Donald Trump plans on raising tariffs by 10% on goods from China while imports from Canada and Mexico will also see a 25% increase in tariffs, as per his recent announcement on Truth Social.
Retail stocks are broadly expected to feel the pressure as higher tariffs take effect.
Still, Oppenheimer analyst Rupesh Parikh sees two of them as well-positioned to withstand Trump tariffs.
Let’s see what each of those two has in store for investors.
Walmart Inc (NYSE: NYSE:WMT)
Oppenheimer analyst expects Walmart to remain resilient in the face of higher tariffs under the new government.
New taxes on imports from China, Canada, and Mexico could even help WMT steal market share from other, less strategically positioned retailers, he told clients in a recent note.
Rupesh Parikh has immense confidence in the ability of Walmart stock to withstand Trump tariffs primarily because “two-thirds of their sourcing comes out of the US market.”
Plus, the big box retailer has invested rather aggressively in improving the in-store experience, expanding in e-commerce, and committing to lower prices in recent years – and these investments will help drive Walmart shares up in 2025, as per the Oppenheimer analyst.
WMT stock is attractive also because it reported better-than-expected earnings last week and raised its guidance for the holiday quarter, suggesting continued strength in the coming months.
Investors may want to load up on Walmart stock despite expectations of higher tariffs because it pays a dividend yield of 0.90% as well. So, they stand to earn a passive income even if new taxes stall the share price temporarily.
Costco Wholesale Corp (NASDAQ: NASDAQ:COST)
Costco stock has already rallied close to 50% this year but Rupesh Parikh continues to see further upside and expects it to hold out against higher tariffs under the Trump administration.
Oppenheimer remains positive on COST as it has “a very limited stock-keeping unit assortment”. That’s meaningful as the retailer can “very easily source different products” to manage the new taxes.
Costco is wildly popular for lower prices which makes it exceptionally positioned for a potential economic slowdown as well. The membership-only warehouse retailer came in handily above Street estimates in its latest reported quarter.
The Nasdaq-listed firm ended its recent quarter with 32.3 million higher-tier members – an increase of 981,000 paid executive memberships versus a year ago.
That made BMO (TSX:BMO) Capital analyst Kelly Bania raise her price target on COST stock to $1,075 signaling potential for another 12% upside from current levels.
Much like WMT, Costco shares also pay a dividend yield of 0.48% which makes them all the more attractive for income investors.