3 stocks to buy amid the market’s tariff tantrum

It’s appropriate to say that the market is having a tariff tantrum.

Since the end of February, the S&P 500 is down 8%, and the Nasdaq is down by more than 10%. 

Periods like this always kick up a storm in the markets. 

Markets loathe uncertainty. 

Unfortunately, this uncertainty is likely to persist given that President Trump truly believes that tariffs are necessary to rebalance the US trade deficit and that any short-term pain, including a recession, is justified. 

Many have also speculated that President Trump and his economic team are more focused on bringing down longer-term yields. This would give the Fed more latitude to cut interest rates, which would reduce financing costs for the US government and reinvigorate the housing market.

It’s understandable for investors and traders to grow anxious during these periods. However, history shows us that these conditions are often when the best investments are made. 

The key to successfully navigating this environment is to focus on high-quality companies that are less impacted by tariffs and offer attractive entry points.

These companies should benefit from lower rates, possess pricing power, have durable moats, and operate in growing markets driven by secular factors.

Read on to discover 3 stocks that are thriving amid the market turmoil:

1. Gilead Sciences (NASDAQ: GILD)

Gilead Sciences (GILD) is a biopharmaceutical giant with a strong portfolio of HIV, oncology, and antiviral drugs. But that’s not the most interesting thing about the stock right now. 

While the market is down nearly 10% YTD, Gilead is up nearly 30%. This outperformance is due to its strong fundamentals, defensive positioning, and robust outlook. 

Most pharmaceutical stocks are largely insulated from tariffs due to a reliance on intellectual property and R&D rather than imported raw materials. Further, their revenues are not impacted by economic uncertainty. Gilead could also benefit from lower rates given its strong balance sheet and 2.7% dividend yield. 

The company’s recent earnings report was quite strong as it exceeded analysts’ expectations on the top and bottom-line with strength across multiple segments. The company’s guidance was also more upbeat than consensus expectations. Additionally, it continues to make strides in expanding operating margins through lower acquisition costs and increased pricing. 

With a Zen Rating of A (Strong Buy), GILD ranks in the 99th percentile of the 4500+ stocks we track — an elite group of stocks that have averaged annual returns of 32.5% over the past 22 years, far outpacing the S&P 500’s average annual return of 10.5%. 

Digging deeper into the Component Grades, GILD is ranked in the top 5% of stocks for Value  — not surprising given its forward P/E of 13.9 which is significantly less than the S&P 500’s 22 P/E. 

2. Sprouts Farmers Market (NASDAQ: SFM)

Sprouts Farmers Market (SFM) caters to health-conscious consumers seeking premium and organic groceries. Its recent earnings report showed momentum specifically in terms of same-store sales growth and profitability, while the company continues to execute its growth strategy and steadily adds locations.

This trifecta of improving margins, location expansion, and increasing same-store revenue is a common ingredient in the biggest winners out of the retail and restaurant sectors. 

In terms of tariffs, SFM is a winner as the company sources the bulk of its products locally and domestically. The company also offers better prices than many of its competitors in the organic and premium grocery space. Additionally, there is a long-term trend towards healthier eating, ensuring that Sprouts’ total market size continues to expand. 

These are some of the reasons why Steve Reitmeister, Editor-in-Chief of our Zen Investor stock-picking newsletter, recently added it to his portfolio. In his recent commentary, he noted a round of positive earnings revisions and upgrades from Wall Street analysts, following SFM’s recent earnings report. 

Our quant ratings model is also bullish on SFM given its overall A (Strong Buy) Zen Rating. it’s in a class of stocks that have produced an annual return of 32.5% since 2003.

Not surprisingly, SFM has a strong Growth score, in the 88th percentile. This is consistent with the company’s plans to add 35 more locations this year, part of its plan to expand to 1,200 stores in the US. 

3. T-Mobile US (NASDAQ: TMUS)

T-Mobile US (TMUS) is a leading wireless carrier, known for its aggressive marketing and bold expansion strategies. The company's recent merger with Sprint has strengthened its position among carriers, as it’s continued to take market share from rivals like AT&T (T) and Verizon (VZ). 

TMUS is largely shielded from tariffs due to its focus on the domestic market. This explains why TMUS is up 52% over the past year and has side-stepped the bulk of recent volatility. 

In the event of a slowing economy and falling rates, TMUS would benefit due to the stability of its revenues, and its plans appealing to cost-conscious customers. 

The company is enjoying a strong wave of growth as evidenced by its last earnings report which shows an addition of 1.6 million new customers, low churn rate, and a 7% increase in revenue. Earnings were also up by 30% from the previous year due to a combination of higher margins and cost-savings, following the merger with Sprint. 

For the full year, T-Mobile forecast an addition of 5.5 to 6 million new customers which was above analysts’ expectations. Some of its growth drivers include home Internet services, an acquisition of UScellular, and fiber partnerships. 

In terms of the Zen Ratings, TMUS has strong ratings across the board, including an overall B (Buy) rating. Buy-rated stocks have produced an average annual return of 19.9%. 

Among the 7 Component Grades, TMUS shines for Momentum, where it is ranked in the 99th percentile. The Momentum score evaluates factors like share turnover, price volatility, and volume-weighted momentum to identify stocks on a sustainable upwards trajectory.

The bottom line? Understandably, the tariff uncertainty and tweet-driven market volatility has been challenging for investors. Yet, history is clear that such volatility also inevitably creates opportunities to accumulate high-quality companies at attractive valuations. Additionally, GILD, SFM, and TMUS' underlying businesses are much less impacted by these policy headwinds while continuing to benefit from pricing power, durable advantages, and secular growth trends.

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