In This Article:
April 7, 2025 - The tariff steamroller ran over the stocks of some good companies in the first quarter and early April. That provides lots of candidates for my Casualty List, a roster of stocks that have been hit hard and that I believe have excellent recovery potential.
The basic idea in investing is to buy low and sell high, Market declines offer an opportunity for the buy low part. Are we near a bottom? I can't tell. But I know that many stocks are priced more attractively than they were at the mid-February peak.
Today I'm adding five stocks to the Casualty List.
Synchrony
Synchrony Financial (NYSE:SYF) provides private-label credit cards for Amazon.com, Lowe's, Sam's Club, Verizon, Walgreens and other companies, serving more than 70 million people in all.
Credit card delinquencies were creeping up even before the trade wars broke out. If tariffs cause a recession, that situation will get worse. Since January, Synchrony stock has come down from nearly $71 to about $44 as of April 4.
Today's price is only five times recent earnings and six times the earnings analysts anticipate for the next four quarters. Synchrony didn't exist in its current form during the Great Recession of 2007-2009. But it held up decently through the Covid-19 recession of 2020.
Abercrombie
The Trump administration slapped a 46% tariff on Vietnam, one of the biggest announced for any country. Clothing retailer Abercrombie & Fitch Co. (NYSE:ANF) got 34% of its clothes from Vietnam in 2023. Cambodia (49% tariff) and India (26%) are also big suppliers to Abercrombie.
Abercrombie executives must be chagrined, as they had reduced their imports from China, only to get caught up in a broader trade war. Vietnam has already offered to reduce its tariffs to zero if the U.S. would ease up. Perhaps a deal will be struck.
Abercrombie stock, which was above $180 last summer, has fallen to about $73, or less than seven times recent earnings.
Dillard's
Down 29% this year, Dillard's Inc. (NYSE:DDS) is a department store chain concentrated in the South. The chain's revenue has grown 15% a year over those five years, but analysts expect soggy revenue going forward, as the new tariffs slow economic growth.
Only four Wall Street analysts follow the stock. None of them rate it a buy, and two rate is underperform.
My view is rosier than the consensus. I consider a return on equity of 15% good and 20% excellent. Dillard's has been above 30% four years in a row. I like the stock at $317, down from a high of $508. The current price is nine times recent earnings.