Six stocks to consider as rebound candidates offer investors opportunities to reap the benefits of whatever rebound ensues once the ongoing fallout from the tariff tumult tappers off.
When a sustained surge in stock prices ensues is unclear, since so much of the selling seems to have been spurred by uncertainty about whether the leaders of governments around the world will decide whether to negotiate with President Trump as he seeks “fairness” or follow China’s strategy thus far of trying to pursue a tariff trade war. Some of the best investments I personally have made occurred after significant market drops but the challenge always is trying to find reduced prices without waiting too long and watching the market soar to new heights again.
One source of helping to find a good time to buy again in the trend-tracking Investing Edge newsletter written by Jim Woods. The Investing Edge newsletter is a relatively low-priced way to gain a proven method of prognostication that has spanned decades.
Six Stocks to Consider as Rebound Candidates: Trend as a Friend
The trend-following plan tracks a collection of exchange-traded funds (ETFs) that represent the domestic equity markets. The funds are SPY, IWF, IUSV, IJR, DVY. Together, they make the Domestic Fund Composite, or DFC. The DFC is tool used by Woods in Investing Edge to reflect the trend in the markets, he explained.
“We track the DFC each week in relation to its 39-week moving average (195 days, very close to the more widely used 200-day average),” Woods counseled. “If the DFC is below the 39-week average, we are in “Sell” status, which means low exposure to equities. If the DFC is above the 39-week average, we are in ‘Buy’ mode and fully invested in equities. Since March 7, the DFC has been in Sell mode, meaning our bias has been very low equity exposure throughout the current period of tumult.”
Paul Dykewicz talks to Jim Woods, head of Investing Edge and Crypto and Commodities Trader.
Since then, President Trump announced “discounted” reciprocal tariffs for all countries, in most cases, set at a rate of about 50% of the Trump administration’s calculation of other nations’ tariff and non-tariff trade barriers on U.S. goods, according to Citi Research. Otherwise, 10% across-the-board tariffs generally apply to all imports, Citi Research wrote in response to President Trump’s “Liberation Day” announcement on April 2.
Citi Research assessed the potential ramifications of tariffs in choosing four U.S.-based electrical equipment, engineering and construction companies that it forecasts could be relatively well-positioned to benefit in an increasingly protectionist macro environment. The investment firm also wrote that it is monitoring potential mitigation actions that companies could implement to manage or offset tariffs.
Six Stocks to Consider as Rebound Candidates: Citi Research’s Tariff Takeaways
Among Citi Research’s key takeaways following President Trump’s “Liberation Day” announcement about new tariffs:
-Prefer companies with good end-market exposure and “self-help” optionality — The ultimate goal of the Trump administration seems to be to bring back manufacturing to the United States, Citi Research wrote. While some near-term disruption is now likely, medium-to-longer run, increased focus on domestic manufacturing could support U.S. industrial activity, particularly automation-related demand, with Citi Research bullish on companies with diverse end-market exposure, as well as factory automation-exposed companies that offer good “self-help” optionality.
-Potential near-term disruption; Expected 2H rebound — Citi Research wrote that it expects a slowdown in overall economic activity during the near-term, especially across shorter-cycle end markets, as well as autos and consumer-focused end markets as U.S.-levied tariffs on imports take effect and retaliatory actions are begun by U.S. trading partners.
-Pricing could help mitigate tariff impact, but expect near-term margin pressure – Most companies covered by Citi Research faced Trump-related tariffs in his first term, coupled with supply chain disruption amid the global pandemic. The investment firm predicted supply chain dynamics would be relatively nimbler this time, since companies mainly have localized supply chains.
-Value investing becomes more relevant if tariffs ramp up — Citi Research is pushing “value” stocks during the chaos caused by tariffs and retaliatory tariffs.
Six Stocks to Consider as Rebound Candidates: Planet Labs
Planet Labs (NYSE: PL) has emerged as arguably the leading provider of daily Earth observation data, operating the world’s largest fleet of Earth imaging satellites. The San Francisco-based company’s mission is to image the entire Earth every day, making global change visible, accessible, and usable through its network of hundreds of satellites, said George Gilder, who heads the Gilder’s Moonshots advisory service that tries to identify technology’s next wave of great growth stocks.
George Gilder heads the Gilder’s Technology Report and Gilder’s Moonshots.
Unlike traditional satellite operators, Planet deploys a constellation of small satellites that provide near-daily coverage of the entire Earth’s landmass, creating a continuously updated digital record of the planet. Its services are in demand from customers in:
• Agriculture: Enabling precision farming through crop monitoring, yield prediction, and pest detection for customers like Bayer and Syngenta.
• Defense & Intelligence: Supporting government agencies including the National Geospatial-Intelligence Agency of the U.S. Department of Defense with timely intelligence and maritime domain awareness.
• Sustainability: Monitoring deforestation and renewable energy infrastructure through partnerships such as the Global Renewables Watch with Microsoft (NASDAQ: MSFT) and The Nature Conservancy.
• Mapping & Infrastructure: Providing high-resolution imagery for infrastructure planning, disaster response, and urban development.
The company’s diverse customer base includes 976 clients. Some 97% of revenue is from recurring annual contracts, giving management and shareholders good visibility
Chart courtesy of www.stockcharts.com
Six Stocks to Consider as Rebound Candidates: Tailwinds and Challenges
“Demand for geospatial intelligence is increasing across both commercial and government sectors,” Gilder wrote in his latest weekly issue of Gilder’s Moonshots. This demand has been accelerated by advances in AI, which makes the data supplied by satellites far more informative at less expense. This increase in the value proposition only boosts already growing demand for intelligence from the defense and climate response sectors and expands commercial applications across agriculture, forestry, and energy.”
Planet does face key challenges, Gilder acknowledged, citing:
• Competition from both traditional aerospace companies and new market entrants.
• High capital expenditures for satellite development and launches.
• Navigation of complex international regulations in the space sector.
The biggest challenge, though, is a good one: Grabbing market opportunities that are emerging as the technology improves.
“Happily, this year the company made great progress in using artificial intelligence in repositioning itself from a pure data provider to a ‘solutions-focused’ business, Gilder wrote to his subscribers.
Six Stocks to Consider as Rebound Candidates: IBM
Mark Skousen, PhD, an economist who heads the Forecasts & Strategies investment newsletter, the TNT Trader advisory service and serves as a Presidential Fellow at Chapman University, added International Business Machines (NYSE: IBM) to his publication’s Flying Five portfolio in the second half of 2024. IBM is up 23.46% since it was recommended by Skousen to his Forecasts & Strategies on July 22, 2024.
The Flying Five stocks are companies offering above average dividend yields, relatively low price-earnings ratios and a positive profit outlook. Skousen’s Flying Five typically outperform the market, but there are exceptions. As dividend-paying stocks, they also help to insulate investors from the worst of market downturns like the one taking place right now.
In recommending IBM to his Forecasts & Strategies subscribers, Skousen wrote that the company is in the “forefront” of the artificial intelligence (AI) revolution. It has increased earnings per share 35% a year for the past three years and has been raising its dividend accordingly.
IBM has beaten Wall Street analysts’ earnings estimates in recent quarters and seems to be a bit undervalued, Skousen counseled. Much has changed since Skousen worked as a consultant to IBM in the early 1980s, he added.
“It’s still headquartered in Armonk, New York, but has expanded its operations in software, consulting, infrastructure and finance,” Skousen wrote to his Forecasts & Strategies subscribers.
IBM has developed strategic partnerships with Adobe (NASDAQ: ADBE), Amazon Web services (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), Oracle (NYSE: ORCL), Salesforce (NYSE: CRM), Samsung Electronics and SAP (NYSE: SAP). Indian-born Arvind Krishna has been chairman and CEO since 2020 and has made IBM grow dramatically, Skousen added.
Chart courtesy of www.stockcharts.com
Six Stocks to Consider as Rebound Candidates: Honeywell
Honeywell International Inc. (NASDAQ: HON), of Charlotte, North Carolina, operates businesses in aerospace, building automation, industrial automation and energy and sustainability solutions (ESS). The company is one of its favored current recommendations of Citi Research that should fare well as tariffs and retaliatory tariffs torment investors.
Skousen had recommended Honeywell International as one of his Flying Five recommendations in Forecasts & Strategies until July 2024, when he replaced it with IBM.
Mark Skousen, head of Forecasts & Strategies and scion of Ben Franklin, meets with Paul Dykewicz.
Honeywell is among a foursome of U.S.-based electrical equipment, engineering and construction companies that Citi Research expects to hold an important role in supporting domestic manufacturing activity, while offering relatively good near-term performance and improving “operating rigor” that could help navigate tariff-related turmoil, according to Citi Research.
Chart courtesy of www.stockcharts.com
Honeywell management has expressed a plan to focus on three powerful megatrends – automation, the future of aviation and energy transition – underpinned by its Honeywell Accelerator operating system and Honeywell Forge IoT platform. The company aims to help organizations solve the world’s toughest, most complex challenges, providing solutions and innovations through its Aerospace Technologies, Industrial Automation, Building Automation and Energy and Sustainability Solutions business segments. The goal is to make the world smarter and safer as well as more secure and sustainable, its officials said.
The company plans to issue its first-quarter 2025 financial results before the opening of the NASDAQ Stock Market on Tuesday, April 29, for three months ended March 31. Honeywell offers income investors additional appeal with its current dividend yield of 2.2%.
The Flying Five stocks are companies offering above average dividend yields, relatively low price-earnings ratios and a positive profit outlook.
Skousen’s Flying Five typically outperform the market, but there are exceptions. As dividend-paying stocks, they also help to insulate investors from the worst of market downturns like the one taking place right now.
Six Stocks to Consider as Rebound Candidates: EMR
Emerson Electric Co. (NYSE: EMR), of St. Louis, Missouri, designs and manufactures electronic and electrical equipment, software, systems and services for industrial, commercial and consumer markets worldwide. Key business segments of Emerson Electric are Automation Solutions, Climate Technologies, Power Technologies, Industrial Automation, Electric Motors, Storage Systems and Professional Tools.
The product line at Emerson Electric features process control systems, climate technologies, power technologies, industrial automation, electric motors, storage systems and professional tools. Emerson Electric, another recommendation of Citi Research, also is helped in the tariff environment by manufacturing many of its products domestically.
The company has amassed a portfolio of intelligent devices, control systems and industrial software, intended to deliver solutions that automate and optimize business performance, its officials said. With a majority stake in AspenTech, Emerson helps hybrid, process and discrete manufacturers optimize operations, protect personnel, reduce emissions and achieve their sustainability goals.
“Emerson began the fiscal year on a strong note, exceeding first quarter expectations for incremental operating margins and earnings per share with strong cash flow generation,” said Emerson President and Chief Executive Officer Lal Karsanbhai during the company’s last quarterly report presentation on Feb. 5. “Our record gross profit margin and adjusted segment EBITA margin reflect the strength of our transformed industrial technology portfolio and Emerson Management System, as well as the talent and dedication of our world-class team.”
Chart courtesy of www.stockcharts.com
Six Stocks to Consider as Rebound Candidates: ROK
Rockwell Automation Inc. (NYSE: ROK), of Milwaukee, Wisconsin, is seeking to enable the next generation of smart manufacturing and digital transformation. The company integrates control and information across an enterprise to help industrial companies and their workers enhance their productivity.
A key part of its uniqueness is to provide its customers with a deep understanding of their best opportunities for productivity by combining differentiated technology and domain expertise to deliver positive business outcomes. Productivity is aided by simplifying a customer’s experience at every step, from initial solution development through services and support, its officials said.
Rockwell also is recommended by Citi Research as a company that is well equipped to cope with the tariff policies of President Trump due in large part to having about 53% of its manufacturing performed within the United States. The company should be one of the better prepared dividend-paying, smart manufacturing stocks to face the fallout of tariffs and retaliatory tariffs.
Chart courtesy of www.stockcharts.com
Six Stocks to Consider as Rebound Candidates: DOV
Downers Grove, Illinois-based Dover Corp (NYSE: DOV), founded in 1955, is a diversified global manufacturer and solutions provider with annual revenue topping $7 billion. It aims to deliver innovative equipment and components, supplies, aftermarket parts, software and digital solutions.
The company also offers support services through five operating segments: Engineered Products, Clean Energy & Fueling, Imaging & Identification, Pumps & Process Solutions and Climate & Sustainability Technologies. Dover further combines global scale with the intent of leading any markets it serves.
Using an entrepreneurial approach during its 70 years of operation, Dover has built its workforce to approximately 24,000 employees who are urged to take an ownership mindset, collaborating with customers to redefine what’s possible, company officials said. Dover also is recommended by Citi Research and its 42% U.S.-based manufacturing is one of the reasons why is not as vulnerable to the tariff battles that are hurting the share prices of many other companies.
Chart courtesy of www.stockcharts.com
Six Stocks to Consider as Rebound Candidates: Reaction
The tariff and retaliatory tariffs between traditional trading partners have turned the markets downward and combined with ongoing military conflicts to create chaotic trading conditions. Woods, who heads the Investing Edge newsletter and the Crypto and Commodities Trader advisory service, wrote to his subscribers that the past week has been “very difficult for us all.”
“There is no denying that reality,” Woods continued. “However, the other part of this reality is that we have the luxury of living in a country that’s the safest, wealthiest, strongest and that still offers the greatest amount of liberty and economic freedom the world has ever seen.
“And if we think of it this way, we are the luckiest humans to ever live. Be grateful and mindful of this.”
On the geopolitical front, foreign ministers of the North Atlantic Treaty Organization (NATO) completed two days of meetings in Brussels, Belgium, on Friday, April 4, the anniversary of the alliance’s formation in 1949. They focused on preparations for the upcoming NATO Summit in The Hague, defense investment, burden sharing, allied support to Ukraine and cooperation with partners.
Secretary General Mark Rutte said that as the world grows “more dangerous,” the need for NATO has never been greater.
“We are united in our commitment to each other in this Alliance,” Rutte said.
On Thursday, April 3, Mark Rutte commended “the biggest increase in defense spending on the European side of NATO since the end of the Cold War.” He also welcomed U.S. Secretary of State Marco Rubio to his first ministerial meeting, thanking him for his “tireless diplomacy and support for NATO.”
The security of the Indo-Pacific and the Euro-Atlantic is more connected than ever before, Rutte told attendees.
“The war in Ukraine is but one example of this as China, North Korea and Iran continue to support Russia’s war machine,” Rutte said. “This poses risks to us all.”
A ray of hope came from European Commission President Ursula von der Leyen, who offered the United States a deal to remove tariffs on all industrial goods as part of trade negotiations. She stressed her intention to retaliate against Donald Trump’s policies if negotiations fail.
President Trump appeared to shock the world’s stock markets by announcing a 20% across-the-board tariff on imports from the European Union set to take effect on April 9. Steel, aluminum and cars are subject to a separate 25% rate. In total, more than €380 billion in EU-made products will be affected.
Pharmaceuticals, copper, lumber, semiconductors and energy have been exempted.
The next move may belong to President Trump. People around the world seem to be watching with both hope and fear, based on the reaction so far.
Paul Dykewicz, www.pauldykewicz.com, is an award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Crain Communications, Seeking Alpha, Guru Focus and other publications and websites. Paul can be followed on Twitter @PaulDykewicz, and is the editor and a columnist at StockInvestor.com and DividendInvestor.com. He also serves as editorial director of Eagle Financial Publications in Washington, D.C. In that role, he edits monthly investment newsletters, time-sensitive trading alerts, free weekly e-letters and other reports. Previously, Paul served as business editor and a columnist at Baltimore’s Daily Record newspaper and as a reporter at the Baltimore Business Journal. Plus, Paul is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The uplifting book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many other sports figures. To buy signed and specially dedicated copies, call 202-677-4457.
