In this article, we will take a detailed look at the 10 Stocks to Watch as Trade Wars Begin.
Bill Strazzullo, Bell Curve Trading chief market strategist, said in a latest program on CNBC that the market isn’t done going down and urged investors not to buy every dip and wait for real opportunities. The analyst made some specific predictions about the market bottom:
“Still think it’s not over. I think you know probably across the board it’s another 15% to go to the downside. Look, the top wasn’t that difficult to call. It really wasn’t. And I think the bottom, typically on these major trends when they roll over, they do the same thing. They mean revert to fair value, which is a fancy way of saying that the market should drop down to where most of the trade activity has taken place on the major trend, which is the rally off the March 2020 lows.”
Strazzullo thinks the S&P 500 could fall to 4,500 to 4,100 before seeing a bottom. He repeatedly said during the interview that the market’s gains from the pandemic days are “tapped out.”
“The key driver here was the rally off the March 2020 lows in the height of the pandemic when we knew we were going to get historic monetary and fiscal stimulus. If you knew that, that was the right trend, you could have known months in advance when the market was going to top out. I gave the targets months in advance. If you missed this fundamentally or technically, you were asleep at the switch.”
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
For this article, we picked 10 stocks Wall Street is closely watching amid the US-China trade war. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. Rocket Companies Inc (NYSE:RKT)
Number of Hedge Fund Investors: 27
Josh Brown, CEO at Ritholtz Wealth Management, said in a recent program on CNBC that he’s buying mortgage, real estate, and personal finance services company Rocket Companies Inc (NYSE:RKT) shares. The analyst believes the company is set to benefit from potential interest rate cuts.
“Who benefits the most if we were to see five Fed rate cuts or even directionally if we got three or four? And the answer is obvious, you’re going to get a refi boom. You’re going to get action in the existing home sales market, and you’re going to see people take advantage of that, especially if they’re struggling in the economy. That’s exactly when you would get a refi. Boom happens every time. So Rocket is uniquely positioned. And they’re very—they’re very aggressive repositioning themselves for what could be. They’ve announced two acquisitions in the last month. One of them the other day is Mr. Cooper, which is the largest mortgage servicing companies in the country. And the other is Redfin, which gets 5.5 million unique users on the website. It’s a business of selling leads to realtors, but also that’s a huge funnel for Rocket to sell mortgages to the consumer through. So this is the type of company that benefits if mortgage rates come down meaningfully and we get a refi boom and we break that logjam of all of these homes not on the market that need to be. So that seemed really obvious to me.”
Seven Corners Capital stated the following regarding Rocket Companies, Inc. (NYSE:RKT) in its Q3 2024 investor letter:
“Rocket Companies, Inc. (NYSE:RKT), 9% position (Cost Basis: $8.24)
Rocket Companies, which was up 32% YTD in 2024, represents the newest large position in the SCC Composite Portfolio, having been purchased in December 2022. RKT represents a play on a future decline in mortgage rates if and when inflation becomes subdued again.
RKT shareholders should take a measure of comfort in the fact that the company is ultimately helmed by founder Dan Gilbert. who owns 1.85 billion shares of stock (on an as-converted basis) through Rock Holdings Inc.”
9. Kraft Heinz Co (NASDAQ:KHC)
Number of Hedge Fund Investors: 38
Jim Cramer in a recent program discussed a bearish analyst report about Kraft Heinz Co (NASDAQ:KHC) and mentioned some threats to the company. Cramer believes investors should avoid piling into the stock for “safety” and “stay the course” with their growth investments:
“Let’s say you try to go to safety, so you pick Kraft Heinz, it’s got a really nice yield. Well, this morning, Citi comes out and says sell it. It’s a share loser, it is in trouble on many different margin issues, and it can’t find a way. And then I would throw in GLP-1s because it’s not exactly like they’ve got this incredible lineup of things that are good for you. So this is the dilemma of the market. Can you pull out of a terrific company like an ARM Holdings, AMD, and go into this, recognizing you’re going and sacrificing all your growth, possible yield getting cut because of the dividend? And I say no, stay the course, right? Because I believe that the president will see the light and say it’s the countries that are the problem, not our great American companies. We’re not going to hurt those companies because that hurts the worker. It is such a clear path that I’m offering right now that if they don’t take it, it’s foolish.”
Mairs & Power Growth Fund stated the following regarding The Kraft Heinz Company (NASDAQ:KHC) in its Q3 2024 investor letter:
“We added The Kraft Heinz Company (NASDAQ:KHC) to the Fund in the quarter. Kraft Heinz is a leading global food company which possesses a portfolio of iconic brands, including its eponymous ketchup brand. The company has been undergoing an operational transformation focused on driving efficiency gains in supply chain, manufacturing and distribution. These efficiency gains have fueled increased investments in technology, automation, innovation and marketing, which should ultimately drive more consistent organic revenue growth and high single digit earnings per share growth. We expect above-average long-term returns, buoyed by consistent free cash flow generation, opportunistic share repurchases and an attractive 4-5% dividend yield. A modest current valuation affords an ample margin of safety.”
8. AT&T Inc (NYSE:T)
Number of Hedge Fund Investors: 59
Jim Cramer in a recent program on CNBC recommended investors gain exposure to telecom companies like AT&T Inc (NYSE:T) for overall downside protection amid tariff-related uncertainty:
“You know what’s really in the driver’s seat here? Telco. The price wars are over, people. Verizon and AT&T have good deals—they both work. They’ve been working. AT&T is suddenly out-executing everybody else in the space. It also has the best chart in the entire book.”
TCW Relative Value Large Cap Fund stated the following regarding AT&T Inc. (NYSE:T) in its Q3 2024 investor letter:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
7. Bristol-Myers Squibb Co (NYSE:BMY)
Number of Hedge Fund Investors: 70
Jim Cramer in a recent program on CNBC recommended investors buy Bristol-Myers Squibb Co (NYSE:BMY) for dividends amid a charging macroeconomic environment.
“You need to own at least one stock like Bristol Myers or Abbot Labs. They are sedate and steady growers with ABY and Bristol offering real good dividend protection, which is a lot more valuable now that rates are coming down.”
6. TJX Companies Inc (NYSE:TJX)
Number of Hedge Funds Investors: 63
Jim Cramer in a recent program reiterated his bullish outlook on TJX Companies Inc (NYSE:TJX) amid tariffs. Here is why Cramer believes the off-price retailer can benefit when others are facing turbulence due to President Trump’s tariff policies:
“Low price retailers that offer great value are so great here, and that means TJX Companies Inc (NYSE:TJX) and Costco. Right now, all sorts of retailers are ordering stuff as fast as they can to beat the tariffs, right? We heard that they’re ordering too much, though—they won’t be able to sell it all. So what do they do? They dump their excess inventory, which is good inventory, to TJX Companies Inc (NYSE:TJX) like they always do.”
ClearBridge Growth Strategy stated the following regarding The TJX Companies, Inc. (NYSE:TJX) in its Q1 2025 investor letter:
“Two newer positions also held up well: uniform and workplace products provider, Cintas, and off-price apparel retailer, The TJX Companies, Inc. (NYSE:TJX). TJX also put up a high-quality beat and has become a relative safe haven for investors amid elevated recession fears. The company has historically benefited from trade-down and inventory availability during periods of weaker consumer spending.”
5. Chevron Corp (NYSE:CVX)
Number of Hedge Fund Investors: 63
Josh Brown, CEO at Ritholtz Wealth Management, explained in a program on CNBC earlier in April why he’s buying Chevron Corp (NYSE:CVX) despite a decline in oil prices:
“Chevron—the lower it goes, the higher the dividend goes. And I don’t believe we’re going to see the level of demand destruction for gasoline that the current price in crude would reflect. I think it’s an overreaction. We’ve seen the price of oil go to negative numbers, so we know you can get overreactions in commodities. So I—I thought that was a layup. The stock’s been hammered over the last couple of days.”
TCW Relative Value Large Cap Fund stated the following regarding Chevron Corporation (NYSE:CVX) in its Q3 2024 investor letter:
“Chevron Corporation (NYSE:CVX), headquartered in San Ramon, CA, is an integrated energy company. At elimination, the stock had a $273 billion market capitalization and met all five valuation factors, including a robust 4.4% dividend yield. Chevron’s planned acquisition of Hess† would yield a strong restructuring catalyst through elimination of duplicate corporate costs and a new markets catalyst through Hess’ 30% interest in the Stabroek oilfield off Guyana; these blocks have a very low cost of supply and decades of reserves that would support strong free cash flow. While Chevron recently received Hart[1]Scott-Rodino (HSR) clearance to acquire the company, the closure timing has extended from Q4 2024 to possibly to Q2 2025 as Chevron is engaged in arbitration with peers ExxonMobil (XOM; 2.47%**) and Chinese state-owned CNOON over rights of first refusal (ROFR) for Hess’ interest in Stabroek. As Chevron’s expected arbitration resolution timeline has slipped, we believe that ExxonMobil and CNOOC’s ROFR case may have more merit than expected, thus putting the entire Hess acquisition at risk. Given an increasingly reasonable outcome that Chevron might abandon the Hess acquisition altogether, we eliminated the position in the stock.”
