Moose head at the Abercrombie & Fitch store on 5th Avenue in New York City. Abercrombie is one of … More
The tariff steamroller ran over the stocks of some good companies in the first quarter and early April. That provides lots of candidates for my Casualty List, a roster of stocks that have been hit hard and that I believe have excellent recovery potential.
The basic idea in investing is to buy low and sell high, Market declines offer an opportunity for the “buy low” part. Are we near a bottom? I can’t tell. But I know that many stocks are priced more attractively than they were at the mid-February peak.
Today I’m adding five stocks to the Casualty List.
Synchrony
Synchrony Financial (SYF) provides private-label credit cards for Amazon.com, Lowe’s, Sam’s Club, Verizon, Walgreens and other companies, serving more than 70 million people in all.
Credit card delinquencies were creeping up even before the trade wars broke out. If tariffs cause a recession, that situation will get worse. Since January, Synchrony stock has come down from nearly $71 to about $44 as of April 4.
Today’s price is only five times recent earnings and six times the earnings analysts anticipate for the next four quarters. Synchrony didn’t exist in its current form during the Great Recession of 2007-2009. But it held up decently through the Covid-19 recession of 2020.
Abercrombie
The Trump administration slapped a 46% tariff on Vietnam, one of the biggest announced for any country. Clothing retailer Abercrombie & Fitch Co. (ANF) got 34% of its clothes from Vietnam in 2023. Cambodia (49% tariff) and India (26%) are also big suppliers to Abercrombie.
Abercrombie executives must be chagrined, as they had reduced their imports from China, only to get caught up in a broader trade war. Vietnam has already offered to reduce its tariffs to zero if the U.S. would ease up. Perhaps a deal will be struck.
Abercrombie stock, which was above $180 last summer, has fallen to about $73, or less than seven times recent earnings.
Dillard’s
Down 29% this year, Dillard’s Inc. (DDS) is a department store chain concentrated in the South. The chain’s revenue has grown 15% a year over those five years, but analysts expect soggy revenue going forward, as the new tariffs slow economic growth.
Only four Wall Street analysts follow the stock. None of them rate it a buy, and two rate is “underperform.”
My view is rosier than the consensus. I consider a return on equity of 15% good and 20% excellent. Dillard’s has been above 30% four years in a row. I like the stock at $317, down from a high of $508. The current price is nine times recent earnings.
Peabody
Selling for less than book value (corporate net worth per share), Peabody Energy Corp. (BTU), looks cheap enough to me to discount a host of bad news.
The largest U.S. coal producer is both an importer and an exporter. Some of its coal comes in from nine mines in Australia. And it sells coal in 26 countries, including India, Japan and South Korea.
In the past decade, Peabody shares have usually fetched above five times earnings. Today the multiple is under four.
Steven Madden
Right in the danger zone is shoemaker Steven Madden Ltd. (SHOO). It saw the tariff threat coming, but not in time to deflect it much. As of last November, it had 71% of its shoes made in China, which is being hit with the steepest tariff rate, 54%.
Steven Madden has sliced Chinese imports to 58%, and hopes to get to 40% by the end of this year. Since may of its shoes will be tariffed, the company has said it will try to raise prices where it can. But of course, customers may resist.
Over the past decade, Steven Madden has grown sales and earnings at about an 8% annual clip. The stock currently fetches 10 times earnings, versus a ten-year median of 19.
The Record
Today’s Casualty List is my 88th one. Performance can be calculated for 84 lists, started in June 2000. The average return on my Casualty List recommendations has been 14.6%, which nicely beats the 11.4% average for the Standard & Poor’s 500 Total Return Index.
Bear in mind that my column results are hypothetical and shouldn’t be confused with results I obtain for clients. Also, past performance doesn’t predict the future.
Of the 84 lists, 39 have beaten the S&P and 53 have been profitable.
My selections a year ago suffered a 2.2% loss from April 1, 2024 through April 1, 2025. My worst pick was Humana Inc. (HUM), which fell almost 24%. My best was Universal Corp (UVV), up a bit more than 17%.
Disclosure: I don’t own the stocks discussed in today’s column, personally or for clients.
