When examined over long stretches, stocks stand atop the pedestal in terms of annualized return, relative to all other asset classes. But this doesn't mean the Dow Jones Industrial Average (^DJI +0.90%), S&P 500 (^GSPC +0.92%), and Nasdaq Composite (^IXIC +0.98%) move from Point A to B in a straight line.
Stock market corrections, bear markets, and even crashes are normal, healthy, and inevitable aspects of investing on Wall Street. Over the last two months, investors have witnessed the ageless Dow and benchmark S&P 500 firmly dip into correction territory. Meanwhile, the growth-focused Nasdaq Composite has fallen into its first bear market since 2022.
Though there are a number of catalysts responsible for pushing the broader market lower, such as the historical priciness of equities, rapidly rising U.S. Treasury yields, and the growing likelihood of a U.S. recession, nothing has fanned the flames of fear and uncertainty quite like President Donald Trump's tariff policy.
President Trump listening to members of his cabinet during a meeting. Image source: Official White House Photo.
The Trump tariff sell-off is a golden opportunity for long-term investors
On April 2nd -- a day the president has affably referred to as America's "Liberation Day" -- Trump unveiled a 10% worldwide tariff, as well as introduced a laundry list of higher reciprocal tariffs on nation's that have regularly run unfavorable trade deficits with the U.S.
The president and his administration believe that instituting tariffs will generate additional revenue for the U.S., protect American jobs, and encourage businesses to manufacture their goods domestically. But there are quite a few ways Trump's tariff policy can go awry.
To begin with, it runs the risk of worsening trade relations with China, as well as our allies. Even if trade deals are eventually negotiated, it's possible foreign businesses and consumers may choose to purchase fewer American-made goods.
Another problem, which I've spoken to previously, is the lack of clarity between output and input tariffs. The former is a tariff placed on a finished good, while input tariffs are duties applied to imported goods used to manufacture products domestically. Input tariffs run the risk of reigniting the prevailing rate of inflation in the U.S., and they might make certain American-made products less cost-competitive.
The other prime issue with President Trump's tariffs is the lack of a clear and cohesive message. Just a week after these tariffs were announced, the president paused most reciprocal tariffs (not including China) for 90 days. Multiple times per week, the Trump administration has shifted its stance on what sectors, industries, and/or products will be subjected to or exempted from tariffs.
While this Trump tariff sell-off has created bouts of historic volatility for the Dow, S&P 500, and Nasdaq, it's also paved the way for investors to scoop up superb stocks at amazing deals. What follows are three outstanding businesses that are no-brainer buys right now.
NYSE: VZ
Key Data Points
Verizon Communications
The first unbeatable stock to buy amid the tariff-driven chaos on Wall Street is domestic telecom behemoth Verizon Communications (VZ 1.72%).
Verizon has contended with a couple of glaring headwinds in recent years. Being a mature business with low-single-digit sales growth has often left it off the radars of investors seeking out fast-paced stocks in the tech sector.
What's more, the Federal Reserve's most-aggressive rate-hiking cycle in four decades, which was undertaken between March 2022 and July 2023, increased borrowing costs. Since most telecom companies rely on debt financing for major projects, the cost of future projects went up. Yet in spite of these challenges, Verizon looks like the perfect stock for patient (and risk-averse) investors to buy right now.
One of the best aspects of wireless service and internet access is that both have evolved into basic necessities. Though consumers and businesses might look for ways to reduce their costs during periods of economic turbulence, most are unwilling to cancel their wireless service and/or broadband access. Verizon's historically low wireless churn rate suggests its operating cash flow is highly transparent and predictable.
While the 5G revolution has taken a back seat to the rise of artificial intelligence (AI), a steady increase in data consumption bodes well for Verizon. Data usage tends to be a key margin driver for big telecom companies. The ongoing expansion of its wireless network to support 5G download speeds should result in modest but steady revenue growth.
To boot, Verizon is also seeing a resurgence in broadband subscriptions. Even though broadband isn't the growth story it was at the turn of the century, it does still generate meaningful operating cash flow, and it serves as a jumping-off point to encourage consumers to bundle their high-margin services.
Verizon's forward price-to-earnings (P/E) ratio of 9 and its dividend yield of 6.2% are simply too attractive to ignore.
Image source: Getty Images.
Teva Pharmaceutical Industries
A second superb stock that can be confidently bought by long-term investors amid Trump's tariff-driven panic on Wall Street is pharmaceutical giant Teva Pharmaceutical Industries (TEVA +0.66%).
Teva has endured challenges galore since the midpoint of the 2010s. It (in hindsight) grossly overpaid for generic drugmaker Actavis and ballooned its outstanding debt. It's also contended with weaker generic-drug-pricing power, and a seemingly endless parade of litigation, including a nationwide lawsuit regarding its role in the opioid crisis. While these headwinds have acted as cement blocks for years, the grey clouds have officially lifted for Teva.
The biggest breakthrough for the company was forging a $4.25 billion opioid litigation settlement with 48 states, which is to be spread over 13 years and includes up to $1.2 billion in Narcan (the opioid overdose reversal drug) supplied to states.
Perhaps more importantly, Teva Pharmaceutical has returned to growth. Management has shifted the company's focus more toward novel-drug development. Despite brand-name drugs having finite periods of sales exclusivity, novel therapies offer faster growth rates and substantially higher margins. Top-selling tardive dyskinesia drug Austedo may top $2 billion in sales this year and has been delivering consistent double-digit annual sales growth.
NYSE: TEVA
Key Data Points
Additionally, Teva has made key strides in improving the financial health of its balance sheet. Following the Actavis acquisition, the company was buried under $35 billion-plus in net debt. But after selling non-core assets, reducing annual expenditures, and shifting the company's focus to higher-margin growth channels, Teva is sitting on only $14.5 billion in net debt, as of the end of 2024.
A forward P/E ratio of 5 creates an ideal low-risk/high-reward scenario for patient investors.
Mastercard
The third superb stock that stands out as a no-brainer buy amid Trump's tariff-induced sell-off on Wall Street is payment-processing titan Mastercard (MA 0.14%).
The prime concern at the moment for Mastercard (along with other cyclical financial stocks) is whether or not Trump's tariff policy will tip the U.S. economy into a recession. The Atlanta Federal Reserve's GDPNow model is forecasting a 2.2% contraction in U.S. gross domestic product (GDP) for the first quarter (as of the April 16 update). When U.S. GDP declines, it's not uncommon for consumers and businesses to pare back their spending, which isn't great news for a company like Mastercard that generates merchant fees from transactions.
NYSE: MA
Key Data Points
The silver lining for Mastercard is that it's able to take full advantage of the nonlinearity of the economic cycle. This is to say that economic expansions and recessions aren't mirror images of each other. Whereas the typical recession since the end of World War II has resolved in 10 months, the average economic expansion has endured for five years. This disparity is what allows Mastercard's sales to sustain a double-digit growth rate over long periods.
Mastercard also blends predictable cash flow in the U.S. -- it's the clear No. 2 payment processor -- with plenty of overseas potential. Last year, cross-border volume surged 18% on a currency-neutral basis from the prior-year period. Since most emerging markets remain chronically underbanked, Mastercard has a lengthy runway to organically or acquisitively expand its payment infrastructure into these regions.
Mastercard benefits from its avoidance of lending, as well. While some of its payment-processing peers double dip (i.e., service both sides of the transaction aisle), Mastercard's management team has solely stuck with payment facilitation. The advantage of this approach is not having to set aside capital to cover prospective loan losses during periods of economic turbulence. In short, Mastercard tends to bounce back from downturns faster than other financial institutions.
Lastly, the company's sub-28 forward P/E ratio represents an 18% discount to its average forward earnings multiple over the last half-decade.
