Investing Insights: Best Stocks Amid Tariff Concerns
President Donald Trump’s recent decision to impose extensive tariffs on imports from nearly every country has triggered one of the most challenging quarters for the U.S. Stock market in years. Market participants are increasingly concerned that this unilateral action and subsequent retaliatory measures may significantly impact the nation’s economy.
In this increasingly volatile macroeconomic environment, prospective investors may want to focus on companies less vulnerable to trade wars. Two notable examples are Netflix (NASDAQ: NFLX) and Visa (NYSE: V), both of which possess strong long-term growth potential beyond just their tariff-related resilience.
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1. Netflix
Netflix’s business model is somewhat insulated from tariffs because it primarily generates revenue through subscriptions rather than physical products. Although the streaming service is likely not entirely immune to the economic impacts of the trade war—especially with its rapidly growing ad-supported subscription tier—it remains better positioned than many competitors. A broader economic downturn could result in lost subscribers; nevertheless, Netflix’s substantial sales from non-advertising sources may help it weather the storm.
The company has adeptly leveraged its vast amount of viewer data to guide content creation, a strategy that has historically served it well. With consistent growth in revenue, earnings, and free cash flow, Netflix is expected to maintain its momentum, especially given the significant remaining market potential. Currently, Netflix serves an addressable market valued at approximately $650 billion, capturing only 6% to date. As viewing trends continue to shift decisively toward streaming, Netflix stands to gain a larger share relative to its peers.
NFLX Revenue (Annual) data by YCharts.
Investors looking to navigate the current tariff-laden environment may find Netflix a strong candidate to buy and hold long-term.
2. Visa
Visa stands as a leading financial services provider, with its iconic logo appearing on billions of credit and debit cards globally. Unlike some companies, Visa does not issue cards or provide underlying credit. Instead, it operates a network facilitating digital transactions, charging fees for each processed transaction.
This structure reduces Visa’s risk associated with borrower defaults, a concern that grows during economic downturns. Should a recession arise from current trade tensions, Visa’s exposure remains lower. Interestingly, the tariffs could lead to inflation, as noted by Federal Reserve Chair Jerome Powell, which may benefit Visa. Since its transaction fees are a small percentage of purchase amounts, increased spending on everyday items would drive higher revenue growth for Visa.
Furthermore, Visa possesses strong long-term growth potential due to the ongoing transition from cash and checks to digital transactions. The network effect plays in Visa’s favor: enhanced acceptance of its cards attracts more consumers, while increased consumer usage incentivizes more businesses to accept their services. This dynamic secures Visa’s prominent position within the financial sector.
Lastly, Visa is a reliable dividend Stock. Over the past decade, its dividends have increased by approximately 392%. Even amidst economic challenges, Visa’s dividend appears stable. Investors looking to reinvest dividends can further boost long-term returns.
Considering an Investment in Netflix?
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Prosper Junior Bakiny does not hold any positions in the stocks mentioned. The Motley Fool holds positions in and recommends Netflix and Visa. The Motley Fool has a disclosure policy.
The views and opinions expressed herein reflect those of the author and do not necessarily represent those of Nasdaq, Inc.
