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 and, in the worst-case scenario, a stagflation in the U.S. economy.
Consequently, Wall Street’s broad-market index – the S&P 500 – has seen extreme volatility. The benchmark is currently in correction territory and was trading almost in bear market zone last week. Year to date, the S&P 500 is in negative territory with a decline of 8.6%.
Defying the bloodbath a handful of S&P 500 stocks have provided double-digit returns year to date. Here we recommend five such stocks with a favorable Zacks Rank. These are American Water Works Co. Inc. AWK, Exelon Corp. EXC, CenterPoint Energy Inc. CNP, The Progressive Corp. PGR and Brown & Brown Inc. BRO.
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 for our five picks year to date.
Zacks Investment Research
Image Source: Zacks Investment Research
American Water Works Co. Inc.
American Water Works has been gaining from contributions from acquired assets and military contracts. New water and wastewater rates implemented in its service region are also boosting performance.
AWK continues to expand its operations through organic and inorganic initiatives. The long-term capital expenditure of AWK is to strengthen its infrastructure and serve an expanding customer base. The decline in interest rates will reduce project expenses and boost margins. AWK has ample liquidity to meet its debt obligations.
American Water Works is expanding its customer base through organic initiatives and acquisitions. American Water Works’ pending 17 acquisitions (as of Jan. 1, 2025), when completed, will add another 24,200 customers to its customer base. Acquisitions allow AWK to get fresh demand for its services and expand its revenue stream.
American Water Works has expected revenue and earnings growth rates of 1.6% and 6.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last seven days.
Exelon Corp.
Exelon’s investment will strengthen its transmission and distribution infrastructure and help in providing reliable services to customers. EXC’s initiatives in grid modernization will improve the resilience of its operations, and revenue decoupling will mitigate the impact of load fluctuation. A stable cash flow allows EXC to pay regular dividends. The development of data centers will increase demand.
Exelon has an expected revenue and earnings growth rate of 4.2% and 6.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the last 30 days.
CenterPoint Energy Inc.
CenterPoint Energy is likely to benefit from increasing electricity demand, backed by rapid electrification of transportation amid rising investments in renewable energy. CNP aims to invest substantially in upgrading its infrastructure. Successful returns from these investments should boost CNP’s long-term growth. CNP boasts a solid solvency position.
With the rapid electrification of the transportation sector, backed by growing clean energy adoption among industries across the board, the utilization of electric vehicles (EVs) has increased manifold in recent times.
To tap the growth benefits of the EV market, CenterPoint Energy has been investing significantly in building a smarter, cleaner and more resilient ecosystem to meet the needs of EV drivers and fleet operators. To this end, CNP has been actively promoting off-road electrification, including electric forklifts and carts.
CenterPoint Energy has an expected revenue and earnings growth rate of 3.2% and 8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the last 60 days.
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 16.1% and 10.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the last seven days.
Brown & Brown Inc.
Brown & Brown’s compelling portfolio, along with an impressive growth trajectory driven by organic and inorganic initiatives across all its segments, bodes well. Buyouts and collaborations have enhanced BRO’s existing capabilities and extended its geographic foothold.
Strategic efforts continue to drive commission and fees. BRO’s solid capital position, backed by a strong operational environment, places it well for long-term growth. BRO’s sturdy performance has been driving cash flow, enabling it to deploy capital in shareholder-friendly moves.
Brown & Brown has an expected revenue and earnings growth rate of 8.4% and 9.1%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the last 30 days.
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