5 Undervalued Stocks To Buy On China Tariff Cuts

Following tariff reductions between the U.S. and China, several undervalued stocks in tariff-sensitive industries are poised for potential growth in the second half of 2025. The article highlights KB Home (KBH), Shoe Carnival (SCVL), Danaos Corp (DAC), G-III Apparel Group (GIII), and ASE Technology Holdings (ASX) as having strong value scores and technical or fundamental catalysts. These companies, operating in sectors like homebuilding, apparel, shipping, and semiconductors, exhibit attractive valuations and positive technical indicators, suggesting potential uptrends despite previous headwinds from tariffs and market volatility.

Analysis

Recent U.S.-China tariff reductions have spurred a partial market recovery towards previous highs, though underlying market fragility persists, evidenced by stock downturns following events like Treasury bond auctions. Amidst this environment, several companies in tariff-impacted industries, previously undervalued, may present significant buying opportunities for the second half of 2025. The analysis identifies five such stocks, each with a Benzinga Edge Value score exceeding 90 and exhibiting technical or fundamental catalysts. KB Home (KBH), a homebuilder with a $3.8 billion market cap and $2.85 billion in LTM sales, trades at a low 7.2 times forward earnings and 0.56 P/S ratio, potentially benefiting from slashed tariffs and emerging technical support. Shoe Carnival (SCVL), despite apparel industry tariff pressures and a 35% YTD share price decline, maintained profit margins above 6%, offers a 2.99% dividend yield, trades at 10 times forward earnings, and recently showed a 17% monthly rally with an RSI breakout. Danaos Corp (DAC), an international bulk shipper, saw its stock rally post-tariff rescission; despite an EPS miss, it reported a 4.7% revenue beat, leading Jeffries to reiterate a Buy rating with a $105 price target. DAC trades at just 3.2 times forward earnings with strong 46% profit margins. G-III Apparel Group (GIII), with over $3 billion in annual sales, shows bullish EMA crossover signals, anticipates a 6% net sales boost, and trades at 6.7 times earnings with a low 0.17 debt/equity ratio. Finally, ASE Technology Holdings (ASX), a semiconductor testing and packaging firm with over $18 billion in annual sales, exhibits bullish technicals and trades at 11.6 times forward earnings, with EPS growth expectations exceeding 40% for the current year.

Key Decisions for Investors

• Investors should consider re-evaluating exposure to tariff-sensitive sectors such as homebuilding, apparel, shipping, and semiconductors, focusing on companies demonstrating undervaluation and specific recovery catalysts following recent trade policy shifts.
• It may be prudent to conduct detailed due diligence on the identified companies (KBH, SCVL, DAC, GIII, ASX), assessing their respective fundamental strengths, such as low forward P/E ratios, P/S ratios, positive earnings outlooks, and technical signals like MACD bullishness, RSI breakouts, or supportive EMA levels, as potential indicators for an uptrend in H2 2025.
• Portfolio managers should monitor ongoing market volatility and company-specific news, including earnings reports and forward guidance, to validate the sustainability of these potential uptrends, particularly for firms like DAC with recent analyst upgrades and ASX with high projected EPS growth.