3 Blue-Chip Retail Stocks to Count on Amid Trade War Uncertainty

The retail sector is no stranger to economic turbulence, and with trade uncertainties on the rise, investors are seeking stability. President Donald Trump’s sweeping tariffs, starting at 10% and escalating for certain countries, have reignited fears of a global trade war. While these policies introduce new challenges, select blue-chip retailers have the financial strength, market dominance and adaptability to navigate these headwinds.

Rising tariffs can increase costs for retailers, particularly those reliant on global supply chains. Higher import costs on goods sourced from key trade partners can squeeze margins and lead to price hikes for consumers. However, well-established retail companies have the flexibility to adjust sourcing strategies, negotiate supplier contracts and offset rising costs through strategic pricing. This ability allows them to weather economic uncertainties more effectively than smaller players.

For long-term stability and consistent growth, market experts favor highly reputable companies with substantial market capitalization — commonly referred to as blue-chip stocks — including Walmart Inc. WMT, Costco Wholesale Corporation COST and The Home Depot, Inc. HD. These industry leaders have demonstrated financial resilience and a history of delivering robust returns to shareholders, even in challenging economic conditions.

Moreover, blue-chip stocks tend to be less vulnerable to sudden market fluctuations, making them a reliable choice for both experienced and novice investors. Their steady dividend payouts further enhance their appeal, offering a source of consistent income while mitigating downside risks.

These companies boast a winning combination of market leadership, strong brand recognition, loyal customer bases and extensive reach. These traits give them a distinct competitive advantage, make them investor favorites and unlock growth opportunities. By including blue-chip retailers in their portfolios, investors can achieve both stability and potential for sustained growth, even amid trade war uncertainty.

Past-Year Stock Price Performance of WMT, COST & HD

Walmart: Embracing Technology for Growth

Walmart has been working to strengthen its already formidable presence in the market. The company has embarked on a series of strategic e-commerce initiatives, encompassing acquisitions, partnerships and significant improvements in its delivery and payment systems. Walmart is committed to elevating its merchandise offerings, ensuring a diverse and appealing product assortment. Innovation extends to its supply chain, wherein the company is enhancing capacity and introducing cutting-edge solutions.

As of yesterday’s trading session, Walmart’s market capitalization stood at $719.6 billion. This Zacks Rank #3 (Hold) company has a trailing four-quarter earnings surprise of 7.4%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings per share (EPS) suggests growth of 3.4% and 4.8%, respectively, from the year-ago reported numbers. The company pays out a quarterly dividend of about 23.5 cents per share (94 cents annualized). WMT’s payout ratio is 33, with a five-year dividend growth rate of 2.9%. (Check WMT’s dividend history here)

Costco: Leveraging Membership Model for Success

Costco has navigated market ups and downs effectively, driven by strategic investments, a customer-centric approach, merchandise initiatives and a strong emphasis on memberships. By identifying untapped markets and tailoring offerings to customer preferences, Costco has deepened its market presence. The company’s high membership renewal rates, efficient supply chain management and bulk purchasing power ensure competitive pricing and foster strong customer loyalty.

Costco has a market cap of $428.2 billion. This Zacks #3 Ranked company has a trailing four-quarter earnings surprise of 0.8%, on average.

The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS implies growth of 7.7% and 11.4%, respectively, from the year-ago period’s actuals. The company pays out a quarterly dividend of $1.16 per share ($4.64 annualized). COST’s payout ratio is 28, with a five-year dividend growth rate of 13.2%.

See the Zacks Earnings Calendar to stay ahead of market-making news.

Home Depot: Capitalizing on Home Improvement Trends

Headquartered in Atlanta, GA, Home Depot stands as another distinguished blue-chip stock, dominating the home improvement retail sector. Its consistent expansion in Professional and Do-It-Yourself segments, fortified by an extensive product lineup and digital innovations, underpins its remarkable success. The company's interconnected retail strategy and robust technological infrastructure have amplified web traffic, leading to growth in digital sales. As mortgage rates decline, it could potentially stimulate homebuying activity and drive demand for renovation and remodeling projects.

Home Depot has a market cap of $368.7 billion. This Zacks Rank #3 company has a trailing four-quarter earnings surprise of 2.6%, on average. 

The Zacks Consensus Estimate for Home Depot’s current financial-year sales calls for growth of 2.7% from the year-ago period’s reported number. The company pays out a quarterly dividend of $2.30 ($9.20 annualized) per share. HD’s payout ratio is 59, with a five-year dividend growth rate of 11.2%.

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This article originally published on Zacks Investment Research (zacks.com).

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