Key Takeaways:
- Both Lululemon ($LULU) and Nike ($NKE) are well-positioned to benefit from their manufacturing strategies in Vietnam, allowing them to potentially sidestep some of the heavier tariffs that impact competitors reliant on other regions.
- DR Horton ($DHI) stands to gain from the recent lumber tariff exemptions, a move that will benefit the homebuilding industry.
- Analysts think that all 3 of these stocks are significantly undervalued today.
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In today’s shifting economic landscape, the introduction of tariffs can dramatically alter market dynamics and create both challenges and opportunities for companies across various industries.
Here are 3 stocks that are expected to escape most of the negative impacts from tariffs, which might give these stocks a competitive advantage in the coming months.
1: lululemon athletica (LULU)
After Trump announced a 46% tariff on Vietnam, Vietnam responded by offering to remove all tariffs, which means that companies that manufacture primarily in Vietnam are likely to have much less of a blowback from tariffs.
Lululemon has said that about 40% of its products are made in Vietnam, which might give the company an advantage in the coming months.
Today, analysts see over 40% upside for Lululemon stock, with an average price target of $352 per share, compared to the stock’s current share price of about $248.
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Why Lululemon is Worth a Closer Look Today
- Strong Brand Loyalty: Lululemon has cultivated a devoted customer base through quality products and a strong community engagement strategy.
- Expansion Opportunities: The company continues to expand into new international markets, potentially offsetting tariff impacts in its U.S. operations.
- Diverse Product Line: Recent diversifications into menswear and digital fitness programs could drive additional revenue streams.
2: Nike (NKE)
Next up, Nike is another stock that’s likely to benefit from Vietnam acting to strengthen its trading ties with the US.
Nike has its biggest factory presence in Vietnam, with Vietnam, China, and Cambodia manufacturing about 28%, 16%, and 15% of Nike’s apparel, respectively.
Additionally, Vietnam produces about 50% of Nike’s footwear. Nike’s supply chain should help the company avoid some of the burdens associated with increased tariffs.
Today, analysts see about 44% upside for Nike stock, with an average price target of $80 per share, compared to Nike’s current share price of about $56.
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Why Nike Could Be a Winning Stock Pick Today
- Global Supply Chain: Nike’s extensive and flexible supply chain can adapt to changes in tariffs by shifting production among different countries.
- Innovation Leadership: Ongoing investment in product innovation keeps Nike at the forefront of the athletic apparel and footwear industry.
- Brand Power: Nike’s strong global brand allows it to maintain pricing power, which can help mitigate the cost impacts of tariffs.
3: DR Horton (DHI)
Last on my list of stocks that are likely to become tariff winners, DR Horton is a Texas-based home construction company that’s set to benefit from some major tariff exceptions for Canada and Mexico.
As of today, there’s a specific tariff exemption for lumber for Canada and Mexico. Lumber is a highly important material for home builders, and Canada currently accounts for about 85% of all US softwood lumber imports.
The National Association of Home Builders has called this exemption a “major win” for the home building industry, and DR Horton is likely to benefit as a leading home builder.
Today, analysts see just over 40% upside for DR Horton stock, with an average price target of $163 per share, compared to the stock’s current share price of about $115.
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Why DR Horton is Worth Further Research Today
- Geographic Diversification: A broad geographic footprint across the U.S. reduces the risk from regional economic disruptions, including those caused by tariffs.
- Robust Housing Demand: DR Horton continues to benefit from strong housing demand, particularly in the affordable segment where it holds significant market share.
- Effective Cost Management: Efficient construction practices and scale allow DR Horton to manage costs effectively, even in a changing economic environment influenced by tariffs.
TIKR Takeaway
While tariffs are essentially a “silent tax,” it looks like Lululemon and Nike will see less of an impact from tariffs due to their high exposure to manufacturing in Vietnam.
DR Horton looks to benefit in the home building industry from the lumber tariff exemption for Mexico and Canada.
Investors looking for resilience and potential growth in fluctuating markets might find these stocks to be particularly compelling choices.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
