Market Analysis: The Consequences of Tariffs and Investment Opportunities

If you haven’t been paying attention, it’s time to wake up. The stock market has been in turmoil following President Donald Trump’s announcement of unexpected and harsher tariff rates, sending the S&P 500 deep into correction territory and pushing the Nasdaq into bear market status, down more than 20% from its recent peaks. This turn of events is not a mere hiccup; it reflects underlying issues that traditional investors must take into account.

Let’s be frank—tariffs can spell disaster for many businesses across various sectors. Retailers relying heavily on imported goods face immediate threats to their profit margins, while banks could see a spike in default rates should these tariffs lead us into inflation or recession. However, the savvy investor should not be disheartened. There remain numerous solid companies whose fundamentals remain intact despite the chaotic market.

Investment Opportunities Amidst Market Turbulence

For those discerning enough to seek out opportunities, three companies stand out as candidates for long-term investments, particularly for those willing to spot price weaknesses in the wake of this downturn.

An Incredible Business: Markel (NYSE: MKL)

First on our list is Markel Corporation, a specialty insurance company that has recently seen its stock decline by 16% since reaching an all-time high two months ago. But make no mistake; this decline is not without a reason. Markel’s stock portfolio has suffered, particularly due to its large positions that are feeling the heat in this market. Furthermore, as a company that invests in cyclical businesses, there’s no doubt that it’s feeling the pinch.

However, let’s not lose sight of the core business—insurance. Markel focuses on crucial insurance products that clients depend on, which gives it a robust foundation. Just last quarter, its operating income surged by 27%, with net investment income improving by 25%. Management is keenly aware of its valuation gap and is conducting a thorough review of capital allocation. With an estimated intrinsic value of $2,610 per share—trading currently at about 33% less—it shows promise for a rebound. The $2 billion buyback authorization only reinforces confidence in its long-term vision.

Steady Cash Flow: EPR Properties (NYSE: EPR)

Next, we turn to EPR Properties, a Real Estate Investment Trust (REIT) specializing in experiential properties. While it might seem counterintuitive, the company should weather the storm of tariffs relatively unscathed. The tenants of EPR—think movie theaters, ski resorts, and waterparks—generally operate on long-term leases, ensuring steady cash flow.

The current yield stands at an eye-catching 7.6%, distributed monthly, and with the stock trading at roughly eight times the 2025 estimates for funds from operations, it presents an attractive valuation. Importantly, the recent market turbulence is driving down interest rates, which could serve EPR well when it seeks growth capital in the coming months. This REIT, focused on experiences rather than physical products, offers a unique angle for cautious investors.

A Commercial Real Estate Leader: Walker & Dunlop (NYSE: WD)

Finally, let’s discuss Walker & Dunlop, a commercial real estate powerhouse that’s currently trading down 35% from its 52-week high. While a slow real estate market complicates the outlook, Walker & Dunlop has a solid $135 billion mortgage-servicing portfolio that generates reliable revenue even when times get tough.

The current climate of uncertainty in the economy won’t disappear overnight, but Walker & Dunlop has consistently demonstrated its ability to grow market share and break into new verticals. Falling interest rates will likely unlock opportunities in the multifamily sector and offer attractive refinancing opportunities, especially since there are $526 billion in multifamily loans maturing between 2025 and 2027—three times the amount maturing from 2021 to 2023. With a 3.4% dividend yield and a historically low valuation of just 17.5 times forward earnings, this company is positioned for significant upside in the long run.

Final Thoughts

In conclusion, while tariffs and market fluctuations present undeniable challenges, they also create opportunities for the long-term investor. Companies like Markel, EPR Properties, and Walker & Dunlop are uniquely positioned to withstand the tempests of the market, making them attractive candidates for those looking to invest wisely. As a final note, I personally own all three of these stocks in my own portfolio and plan to purchase more shares if market conditions provide favorable entry points. Remember, patience and a keen eye on long-term fundamentals will serve you well in these turbulent times.