As Tariff Uncertainty Continues, Here Are 2 American Companies Investors Should Consider

Amidst ongoing tariff uncertainty, Berkshire Hathaway and Progressive are highlighted as potentially resilient investment options due to their strong American-based revenues and technological advantages, respectively. Berkshire's substantial cash reserves and recession-resistant businesses like GEICO provide financial flexibility, while Progressive's early adoption of telematics and AI in insurance underwriting has led to significant market share and profitability gains, with a reported underwriting profit margin exceeding 11% in 2024. While not entirely immune to tariff impacts, both companies are positioned to outperform many others in the event of escalating trade tensions.

Analysis

Amid persistent tariff uncertainty and potential for renewed market volatility surrounding the July 8 deadline, a defensive investment thesis is presented, focusing on high-quality U.S. companies. Berkshire Hathaway (BRK.B) is highlighted as an attractive opportunity, currently trading 11% below its recent peak. Its resilience is attributed to a portfolio of primarily domestic, recession-resistant operating businesses and a substantial cash balance of nearly $348 billion, which provides significant financial flexibility to capitalize on market dislocations. While the announced CEO transition has contributed to the stock's recent decline, the succession is viewed as well-prepared. Concurrently, Progressive (PGR) is identified as a technology leader in the insurance sector, having leveraged a 15-year head start in telematics and AI to surpass GEICO in U.S. auto market share. This technological edge is translating into strong fundamentals, including 15% year-over-year growth in net premiums earned in May and a superior underwriting profit margin exceeding 11% in 2024. Although neither company is entirely immune to the secondary effects of a trade war, their strong domestic focus and fundamental strengths position them to potentially outperform the broader market.

Key Decisions for Investors

• Given the looming tariff deadline, consider shifting a portion of capital towards high-quality companies with primarily domestic revenue streams, such as those highlighted, to hedge against geopolitical volatility.
• For long-term investors, Berkshire Hathaway's 11% pullback from its high may offer a strategic entry point, leveraging its defensive business mix and its $348 billion cash position for opportunistic acquisitions in a downturn.
• Investors seeking growth in a defensive sector should assess Progressive, as its technological leadership in AI is driving tangible market share gains and superior profitability, evidenced by its 11% underwriting margin.
• Monitor the impact of escalating auto tariffs, which could indirectly affect Progressive by potentially slowing new car sales and associated high-premium policies.