Stocks are sinking the most since the COVID-19-fueled sell-off in 2020. A global trade war seems imminent. JPMorgan Chase just raised its estimated probability of a recession to 60%. What's the common denominator behind all this bleak news? President Donald Trump's new tariffs.
If you're worried about the effect of the Trump administration's trade policies, that's understandable. However, one way to turn those concerns into concrete actions that can make you money is to invest in businesses that have little reason to worry about tariffs. These three U.S. companies are set to weather the storm quite well.
1. Kroger
While the stock market plunged in recent weeks, a few stocks were actually hitting record highs. Kroger(NYSE: KR) was one of them. Although shares of the giant grocery chain company have retreated slightly, they're still up around 14%. That's an especially impressive gain considering the pervasive doom and gloom on Wall Street.
Will Kroger escape unscathed from the tariff fallout? Not completely. CFO Todd Foley noted in the company's fourth-quarter earnings call last month that Kroger could be affected somewhat by tariffs. However, he said: "As a domestic retailer, I think we have less exposure to some of the international tariffs that some of our peers will see." Foley singled out Kroger's produce business as the area that could be most affected. Still, he said there wouldn't be "a massive impact" (only a mid-single-digit percentage) for produce.
Even if a global trade war leads to a recession, Kroger should be in good shape. People won't quit shopping for groceries. They could try to reduce spending, of course. However, that could boost sales of Kroger's own private-label products.
I like Kroger's prospects in a high-tariff environment. I'm also impressed with management's upbeat perspective about tariffs. Foley said in the Q4 call: "Even though it's not a huge impact overall in our business, maybe certainly relative to our peers, it's a great opportunity for us to be proactive and stay in front of it." That's the kind of outlook investors should applaud.
2. Evergy
Many U.S. utility companies are well-positioned to succeed with the new tariffs in place. I'll highlight Evergy(NASDAQ: EVRG), though, because it's among the utility stocks that have delivered gains so far this year.
Evergy provides electricity to 1.7 million customers in Kansas and Missouri. It's not an especially large utility company, with a market cap of around $15.7 billion and net income in 2024 of $873.5 million. However, CEO David Campbell noted in the company's Q4 update that relative to its size, Evergy's backlog of growth opportunities is "one of the most robust in the country."
There wasn't a single mention of tariffs in Evergy's Q4 earnings call. That's indicative of how minimal any effect from the Trump administration's trade policies will likely be on the company. Customers in Kansas and Missouri will continue to need electricity -- and Evergy will be there to supply it.
The company should also keep supplying juicy dividends to shareholders. Evergy's forward dividend yield tops 3.8%. Its payout ratio also remains in a comfortable 60% to 70% range.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals(NASDAQ: VRTX) ranks as one of my favorite tariff-resistant stocks. If you want proof of just how tariff-resistant Vertex is, look at its stock chart. Shares of the innovative biotech company have soared almost 20% year to date.
Why is Vertex faring so well? The big biotech company markets the only approved therapies that treat the underlying cause of cystic fibrosis (CF). It's also ramping up commercialization efforts for Casgevy (a gene-editing therapy that's a one-and-done treatment for two rare blood diseases) and recently approved pain drug Journavx. As you might imagine, physicians and patients aren't going to snub those therapies because of tariffs.
I'm especially excited about the prospects for Journavx. It doesn't have the addictive properties of opioids, but is highly effective at relieving acute pain. Vertex's newest product seems to be a slam-dunk to rake in billions of dollars in sales.
Even better, Vertex could have more big winners on the way. Its pipeline features four late-stage programs, including another potential indication for Journavx, two drugs that target kidney diseases affecting more patients than CF, and a potential cure for severe type 1 diabetes.
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JPMorgan Chase is an advertising partner of Motley Fool Money. Keith Speights has positions in Evergy and Vertex Pharmaceuticals. The Motley Fool has positions in and recommends JPMorgan Chase and Vertex Pharmaceuticals. The Motley Fool recommends Kroger. The Motley Fool has a disclosure policy.
