If you haven't noticed yet, it's been a rough period for the stock market over the past week or so. After President Donald Trump announced much harsher tariff rates than most experts were expecting, the S&P 500 fell well into correction territory, and the Nasdaq even finished the week in a bear market, down by more than 20% from its recent highs.
Of course, there are many businesses that could take a big hit from tariffs. An obvious example would be retailers who primarily sell imported products. And if tariffs cause inflation or a recession, banks could see default rates spike higher.
On the other hand, there are some excellent businesses whose stocks have been beaten down but which should see a minimal impact from tariffs. Here are three in particular that patient, long-term investors might want to take a closer look to spot any price weakness.
An incredible business with a lot to like
Specialty insurance company Markel (MKL 6.71%) is down by 16% since reaching a fresh all-time high less than two months ago. And to be fair, the stock isn't down for no reason; it has a large stock portfolio, and many of its positions are taking big hits right now. Plus, its venture capital division invests in businesses, many of which have rather cyclical revenue streams.
NYSE: MKL
Key Data Points
However, the core insurance business should be just fine. Markel provides several types of insurance products, but the key point to keep in mind is that it sells coverage that its clients need.
In the most recent quarter, Markel's operating income grew by 27%, and net investment income increased by 25%. The company's management team also announced they were conducting a thorough review of the business to optimize the insurance business and capital allocation. Markel's leaders estimate that the company has a $2,610 per-share intrinsic value right now and aims to unlock more of it (it currently trades for about 33% less). Plus, the company announced a relatively aggressive $2 billion buyback authorization to take advantage of the valuation gap.
Steady cash flow and minimal tariff impact
EPR Properties (EPR 8.18%) is a real estate investment trust, or REIT, that specializes in experiential real estate. In simple terms, it leases real estate to tenants who primarily sell experiences, not physical products. EPR's properties include movie theaters, ski resorts, eat-and-play businesses, waterparks, and more.
To be sure, tariffs can certainly impact some of the tenants. Most would be considered cyclical businesses, and it's fair to assume that if the tariffs cause inflation, it could lead to a slowdown in consumer spending. However, EPR's tenants are generally on long-term leases, so the business's cash flow should be just fine. EPR currently has a 7.6% yield, which it pays in monthly installments, and the stock trades for about eight times 2025 estimates for funds from operations, or FFO (the real estate equivalent of "earnings").
What's more, the market turbulence is causing interest rates to fall, which could eventually help EPR access growth capital at a more reasonable cost.
A commercial real estate leader
Walker & Dunlop (WD 6.72%) has been beaten down because of the slow real estate market and is now 35% below its 52-week high. Of course, the uncertainty in the economy right now isn't likely to do any favors for commercial real estate transaction volume. However, there's still a lot to like about this company.
For one thing, its $135 billion mortgage-servicing portfolio is an evergreen business that provides predictable revenue even in bad times. The company has an excellent track record of growing its market share and expanding into new verticals. Falling interest rates should help thaw the multifamily market (Walker & Dunlop's key focus area), even with economic uncertainty. And finally, lower interest rates should provide a massive opportunity to refinance existing loans. In fact, there is $526 billion in multifamily loans set to mature from 2025 to 2027. That's about three times the loan maturities from the three-year period from 2021 to 2023.
With a 3.4% dividend yield and a historically low valuation of just 17.5 times forward earnings, this is a well-run company that has a lot of upside.
As a final thought, I own all three of these stocks in my own portfolio and plan to pick up additional shares on any weakness during the current market downturn. Just be sure that you're buying with the long term in mind; even though these are excellent businesses, the stocks can be a bit volatile over short periods.
