By Teresa Rivas

Does the tariff-induced market panic have you stress eating potato chips? It might be time to buy Utz.

That's the advice of Mizhuo Securities analysts as they -- like others -- ponder safe places to hide amid the trade war chaos.

Not surprisingly, with tariffs at levels not seen in a century, much of Wall Street's advice might seem similarly fanciful. With ongoing uncertainty, there are only so many conclusions to draw.

Stocks zigzagged on Monday, as any hope for a tariff pause was quickly quashed. With the S&P 500 down double digits since the start of the year and hovering around the 5000 mark, investors don't even have the comfort of the index bottoming.

Citi's U.S. Equity Strategist Scott Chronert warns that, using "a discounted cash flow approach incorporating earnings, terminal growth, and cost of equity assumptions we believe a 4,700 fair value level should reflect most of the current tariff impacts, all things equal." But that can't factor things like further shocks that are more about emotion than math.

He also notes that while he can start to factor in some of the earnings hits, other effects such as deeper economic impact and monetary policy are beyond his current modeling. In short, with so many unknowns remaining, that 4700 figure itself, regardless of how shocking it might have seemed just two months ago, might prove optimistic.

Nonetheless, for those willing to dip a toe back into the market -- while fully aware it could fall further -- Chronert does have advice.

He screened for companies already factoring in a fair bit of earnings pain while also potentially delivering improvement in return on equity. That tactic considers that companies "making fundamental operating improvements should be relatively better off than peers when dealing with tariff headwinds" he writes. To be included in the positive ROE camp, companies need to show potential margin expansion and deleveraging, for example.

"However, in some industries, enduring impacts may be too much to overcome," Chronert writes.

To wit, the list that combines those two catalysts is heavy on financials while other sectors are absent. Bank of America, Capital One Financial, U.S. Bancorp, and Citizens Financial are all in the top 10. Tech and energy dominate the rest of the list -- Teradyne, Micron Technology, Coterra Energy, First Solar, Dayforce, and Expand Energy.

Of course, investors need to take that with a grain of salt. Banks are having another tough day, and a financial crisis isn't off the table as tariff fallout spirals.

Returning to Mizuho, its analysts compiled a list of Buy-rated stocks that are insulated from tariffs, have dislocated from their respective sectors, or have stock-moving catalysts near-term.

Utz is the top pick from the food sector, as the firm sees it as "as highly insulated against tariffs while U.S. salty snacks category demand may benefit from an uptick in indulgence/stress eating with any related economic dislocations such as seen during COVID."

It is worth noting there are concerns on Wall Street that consumers' increasing preference for healthy foods, combined with economic pressure, is denting snack demand far beyond weight loss drugs.

Likewise, Mizuho highlights Carnival as a good bargain buy, given its reputation as a low-cost cruise line means it will benefit from people desperate for a vacation on a budget, and it is trading cheaply. It was a Barron's pick last year, but consumer outlooks have been changing quickly because of tariffs, with a Jefferies poll from last week showing more than a third of Americans had already altered or canceled their travel plans.

Put another way, with so many unknowns, there are reasons nearly any stock could feel further pain.

Still, Mizuho's other consumer picks include Tractor Supply and Chewy, as both get most of their supplies and sales domestically. Among energy, it highlights large, globally-diversified producer ConocoPhillips, whose Canadian operations aren't (yet) included in tariffs.

The firm notes UnitedHealth Group has little supply chain or tariff risk, as do DoorDash and Alibaba Group, as they are focused on the U.S. and Chinese domestic markets.

In the end, stock recommendations for a downturn or worse all come with caveats at this point. The market can't get real relief with so much ongoing uncertainty.

Any bounce this early may be a sucker's rally, and when it comes to tariffs the " sheer incompetence of their execution" has rightfully cratered faith in U.S. policymaking.

That means investors wading back in probably need a long-term horizon and a strong stomach. Or maybe just a grumbling one: Pass the chips.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 07, 2025 15:41 ET (19:41 GMT)

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