As new tariffs raise worries about higher prices and a possible slowdown in the economy, many investors are looking for stocks that won’t be hit as hard. Some companies are better positioned because they do most of their business in the U.S., have strong pricing power, or aren’t too dependent on imported goods. Here are three stocks that could potentially handle the impact of tariffs better than others.
Costco Wholesale
We begin with Costco Wholesale (COST), which is considered as one of the most reliable retailers during tough times. Indeed, it keeps prices low by selling in bulk and sticking to a tight cost structure. Although some of its products are imported, Costco has strong relationships with suppliers and can often avoid major price increases. Shoppers also tend to stock up at warehouse clubs when they are worried about rising prices, which helps keep sales strong.
NextEra Energy
The next stock on the list is NextEra Energy (NEE), a major U.S. utility company that also invests heavily in renewable energy. Because most of its operations and revenue come from within the U.S., it’s less likely to be hurt by tariffs. While some solar and wind equipment comes from abroad, the company has long-term plans and support from regulators that help it manage costs. Utility stocks also tend to hold up well when the economy slows down, thanks to the steady demand for electricity.
Kroger
Finally, we arrive at Kroger (KR), which is one of the biggest grocery chains in the U.S. and gets most of its goods from domestic suppliers. As a result, this limits the effect tariffs could have on its business. Furthermore, people still need to buy groceries no matter what is happening in the economy, so sales stay relatively stable. Kroger has also been improving efficiency and growing its own private-label brands, which helps protect its profits even if costs rise elsewhere.
Which Stock Is the Better Buy?
Turning to Wall Street, out of the three stocks mentioned above, analysts think that NEE stock has the most room to run. In fact, NEE’s average price target of $86.36 per share implies more than 21% upside potential. On the other hand, analysts expect the least from KR stock, as its average price target of $68.77 suggests that the stock may already be fully valued. However, it is worth noting that KR has performed the best out of the three so far this year, and it is possible that this momentum could continue, especially since it has the lowest P/E ratio.
