Here's 10 Undervalued Tariff-proof Stocks on My Watchlist
Effective tariff rate is still above 20% despite the 90-day pause.
This will increase inflation and reduce growth.
Here's 10 undervalued tariff-proof stocks on my watchlist: 🧵
5-Year Revenue CAGR: 14%
Return on Investment: 25%
Forward P/E: 24
ASML holds a monopoly on EUV lithography, essential for manufacturing advanced chips.
Every new AI model and vertical agent boosts chip complexity, driving demand for ASML’s machines higher.
With semiconductor equipment exempt from tariffs, ASML remains the ultimate pick-and-shovel play in AI compute growth.
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2. $Taiwan Semiconductor Manufacturing(TSM)$
5-Year Revenue CAGR: 16%
Return on Investment: 26%
Forward P/E: 15
TSMC has expanded its overall market share from 64% to 67% last quarter while keeping above 90% share in advanced chip manufacturing.
AI labs are coming up with new models with larger context and output windows and new vertical agents are built everyday, skyrocketing compute demand.
This is not going to stop anytime soon as semiconductors are exempt from tariffs.
Regardless of who designs the best chips, TSMC will be manufacturing them.
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3.
5-Year Revenue CAGR: 51%
Return on Investment: 15%
Forward P/E: 42
MercadoLibre isn't active in the US so it has very little do with tariffs.
It holds over 35% share in LatAm e-commerce. This scale allows it to offer lower prices than competitors.
As the tariffs will reduce global overall growth, people in LatAm will also increasingly switch to low-cost providers, benefiting MELI.
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4.
5-Year Revenue CAGR: 52%
Return on Equity: 28%
Forward P/E: 20
The largest digital bank in the world.
It struggled due to surging USD in the second half of the 2024 but it's about to change now.
As tariffs will boost inflation and weaken the USD, foreign exchange rate will turn from a headwind into a tailwind for $NU.
It's a no brainer at 20 times forward earnings.
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5.
5-Year Revenue CAGR: 11%
Return on Equity: 14%
Forward P/E: 20
Largest health insurer in the US.
Health insurance is the most defensive sector in S&P 500 after utilities.
People may cut back on everything, but they'll keep paying for health insurers as long as they have money.
As UnitedHealth is able to pass all cost increases to clients, it's well positioned to thrive in high tariff era.
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6.
5-Year Revenue CAGR: 18%
Return on Investment: 14%
Forward P/E: 16
American Express is both inflation proof and recession proof company.
It's inflation proof because its commission dollars also go up as total basket sizes grow due to inflation.
It's recession proof because average wealth of its user base is higher than that of Visa and MasterCard so their spending don't decline that much.
I'll be loading the boat if the valuation touches 15 times trailing earnings.
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7.
$Hims & Hers Health Inc.(HIMS)$
5-Year Revenue CAGR: 77%
Return on Investment: 39%
Forward P/E: 42
It has two advantages in tariff era:
1) Most of its suppliers are in the US so it's prices will be affected less by tariffs.
2) More than 50% of its subscribers are on personalized plans, meaning its retention will remain high.
On top of all these, it'll also capture demand bouncing off from the big players as they'll have to increase their already high prices.
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8.
5-Year Revenue CAGR: 7%
Return on Investment: 13%
Forward P/E: 17
Consumer staples was the best performing S&P 500 sector in the last trade wars.
Pepsi, in my view, is the best positioned consumer staples company.
Its supply chain is localized in all its operating regions. This means that its inputs cost won't grow because of tariffs.
No brainer at 17 times forward earnings.
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9.
5-Year Revenue CAGR: 50%
Sales-to-Capital: 1.6
Forward P/S: 3
It's an AI based direct-to-consumer insurance provider.
98% of all its policies are sold and 55% of all claims are settled by its internal AI agents, significantly cutting overhead costs.
This allows it to offer cheaper prices than competitors. On average, its policies are 68% cheaper than competitors.
Sluggish economy will only accelerate customers transition from expensive legacy providers to low-cost direct to consumer providers.
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10.
5-Year Revenue CAGR: 41%
Return on Investment: 18%
Forward P/E: 29
It's tariff proof because of two reasons:
1) All its service base is localized, no export or import related costs.
2) Alternative to its mobility solution is buying a car which people don't do in a recession.
Its deliver business may take a hit but that could be easily compensated by multiple expansion as the stock now trades at a ridiculous 16 times 2026 earnings.
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