Investors Weigh Tariff Risks Amid Opportunities in Disney, Starbucks

Market volatility following Trump's tariff plan presents unique buying opportunities for long-term investors. Disney and Starbucks, while facing challenges, show potential for recovery and growth.

Date: 09-04-2025

AI Rating: 7

Market Context: The stock market is currently experiencing volatility due to President Trump's tariff plan, causing various stocks to trade at significant discounts. Notably, major brands like Disney (DIS) and Starbucks (SBUX) are highlighted as potential opportunities for long-term investors. Despite recent downturns, these companies showcase promising fundamentals.

Walt Disney Analysis: Disney's latest quarter indicates a revenue growth of 5% despite a challenging comparison, alongside an impressive 31% increase in operating income and a 44% rise in adjusted earnings per share (EPS). These figures reflect management’s focus on operational efficiency. The company's operating cash flow is projected to be around $15 billion with plans for substantial investments in its theme parks. Disney's current trading position marks it at its lowest price-to-sales ratio since the financial crisis, suggesting potential upside for investors willing to overlook short-term tariff impacts.

Starbucks Analysis: For Starbucks, recent management changes are leading to a turnaround strategy with an eye on improving customer experience and efficiency. Even though comparable sales have dipped slightly, key customer metrics are on the rise, pointing to traction in their initiatives. The stock trading at a historically low price-to-sales ratio could represent a buying opportunity if the company manages to enhance growth and margins through ongoing investments.

Tariff Risks: Both Disney and Starbucks are not immune to the implications of the trade war, with substantial exposure to the Chinese market highlighted. Any escalation in tariffs could negatively impact their financial performance, particularly in terms of inflation and potential consumer spending in a recessionary environment. However, long-term prospects for both companies remain strong, supported by their brand strength and strategic initiatives.

Stocks: DIS SBUX