The three stocks are Nu Holdings (NYSE:NU), RH (NYSE:RH), and Carnival (LSE:CCL) (yes, Carnival is a UK stock but it has a primary listing in the US). Anyway, they’ve all been heavily impacted by global economic uncertainty and policies under US President Donald Trump. Despite these challenges, they boast strong fundamentals.

However, the market is choppy. A lot depends on the whim of the US administration and I’m yet to buy any shares since ‘Liberation Day’.

A fintech powerhouse with room to run

Nu Holdings is a leading fintech company in Latin America. The stock is flat over the year, but has traded more than 50% higher than it does today. The downturn has been exacerbated by Trump’s trade policies that have strained international markets, particularly emerging economies.

However, Nu Holdings remains a compelling business. The company reported impressive revenue growth of 49% year on year in its latest quarter, reaching $2.99bn. That was well above analyst expectations. Its customer base has surged by 22% to 114.2m, capitalising on demand for banking services especially among underserved populations. 

Despite challenges such as foreign exchange volatility and narrowing net interest margins, Nu Holdings achieved a huge annualised return on equity of 29% and a net income increase of 85% year on year. It’s pricey at 20 times forward earnings, but this is expected to fall to 6 times by 2027.

Luxury furniture, made in Vietnam

RH (formerly Restoration Hardware) is another stock near its 52-week low that deserves attention. Known for its upmarket furniture and home décor offerings, RH has established itself as a global leader in luxury retail. However, the company mostly manufacturers in Vietnam and is exposed to any tariffs there. As such, management experienced a whirlwind of emotions in recent weeks — the CEO was shocked when he saw what was happening to the share price during the 3 April earnings call.

I’m just keeping a close eye on this one. Tariffs could really impact margins. Current forecasts suggest it’s trading at 15 times forward earnings, falling to five times in just three years. These forecasts will need altering if the tariffs on Vietnam are hard to absorb.

Choppy waters

Carnival is one of the world’s largest cruise operators and its stock price drifted near its 52-week low since the tariff announcements and a threat from the administration to make cruise operators pay more tax. A tariff-induced recession and more taxes aren’t good for business.

Nonetheless, it’s important to note the cruise sector has been performing extremely well since the pandemic. Consumers have increasingly focused on experience-based holidays, providing a real boost for cruise companies. This is evidenced by the fact that Carnival has approximately 80% of capacity booked for 2025 already, providing some shelter from Trump’s tariffs.

Moreover, it has implemented cost-saving measures and fleet upgrades to enhance operational efficiency. And at 9.4 times forward earnings, the stock doesn’t look expensive. I’ve owned this one for some time, but I may double down in the current market.

The post Hunting for an enticing entry point? 3 US stocks to key an eye on appeared first on The Motley Fool UK.

1. TSMC

Taiwan Semiconductor Manufacturing Company (NYSE: TSM) is a semiconductor foundry that makes chips for leading tech companies like Apple, AMD, and Qualcomm.

Amid declining chip demand this year, Buffett practiced what he always preaches — “Be greedy when others are fearful”. The Oracle of Omaha took the opportunity to take advantaged of the stock’s discounted price, and bought a big position worth $4.1bn.

The company has solid growth potential. Demand for faster and more powerful processors keeps increasing every year, and there are few other semiconductor manufacturers that can match TSMC’s production capability. Additionally, it’s been growing its profit margins over the past decade.

The foundry also has ambitions to diversify its geopolitical risks. It’s planning on building two factories in the US in the coming years, which could ease investors’ worries about a Chinese invasion of Taiwan.

2. Paramount

Warren Buffett’s investment in Paramount (NASDAQ: PARA) is a fascinating one. That’s because it’s one of the few big tech investments that he’s made. The film studio and broadcaster owns the rights to renowned films such as Mission Impossible, Star Trek, and The Godfather. It’s also seeing the benefits from producing shows for streaming services such as Netflix and Amazon Prime Video.

Advertising revenue is expected to drag the company’s overall revenue in the next couple of quarters, but its long-term outlook looks positive. This is due to the studio’s strong moat and presence across media channels in the US.

Having said that, I’m paying close attention to the state of its balance sheet. While its debt-to-equity ratio isn’t staggeringly high, it’s worth noting that its cash and equivalents don’t cover its total debt. This is even more worrying when taking into account its negative free cash flow.

3. RH

Restoration Hardware (NYSE: RH) is a luxury furniture and home-decor retailer. It’s managed to stay afloat in an increasingly competitive retailing landscape.

Its success can be attributed to a well thought-out omni-channel strategy. Its top line figures grew by 32% this year, thanks to its new, modern, and convenient shopping experience for customers.

Headwinds for the furniture conglomerate can’t be ignored, as housing activity continues to decline. However, RH’s long-term outlook remains strong given its pipeline of luxury ideas. This is evident through its recent expansion into other categories, which include modern, teen, and hospitality. These are areas its competitors have barely touched. If successful, this could help RH capture incremental market share.

The firm’s balance sheet isn’t terrible, but it’s not the best either. It’s got a high debt-to-equity ratio of 203.5%, but its cash and equivalents are sufficient to cover its short-term debt. Even so, its declining free cash flow is something I’m keeping a close eye on.

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