximum upside of 22.2% and no downside.
GE Aerospace
GE Aerospace has been witnessing strength in its businesses, driven by robust demand for commercial engines, propulsion and additive technologies. Rising U.S. & international defense budgets, geopolitical tensions, positive airline & airframer dynamics and robust demand for commercial air travel augur well for the company.
GE is benefiting from a growing installed base and higher utilization of engine platforms, driven by strong momentum and growth across the commercial and defense sectors. Solid demand for LEAP, GEnx & GE9X engines and services, supported by growth in air traffic, fleet renewal and expansion activities, is proving beneficial for the Commercial Engines & Services business.
During the second half of 2024, GE received orders for more than 4,600 commercial and defense engines, including commitments from American Airlines, British Airways and the Polish Armed Forces. For 2025, GE expects organic revenues to grow in the low-double-digit range from the year-ago level.
GE Aerospace has an expected revenue and earnings growth rate of -6.8% and 17.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.
The average short-term price target of brokerage firms represents an increase of 17.2% from the last closing price of $197.41. The brokerage target price is currently in the range of $200 to $261. This indicates a maximum upside of 32.2% and no downside.
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