Investing

Worried About Tariffs? 4 Stocks to Buy That Do Almost 100% US Business

Lee Jackson

Published: June 19, 2018 8:00 am

Last Updated: January 11, 2020 10:11 pm

Depending on whom you listen to, the tariffs that are about to be levied on products coming into the United States from abroad will either start a trade war that will result in a new depression or it ultimately will just speed up the time it takes to negotiate new trade deals. One thing’s for sure: President Trump, like many others, has said for years that tariffs imposed upon American companies are wrong and the massive trade imbalances they help to create need to be addressed once and for all.

That being said, many investors are concerned that is will affect the stocks they own, especially if foreign nations impose tariffs on U.S. export products and services. We screened our 24/7 Wall St. research database looking for companies that do the vast majority of the business they conduct here in the United States. We found four that look like good stocks to own now and going forward.

AT&T

This stock has been absolutely hammered, and after AT&T Inc. (NYSE: T) finally got the go-ahead to purchase Time Warner, shares may be an outstanding value. The company is the world’s largest provider of pay TV, with TV customers in the United States and 11 Latin American countries. In the United States, the AT&T wireless network has the nation’s self-described strongest 4G LTE signal and most reliable 4G LTE. The company also helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

With its shares trading at a very cheap 9.6 times estimated 2019 earnings, the company continues to expand its user base, and strong product introductions from smartphone vendors have not only driven traffic but increased device financing plans.

AT&T reported first-quarter results that missed consensus estimates, sending its shares down sharply in April, as it lost subscribers to its satellite and U-verse services. Despite the hit, the company still generates solid and dependable earnings and dividends.

AT&T shareholders are paid a rich 6.21% dividend. The Wall Street consensus price target for the shares is $38.35. The stock closed Monday at $32.19 per share.

American Electric Power

This industry leader is a solid dividend-paying company and is on the Merrill Lynch US 1 list of high-conviction stocks. American Electric Power Co. Inc. (NYSE: AEP) is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states.

The company ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the United States. It also owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.

Many on Wall Street feel that the stock trades at a discount to its utility peers, and they feel it deserves a premium. Top analysts also think the company may sell generating assets and buy back shares with the proceeds, which would be also accretive.

Shareholders are paid a 3.79% dividend. The consensus price target is $73.41, and shares closed on Monday at $65.46.

Kroger

This top grocer does almost all of its business in the United States. Kroger Co. (NYSE: KR) is the second largest U.S. food supermarket retailer and generates $120 billion in annual sales. Kroger operates roughly 2,800 supermarkets throughout 35 states and under two dozen banners. Kroger also sells fuel at 1,450 supermarket fuel centers and operates 2,268 pharmacies and 274 jewelry stores.

The stock remains very cheap, as it has a market cap of under $21 billion despite $122.6 billion in sales during its most recent fiscal year, up about 6% from the previous year’s $115.3 billion. Kroger is also profitable, with net income of $1.9 billion last year.

Kroger shareholders receive a 1.92% dividend. The Wall Street Price target is $27.75. The shares closed Monday at $26.01.

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Southwest Airlines

This company continues to expand routes, remains a low-cost leader and is also one of the top airline picks across Wall Street. Southwest Airlines Inc. (NYSE: LUV) is the fourth-largest U.S. airline by revenues and operates a customer-friendly, low-cost, point-to-point model without fees and offers flights throughout the continental United States. Its six largest operations are in Dallas, Chicago, Las Vegas, Baltimore, Phoenix and Houston.

Jet fuel prices, which have been creeping higher this year and are almost 30% of Southwest’s total costs, have been a key for improving revenues and earnings. With almost no international business at this time, currency headwinds are not an issue for the airline. The company will begin routes to Hawaii later this year or early in 2019.

Based on the U.S. Department of Transportation’s most recent data, Southwest Airlines is the nation’s largest carrier in terms of originating domestic passengers boarded. The company operates the largest fleet of Boeing aircraft in the world, the majority of which are equipped with satellite-based Wi-Fi, providing gate-to-gate connectivity.

Southwest shareholders are paid a 1.22% dividend. The consensus price target is $65.89, and the stock closed Monday at $52.37.

These are clearly not the most exciting companies on Wall Street, but if you are an investor concerned over the ramifications of the tariffs and a potential trade war, then these could be just right for you. All are among the top plays in their respective sectors and at current trading levels offer outstanding value.