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Financial markets hate uncertainty. It can cause consumers to hold back their spending and businesses to delay their capital investments until they can forecast the future more accurately. The Trump administration's tariff announcement on April 2 served as a stark reminder of this concept as it sent global equities into a tailspin.
Regardless of the potential viability of Trump's plan to bring manufacturing jobs back to the U.S., the administration's unpredictable decisions could put a shadow over the economy for months or even years. In times like these, investors should pivot away from expensive growth stocks to more affordable companies with less downside risk. Let's explore why Super Micro Computer (NASDAQ: SMCI) and Dollar Tree (NASDAQ: DLTR) could make excellent long-term bets.
Super Micro Computer
With shares down 63% over the last 12 months, Super Micro's crash didn't start in April. The company is bouncing back from allegations of poor accounting practices, which led to the resignation of its auditor and its near de-listing from the Nasdaq exchange in 2024. However, management has pushed back against claims of wrongdoing and regained compliance with Nasdaq, putting shares in a great position to benefit from strong fundamentals.
In the fiscal second quarter, Super Micro expects sales to grow by a whopping 54% year over year to between $5.6 billion and $5.7 billion. The company turns AI chips made by partners like Nvidia into ready-to-use computer servers. So, the rollout of the most advanced Blackwell-based graphics processing units (GPUs) will help sustain operational momentum.
Super Micro's forward price-to-earnings (P/E) multiple of just 10 is remarkably low considering its growth rate. And while investors may be skittish about betting on a company that has recently been accused of accounting irregularities by Hindenburg Research, they should remember that short-sellers aren't infallible (they also have a conflict of interest).
In December, Super Micro put many of these fears to rest by publishing the results of a three-month independent committee review, which found no evidence of fraud or misconduct from the company's management. They have hired a new chief financial officer and chief accounting officer to strengthen internal controls and regain the trust of the market.
Dollar Tree
Analysts at JP Morgan now see a 60% chance of a U.S. recession in 2025, due in part to heightened uncertainty about trade policy, which can slow down business activity and investment. In times like these, it can be beneficial to bet on recession-proof businesses like Dollar Tree because of its focus on low-cost and nondiscretionary consumer goods.