3 Stocks to Sell on an Escalating Trade War

Core Insights - GigaCloud Technology Inc. (GCT) was sold from the Accelerated Profits portfolio despite its impressive growth metrics, including a 65% revenue increase and a net profit of $125 million, which is a sixfold increase from two years prior [1][3] - The imposition of tariffs by the U.S. government on Chinese imports has severely impacted GigaCloud's business model, which relies on connecting Asian manufacturers with U.S. resellers [2][3] - Analysts have reduced GCT's 2025 earnings estimates by 20% due to the adverse effects of tariffs, leading to a downgrade in its stock rating [3] GigaCloud Technology Inc. - GigaCloud specializes in large parcel shipping, utilizing software to consolidate small shipments into larger ones to reduce costs [1] - The company's core operations are significantly affected by the 20% tariffs imposed on Chinese goods, which threaten the profitability of Chinese exporters and subsequently reduce demand for GigaCloud's logistics services [3] Deckers Outdoor Corp. (DECK) - Deckers, known for brands like UGG and Hoka, has also been impacted by rising tariffs, leading to a decision to sell its stock [6] - The company sources a significant portion of its materials from China, making it vulnerable to tariff increases [7] - Analysts have cut first-quarter earnings estimates for Deckers by 20%, predicting a 29% year-over-year decline in profits [8] Abercrombie & Fitch Co. (ANF) - Abercrombie has seen a turnaround under new leadership, but rising tariffs threaten its recovery as it sources nearly half of its production from Vietnam and China [10] - The company relies on high gross margins to offset overhead costs, and any increase in production costs due to tariffs could significantly impact net profits [11] - A lack of buying pressure has been noted, prompting a recommendation to sell shares [12] Toll Brothers Inc. (TOL) - The homebuilding sector is feeling the effects of rising tariffs, with a decline in the Fannie Mae Home Purchase Sentiment Index indicating reduced consumer confidence [13] - Toll Brothers has reported a softening demand in the lower-end market and plans to cut back on speculative home construction [13] - Current tariff rates are expected to increase the average new home price by 5%, further complicating the market for homebuilders [14] General Market Impact - The imposition of tariffs has historically led to significant market value losses for companies reliant on imports, with examples including Toll Brothers and Abercrombie [16] - High-growth tech firms, however, tend to remain resilient during such economic disruptions, focusing on innovation rather than tariff impacts [18]