For well over a century, the stock market has been a bona fide wealth-creating machine. But this doesn't mean equities aren't susceptible to big moves lower from time to time.
Between Feb. 19 and April 4, the mature stock-driven Dow Jones Industrial Average(DJINDICES: ^DJI), benchmark S&P 500(SNPINDEX: ^GSPC), growth-dependent Nasdaq Composite(NASDAQINDEX: ^IXIC) respectively lost 14.2%, 17.4%, and 22.3% of their value. The Dow and S&P 500, as of this writing, are firmly in correction territory, while the Nasdaq has entered a bear market.
President Trump delivering his State of the Union address to a joint session of Congress. Image source: Official White House Photo.
But this only tells part of the story. Over a two-day period (April 3-4), the S&P 500 lost more than 10% of its value. Wall Street's benchmark index has only declined by 10% over a two-day period four times over the last four decades. This rare event is what qualifies the current move as a stock market crash that's been precipitated by President Donald Trump's tariff policies.
On April 2nd, the president unveiled a series of "Liberation Day" tariffs designed to protect American jobs and bring manufacturing back to America. Trump instituted a 10% sweeping global tariff, along with reciprocal tariffs to countries that have long run trade imbalances with the U.S.
While the Trump administration remains confident that tariffs will generate revenue and protect American interests, there's concern Liberation Day will result in higher prices for consumers, weaker sales and margins for businesses, and a potential recession for the U.S. economy. In other words, we're in a seemingly tariff-induced Trump stock market crash.
Although crashes can be scary, it's important to recognize that these events are short-lived and have, without fail, afforded long-term investors opportunities to scoop up shares of phenomenal businesses at a discount.
Amid the Trump stock market crash, three surefire stocks are simply too cheap to pass up.
Walt Disney
It's been a rough decade for the affably dubbed "House of Mouse." The COVID-19 pandemic brought its theme-park operations to a veritable standstill, while its film entertainment division has been hit-and-miss. Despite these challenges, Walt Disney(NYSE: DIS) stock stands out as a phenomenal value amid this sell-off.
One thing Disney possesses that few other businesses can match is its ability to transcend generational gaps with ease. Though there are other theme parks to attend and movies to watch in theaters, no media company offers the storytelling or breadth of characters that Walt Disney brings to the table. Wall Street tends to place a premium on this type of irreplaceability.
Walt Disney also deserves credit for rapidly building out its direct-to-consumer (DTC) segment and successfully pushing it to recurring profitability. It's relied on the strong appeal of its brand and content, along with a push toward ad-supported tiers, as a way to boost its digital subscriber count and maintain its recurring profits from its DTC segment.
Most importantly, Walt Disney stock is cheap. Its forward price-to-earnings (P/E) ratio of 13.6 marks its cheapest earnings multiple since 2018. Even modest success from its entertainment segment would offer tantalizing upside for its shares.
Image source: Getty Images.
PayPal Holdings
The Trump stock market crash is also the perfect time to scoop up shares of fintech goliath PayPal Holdings(NASDAQ: PYPL). Even with growing competition in the digital payment space, PayPal's key performance indicators and ongoing innovation help set it apart.
In the face of increasing competition, all PayPal has managed to do is sustain double-digit growth in total payment volume traversing its network on a constant currency basis.
Further, the average number of payment transactions completed by active accounts over the trailing-12-month period has expanded from 40.9 at the end of 2020 to 60.6 as of Dec. 31, 2024. In other words, active accounts are more engaged than ever before, which is fantastic news for the company's gross profit.
Meanwhile, CEO Alex Chriss isn't sitting on his laurels. Chriss, who became CEO in 2023, has a keen understanding of the needs of small businesses. He aims to expand merchant acceptance of digital payments and is focused on improving value for users.
Additionally, Chriss hasn't been afraid to use share repurchases as a tool to enhance the value of his company's stock. In 2024, PayPal bought back $6 billion worth of its stock, which for companies with steady or growing net income can lead to an increase in earnings per share. PayPal's forward P/E of just over 10 equates to a nearly 50% discount to its average forward earnings multiple over the last half-decade.
Alphabet
Among the "Magnificent Seven," no stock is begging to be bought on a valuation basis more during the Trump stock market crash than Google parent Alphabet(NASDAQ: GOOGL)(NASDAQ: GOOG).
Alphabet's foundational operating segment continues to be internet search engine Google. Looking back 10 years, Google has consistently accounted for an 89% to 93% monthly share of global internet search. Operating as a practical monopoly makes it the go-to choice for advertisers wanting to get their message(s) in front of users. Though Alphabet is susceptible to short-lived ad spending weakness during recessions, it benefits from the U.S. economy enjoying disproportionately long periods of expansion.
What makes Alphabet such an exciting stock to own for the latter-half of the decade is its artificial intelligence (AI) ties. It's incorporating generative AI solutions into Google Cloud, the world's No. 3 cloud infrastructure service platform by ad spend. Since cloud-service margins handily surpass those associated with advertising, Google Cloud is expected to funnel Alphabet a lot of extra cash flow in the coming years.
Alphabet is cash-rich, one of the top repurchasers of its own shares, and it ended last week at a forward P/E of around 14. This is 37% lower than its average forward earnings multiple over the trailing-five-year period, which is an incredible value for an industry-leading business.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Sean Williams has positions in Alphabet and PayPal. The Motley Fool has positions in and recommends Alphabet, PayPal, and Walt Disney. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2025 $85 calls on PayPal. The Motley Fool has a disclosure policy.
