Try stocks with strong fundamentals, less risk in market tumult, Piper Sandler says
Heightened tensions around President Donald Trump’s tariffs have weighed on the market in recent days, but some stocks could provide investors safety amid persistent uncertainty, according to Piper Sandler. All three major averages closed the past week lower after Trump on Monday said that 25% tariffs would be imposed on goods from Canada and Mexico and that an additional 10% tariff on Chinese goods would go into effect. That sent stocks into a tailspin, with stocks seeing their worst week since September. “Unlike selloffs in recent years, where the transmission mechanism that would provide relief for the market’s primary issues (rising CPI in ’22, rising 10yr [yield] in ’23, rising unemployment in ’24) was more predictable, this is different in that the market doesn’t quite know how far Trump is willing to go on tariffs or what his reaction function is to ‘bad news,'” wrote Piper analyst Michael Kantrowitz. “In a way, this is more reminiscent of 2018’s 4Q selloff where the market wasn’t happy with Powell’s policy plans and didn’t bottom until he pivoted.” As a result, investors should “avoid trying to time the market and pick up stocks with stronger fundamentals and less risk that they can underwrite for longer than a trade,” the Wall Street firm continued. To find such stocks, Piper ran a screen looking for companies that could be set up to outperform in the current economic environment and are positively correlated to U.S. corporate bond risk spreads. Below are some of the names that appeared on the list. Shares of food retailer Kroger rose nearly 5% Friday, touching a new 52-week high and putting the stock’s weekly gain at about 3%. By Piper’s internal ranking system, Kroger received a macroeconomic select score and corporate bond risk spread score of 1. The move Friday extended Thursday’s gains, which came on the back of Kroger forecasting annual same-store sales above analysts’ expectations. More than half of sell-side analysts have a bullish stance on the grocery chain, with 13 of 25 having an equivalent of a buy rating, and 12 a neutral option, according to LSEG data. In the past six months, Kroger has far outpaced the broader market, surging almost 28% versus less than 7% for the S & P 500. KR YTD mountain KR, year-to-date Echoing Piper, Morgan Stanley said last week that Dollar General is among the stocks it thinks might be insulated from Trump’s tariffs . The discounter, based outside Nashville, has a macro select score of 1 and a corporate bond risk spread score of 2, using Piper’s own internal scores. Shares of the discount retailer advanced more than 7% on Friday, capping a weekly gain of more than 10%. Dollar General has done well over the past month, rising almost 13%, but remains lower by more than 48% over the past year. DG YTD mountain DG, year-to-date OIl and gas producer Hess , which climbed almost 3% on Friday, also made it on to Piper’s screen, having a macro select score and corporate bond risk spread score of 2. Hess has risen almost 11% in 2025 compared with the 2% decline in the S & P 500.
