President Donald Trump's sweeping tariffs have sent the market into free fall and it's clear investors are starting to panic as they think about the adverse effects of a transitioning economy, slower growth, and a potential recession or even stagflation. As scary as times like this can seem, however, they have also presented the best buying opportunities for calm investors who have long investing horizons ahead of them.
That seems to be how legendary value investor Bill Nygren of the Oakmark Fund is approaching the situation. While investors have been sprinting to the sidelines, Nygren told CNBC last week that he swooped in and bought three beaten-down stocks that already have negative expectations baked in. Let's take a look.
1. Delta Airlines
It's been a rough go for Delta Airlines (DAL 3.75%) this year, with the stock trading down 39% in 2025. Airline stocks are effected by economic sentiment because healthy levels of travel are heavily dependent on a healthy economy.
In early March, airline CEOs began to warn about slowing domestic demand for travel in the U.S. As a result, Delta cut its first-quarter outlook for revenue and earnings, saying that revenue would increase no more than 5% year over year, down from initial projections of 6% to 8%. Delta also took down its adjusted earnings estimates to a midpoint of $0.40, down from a prior midpoint of $0.85.
NYSE: DAL
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"The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in domestic demand," Delta management said at the time. Things have only gotten worse with Trump's latest batch of tariffs. There's also the possibility that international travel into the U.S. sours, with the trade war becoming more contentious by the day. Recent data showed that bookings from Canada to the U.S. are way down.
But right now, you can buy Delta stock for a song while it trades at just 5 times forward earnings. The stock may take some time to find its feet again, especially until this mess with tariffs and the trade war gets figured out, but Delta has certainly cemented itself as one of the major airlines, and should bounce back once travel demand rebounds.
2. Charter Communications
Charter Communications (CHTR +1.00%) owns the cable, mobile, and internet provider Spectrum, which services over 57 million homes in 41 states. The bulk of Charter's revenue comes from providing internet connectivity, while its second-biggest generator is from providing cable packages and access to streaming networks.
Last November, Charter announced its plan to acquire its largest shareholder, Liberty Broadband, in an all-stock deal in an attempt to simplify the company's corporate structure. Liberty Broadband also owns an Alaskan telecommunications company that will be spun off once the deal closes, which interestingly isn't slated to occur until 2027.
NASDAQ: CHTR
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Despite all of the chaos in the market, Charter has held up pretty well and is only down about 3% this year. Nygren believes the company is viewed by investors as a cable company but should be viewed as an internet provider. In fact, Charter claims to be an industry leader in terms of providing the fastest internet speed. The company also says it's the fastest-growing mobile provider and the largest video and voice provider, among other accolades.
Analysts at Citigroup (C 2.17%) recently resumed coverage of the company with a buy rating. They suggest that while Charter faces competition from competitors in the fiber-optic space, it has ways to counter the competition through strategies such as rate plan bundles and value pricing, enhanced cable solutions, improved broadband performance, and further expansion of its network including in rural markets, where it is already a leader. The analysts also see an opportunity to continue to grow free cash flow (FCF). Charter generated FCF of $4.3 billion in 2024. The stock trades at a trailing FCF yield of about 6% and 9.4 times forward earnings.
3. Citigroup
Citigroup is still trying to overcome issues it ran into during the 2008-09 Great Recession, but it has seemingly gotten on the right track over the last couple of years. Jane Fraser became the new CEO in 2021 and quickly implemented sweeping changes. The longtime Citigroup veteran immediately began to sell off the bank's capital-intensive international consumer banking divisions, which management didn't think had enough scale in their perspective markets.
Citigroup also began the complex process of selling its highly profitable consumer, small business, and middle market banking division in Mexico, which is called Banamex. This involved trying to find a buyer approved by the Mexican government. The process proved more difficult than expected and Citigroup eventually abandoned trying to find a buyer and chose to split off these operations from its institutional businesses at Banamex, which the bank will retain. Citigroup eventually plans to spin off these businesses into an initial public offering. All of these moves are intended to free up capital that Citigroup can use to modernize the bank, repurchase shares, and invest in its higher-performing businesses.
NYSE: C
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Citigroup's goal is to drive a 10%-11% return on tangible common equity, which ideally should eventually translate into a valuation equivalent to the bank's tangible book value (TBV) per share, especially if management can convince investors that it can generate this performance on a regular basis. The stock currently trades at about 66% of TBV, so there should be a lot of upside if management can execute. The bank also has a dividend yield of 3.82%, so investors are getting compensated for their patience.
