My 2 Favorite Stocks to Buy Right Now

Following a recent two-day, 10% market drop, the article highlights Amazon and Philip Morris International as attractive buys: Amazon trades at a forward P/E of ~27.5 while its AWS division—responsible for 58% of 2024 operating income—grew revenue 19% both last quarter and in 2024, and management plans $100 billion of AI data-center investment and in-house Annapurna AI chips. Trade-policy moves (10% near-global tariffs, higher China tariffs, and closure of the de minimis loophole for China/HK shipments) could favor Amazon versus low-cost Chinese rivals, while Philip Morris (forward P/E ~21) benefits from strong Zyn momentum (shipments +46% last quarter, +53% in 2024; U.S. volume guide +34%–41% for 2025) and defensive pricing power.

Analysis

Market structure: Tariff re‑acceleration (article cites a 10% baseline and targeted China measures) favors domestic producers, vertically integrated platforms and cloud providers that lower unit costs. Direct winners: AMZN (AMZN) via tighter competition from Temu/Shein and AWS scaling; PM (PM) via domestic Zyn/Iqos manufacturing and pricing power. Losers: low‑margin, import‑dependent e‑tailers and discretionary goods shipped direct from Asia — expect margin compression of 200–500bps for exposed players within 2–6 months.

Risk assessment: Key tail risks are tariff escalation (>25% across broad categories), expedited consumer spending contraction leading to a U.S. recession within 6–12 months, and accelerated FDA/regulatory action on nicotine pouches or heated tobacco in the next 3–9 months. Hidden dependencies include AMZN’s AWS capacity constraints (capex cadence: $100bn AI investment) and PM’s concentration of Zyn demand in the U.S. — if U.S. Zyn growth falls below +20% YoY, PM’s valuation premium is at risk.

Trade implications: Favor durable, cash‑flowing tech with AI exposure and defensive consumables. Tactical plays: long AMZN and PM; hedge AMZN equity exposure with short NVDA‑correlated call/rotation exposure if GPU pricing normalizes. Use spread structures to manage elevated IV after the 10% two‑day drop and size initial positions 1–3% of portfolio each, scaling into confirmed Q2 earnings beats or tariff clarifications.

Contrarian angles: Consensus underrates operational leverage inside AWS and PM’s superior unit economics for Zyn/Iqos vs combustibles — upside if FDA does not materially restrict distribution. The market may be overpricing tariff permanence; if tariffs are rolled back or de‑minimus applied narrowly, importers’ margins recover within 3–6 months and AMZN downside is limited. Watch shipment volumes and freight rates for early reversal signals.

Key Decisions for Investors

• Establish a 2–3% portfolio long position in AMZN using staggered buys over 4 weeks; alternatively buy a 9‑12 month call spread (buy 1 LEAP ~25% ITM, sell a higher strike ~+40%) to express upside while limiting cost — add on AWS revenue beats or if forward P/E trades below 25.
• Initiate a 2% long position in PM (Philip Morris) funded by a 1.5–2% short position in MO (Altria) as a pair trade: long PM/short MO to capture Zyn/Iqos execution vs legacy combustible exposure; trim if PM U.S. Zyn volume growth slows below +20% YoY or if PM forward P/E rises above 26.
• If volatility remains elevated, sell short‑dated (30–60 day) call spreads on highly import‑exposed retail names and use proceeds to buy 3–6 month protective put spreads on a concentrated tech sleeve (AMZN/NVDA) — target net cost <0.6% portfolio to hedge a tariff shock widening to >25%.
• Reduce cyclical small‑cap retail exposure by 50% and redeploy into staples/defensive names and cash equivalents until tariff clarity in the next 30–90 days; re‑enter cyclicals only after freight indices fall 10% from current spike or official tariff rollback/clarification is announced.