4 Cheap Stocks With Solid Fundamentals to Offset Market Uncertainty

The U.S. stock markets have been rattled by the new tariff regime imposed by President Trump earlier this year. The President has been indicative of tariff hike on its trading partner since he assumed the Oval office. The S&P 500 Index made its all-time high in mid-February before starting its downtrend. The major fall across global markets started earlier this month when the U.S. government announced a blanket tariff of 10% for all imports and a higher rate for key trading partners on April 2. The highest tariff of 145% has been imposed on China, raising apprehension of a trade war between the world’s two largest economies as the country imposes similar tariff hikes for the United States.

The imposition of significant tariffs against each other by the United States and China has led to a rise in the risk of a recession or stagflation. This tariff war comes at a point when the global markets started to recover from a period of high inflation and supply-chain disruptions due to several conflicts between countries, especially Russia and Ukraine.

The S&P 500 Index has declined 6.8% so far this year, after a strong rally in 2024. The decline was primarily due to rising uncertainty on account of tariffs.

Top Brokers Lower S&P 500 Target

Amid the rising uncertainty due to tariffs, several top brokers, including Deutsche Bank, Barclays, Citi, Goldman Sachs and others, have lowered their 2025-end targets for the S&P 500. The reduction in the target ranges between 10% and 25%. However, each of these brokerage houses has its most optimistic target for the S&P 500 Index higher than current levels, except J.P. Morgan, which expects 5200 for the index by year-end. These analysts believe that tariffs could send prices higher and weigh on demand. There could also be less trade with China and a slowing of economic activity, leading to a decline in earnings for constituent companies of the S&P 500 Index.

However, tariffs have been paused for a 90-day window for all U.S. trading partners, except China. Several countries are rushing to sign trade agreements with the United States to avoid the significant hike in tariffs. Although there is a rising hope of negotiation between the world’s top two economies, there is a stalemate at present as both countries seem to be unwilling to lower their absurdly high tariff rates.

However, there have been some improvements, with both countries exempting certain product imports from their tariff lists. While China is exempting medical equipment and ethane among others, the U.S. government has exempted electronics like smartphones and laptops, and plans the same for auto parts.

The pace of trade deals, especially between the United and China, will indicate the time for recovery in the stock market. However, no such deal may lead to consolidation or further correction in the market later in 2025.

Four Cheap Stocks With Strong Earnings Growth

Here we discuss four companies — Aveanna Healthcare AVAH, CalMaine Foods CALM, CommScope COMM and Sterling Infrastructure STRL — across different sectors that are likely to beat the market and create wealth for investors irrespective of tariff situation. The shares of these companies (with strong fundamentals) have, however, declined year to date, leading to attractive valuation for entry. The 2025 earnings estimate for these companies reflects significant improvement over 2024 levels. All these companies currently sport a Zacks Rank #1 (Strong Buy) and a VGM score of ‘A’. You can see the complete list of today’s Zacks #1 Rank stocks here.

Aveanna Healthcare is a leading home care provider for medically complex patients, offering Private Duty Services, Medical Solutions, and Home Health & Hospice. In fourth-quarter 2024, Aveanna reported $519.9 million in revenues, reflecting an 8.6% year-over-year increase and a 42.8% rise in adjusted EBITDA (to $55.2 million). Net income improved to $29.2 million from a loss of $25.7 million in the fourth quarter of 2023.

Performance was driven by strategic cost reductions, improved reimbursement rates and a focus on preferred payor partnerships. For 2025, the company expects revenues to be in the range of $2.10-$2.12 billion and adjusted EBITDA in the $190-$194 million band. In April 2025, Aveanna announced the acquisition of Thrive Skilled Pediatric Care, enhancing its pediatric service footprint and expanding operations into two new states.

AVAH has an expected revenue and earnings growth rate of 4.6% and 100%, respectively, for the current year. The Zacks Consensus Estimate for earnings has improved 71.4% over the last 60 days. The company is trading at 0.41X P/S F12M, lower than the industry’s 2.67X as well as its five-year high of 1.28X, reflecting cheap valuation. It carries a Value and Growth score of ‘B’.

Aveanna Healthcare Holdings Inc. Price

Aveanna Healthcare Holdings Inc. price | Aveanna Healthcare Holdings Inc. Quote

Cal-Maine Foods is the nation’s largest producer and distributor of fresh shell eggs, offering a wide range of products including conventional, cage-free, organic, and ready-to-eat egg items. In the third quarter of fiscal 2025, CALM reported $1.4 billion in sales and $508.5 million in net income, driven by higher market prices and strong demand, especially amid avian flu-related supply shortages.

The company sold a record 331.4 million dozen eggs, supported by increased production capacity and recent acquisitions. Feed costs declined 9.6%, aiding margins. For 2025, growth is expected from continued demand, operational efficiency and new capacity expansions. CALM also announced the acquisition of Echo Lake Foods, a major producer of ready-to-eat egg and breakfast items, further diversifying its portfolio and adding stable, high-growth revenue streams.

CALM expects an earnings growth rate of 300.5% for fiscal 2025. The Zacks Consensus Estimate for current-year earnings has improved 46.2% over the last 60 days. The company is trading at a 10.91X P/E F12M, slightly higher than the industry’s 9.76X but lower than its five-year median of 23.49X, reflecting a cheap valuation. It carries a Value score of ‘A’ and a Growth score of ‘B’.

Cal-Maine Foods, Inc. Price

Cal-Maine Foods, Inc. price | Cal-Maine Foods, Inc. Quote

CommScope is a global leader in network infrastructure solutions, providing fiber, wireless, and broadband technologies that power data centers, telecom and enterprise networks. In fourth-quarter 2024, the company delivered improved performance, driven by cost optimization and steady demand for broadband and data center solutions.

Looking ahead to 2025, CommScope aims to strengthen its position through strategic investments and new product rollouts. Key performance drivers include efficiency initiatives and growth in fiber deployment. Recently, CommScope launched the Propel XFrame, a compact fiber frame for high-density data centers, offering flexible and scalable infrastructure.

Additionally, its collaboration with Altice Labs on the PON Evo suite integrates advanced fiber-to-the-home technologies, enhancing service provider capabilities and reducing infrastructure costs. These innovations underscore CommScope’s commitment to next-generation network evolution.

COMM has an expected revenue and earnings growth rate of 3.8% and 3000%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 52.6% over the last 60 days. The company is trading at a 3.93X P/E F12M, lower than the industry’s 7.75X as well as its five-year median of 6.11X, reflecting a cheap valuation. It carries a Value and Growth score of ‘A’.

CommScope Holding Company, Inc. Price

CommScope Holding Company, Inc. price | CommScope Holding Company, Inc. Quote

Sterling Infrastructure delivers E-Infrastructure, Transportation and Building Solutions across the United States, supporting data centers, highways and residential and commercial builds. In fourth-quarter 2024, Sterling posted record revenues of $553.5 million (up 14% year over year) and net income of $34.9 million, reflecting strong execution and demand across all segments. For full-year 2024, revenues rose 17% to $2.1 billion, with EPS of $3.38 (up 28%).

The company expects continued momentum in 2025, driven by E-Infrastructure growth and robust transportation demand. Key drivers include large-scale site development projects, resilient market fundamentals and operational excellence. Sterling’s RLW unit recently secured two major transportation contracts — a $195 million I-15 Interchange project in Utah and an $86 million I-25 North Corridor project in Colorado — reinforcing its regional strength and technical leadership in complex infrastructure builds.

STRL’s 2025 revenues are estimated to decline 4.1% in 2025 but earnings are anticipated to rise 34.6%. The Zacks Consensus Estimate for current-year earnings has improved 29.3% over the past 60 days. The company is trading at a 17.04X P/E F12M, slightly higher than the industry’s 16.88X, reflecting a moderate valuation. However, STRL’s current valuation is significantly lower than its five-year high of 31.97X. It carries a Value score of ‘C’ and a Growth score of ‘A’.

Sterling Infrastructure, Inc. Price

Sterling Infrastructure, Inc. price | Sterling Infrastructure, Inc. Quote

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research