What Happened?
A number of stocks fell in the afternoon session after the U.S. threatened to impose "massive increases" to tariffs on China in response to new export controls from Beijing. The potential countermeasures follow China's decision to place new restrictions on the export of strategic minerals and related products, including rare earths, which are critical for the defense, semiconductor, and manufacturing industries. This escalation in the economic competition between the two largest global economies is fueling investor anxiety. The new tariff threats raise concerns about disruptions to global supply chains, increased material costs for manufacturers, and a potential drag on an already sluggish economy. Industrial companies are particularly sensitive to these developments as they are often cyclical and heavily reliant on international trade.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Construction Machinery company Terex (NYSE: TEX) fell 5.6%. Is now the time to buy Terex? Access our full analysis report here, it’s free for active Edge members.
- Infrastructure Distributors company DistributionNOW (NYSE: DNOW) fell 4.4%. Is now the time to buy DistributionNOW? Access our full analysis report here, it’s free for active Edge members.
- Internet of Things company SmartRent (NYSE: SMRT) fell 5.7%. Is now the time to buy SmartRent? Access our full analysis report here, it’s free for active Edge members.
- Marine Transportation company Matson (NYSE: MATX) fell 6.6%. Is now the time to buy Matson? Access our full analysis report here, it’s free for active Edge members.
- Defense Contractors company Mercury Systems (NASDAQ: MRCY) fell 5.5%. Is now the time to buy Mercury Systems? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Matson (MATX)
Matson’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 16% on the news that the company reported weak third quarter earnings that blew past analysts' EBITDA expectations. Its EPS also outperformed Wall Street's estimates. On the other hand, its revenue missed. Zooming out, we think this was a solid quarter.
Matson is down 36.2% since the beginning of the year, and at $88.16 per share, it is trading 47.3% below its 52-week high of $167.37 from November 2024. Investors who bought $1,000 worth of Matson’s shares 5 years ago would now be looking at an investment worth $1,722.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
