Major Changes for GigaCloud and Other Companies Amid Tariffs

Last week, InvestorPlace Senior Analyst Louis Navellier made a notable decision to sell GigaCloud Technology Inc. (GCT) from his Accelerated Profits portfolio. This move may seem unexpected, akin to a chef discarding a perfectly cooked steak.

GigaCloud has displayed impressive growth, with a return rate exceeding 30%. Its revenue surged by 65% last year, resulting in net profits soaring to $125 million—a sixfold increase from just two years ago.

The company, which specializes in large parcel shipping, utilizes software to consolidate small shipments into larger loads, thus reducing transportation costs. Its primary business model connects Asian manufacturers with U.S. resellers. However, challenges now loom over this core business.

On February 4, President Donald Trump instituted a 10% tariff on all goods imported from China, leading to a temporary halt of postal service shipments as the details were ironed out. This tariff was later increased to 20%.

This escalation will likely devastate GigaCloud’s sector. Many Chinese exporters already operate on very thin profit margins, making a 20% surcharge detrimental to their viability and likely to drastically cut demand for GigaCloud’s logistics services. Consequently, analysts have reduced GCT’s 2025 earnings estimates by 20% since January, with further challenges anticipated.

Currently, GigaCloud holds a “D” rating in Louis’s Stock Grader (Navellier subscription required), which is not an enticing position at all.

The Los Angeles-based logistics firm is not alone; rising U.S. tariffs will impact several companies. As Trump mentioned in a recent interview with Fox News host Maria Bartiromo, the country is experiencing a “period of transition” that may involve “a little disruption.”

This article will explore three other companies Louis has opted to sell to mitigate potential impacts on his portfolio. If these stocks are part of your investment strategy, consider whether to reduce your exposure to these less favorable options.

Waiting for the Shoe to Drop

When people think of UGG shoes, they often envision the comfortable sheepskin footwear popular among surfers and college students, especially among TikTok users. The brand has accumulated a devoted following.

The modern college campus uniform

Investors, however, recognize that UGG is a brand under Deckers Outdoor Corp. (DECK), a footwear conglomerate that manages several well-known brands, including Hoka and Teva. Deckers actively acquires and sells brands to enhance efficiencies and profits. For instance, in 2013, Deckers acquired Hoka to develop a comfort running shoe line, complementing its UGG range. A couple of years later, it added Koolaburra to its UGG brand.

These strategies paid off significantly during prosperous years. Louis added shares of this rapidly growing firm in Growth Investor last year as margins expanded and profits increased at double-digit rates.

Your investment strategy may face challenges, as the “eggs in the same basket” approach is currently backfiring. Increased Chinese tariffs pose risks to Deckers’ profitability, prompting Louis to divest from the Stock last month.

Take the sheepskin used in UGG and Koolaburra shoes, for example. Deckers has kept costs low by sourcing this expensive material from just two Chinese tanneries and focusing manufacturing efforts in China and Vietnam. This reliance on a limited supply chain puts Deckers at a disadvantage compared to brands, like New Balance, with American-based manufacturing.

Recent analysis shows that first-quarter earnings estimates have been cut by 20%, while profits are expected to decline 29% year-over-year to $0.58 per share. Given the high valuation of DECK shares from previous growth, there is a considerable risk for further decline.

Derailing a Turnaround Story

Our next company to sell, Abercrombie & Fitch Co. (ANF) , is known equally for its controversies as its fashion lines. The mall retailer had been infamous for its provocative advertising aimed at teenagers, with a former CEO once claiming the brand was “only for cool people.” His resignation in 2017 marked a pivotal moment for the company.

Under new CEO Fran Horowitz, Abercrombie transformed significantly. She eliminated the company’s hypersexualized marketing and shifted focus to a more straightforward lineup aimed at young adults. Shares have skyrocketed 520% since her tenure began, leading Vox to commendably address Abercrombie’s resurgence as a closet essential.

Unfortunately, rising tariff threats may undermine Abercrombie’s recovery. The firm sources nearly half of its products from Vietnam and China, both of which face escalating U.S. tariffs. Vietnamese officials are particularly concerned, given that their country maintains one of the largest trade surpluses with the United States—something criticized by Trump.

This situation poses difficulties for Abercrombie, which has relied on significant gross margins to balance its elevated overhead costs. An increase of 5% in its cost of goods could trigger a 30% drop in net profits, and attempts to raise prices may not be well received by consumers.