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We’re seeing massive volatility in the stock market across the pond today (3 April). As I write, many US holdings in my Stocks and Shares ISA have opened lower as fear about a global trade war/recession grips Wall Street. The S&P 500 is down nearly 4%!
With this in mind, here are two stocks in my portfolio that I’ve got my eye on for different reasons. One because I’m worried about it due to tariffs and the other because I’m tempted to invest more money in it.
Is Toast toast?
The first one is Toast (NYSE: TOST), which admittedly isn’t in the S&P 500. But the stock had almost doubled since the start of 2023, pushing the market cap above $20bn. So it was starting to look like a future contender for the benchmark index.
However, it fell 9% today, taking its decline to 25% since November. I think today’s drop is understandable though.
The company provides point-of-sale payment systems and operates a cloud-based platform tailored for the restaurant industry, encompassing online orders, delivery, marketing, loyalty programmes, and more.
Given Toast’s focus on the US market, the direct impact of tariffs may appear limited. However, tariffs on imported goods can lead to higher prices for packaging and food, which restaurants might not be able to pass on successfully to their customers.
In a worst-case scenario, many restaurants could struggle badly or even be forced to close. This would negatively impact Toast because it generates a large proportion of its revenue from transaction fees, which are directly tied to sales processed through its system.
Thing is unfortunate because the company has been doing really well. Last year, revenue jumped 28% to $5bn as it added 8,000 net locations to end the year with approximately 134,000. It generated $306m in free cash flow and achieved its first full year of profitability.
I don’t think the company is toast by any means, and I’m not selling my shares. But given the uncertainty with tariffs, I’m keeping the stock on a short leash.
Super-app Uber
With a market cap of $150bn, the second stock is most definitely in the S&P 500. That is Uber Technologies (NYSE: UBER).
The stock is up nearly 200% since the start of 2023, driven higher by Uber’s move into profitability. However, it fell 4.5% today, taking the stock to around $71 (the same level it was 14 months ago).
At this price, I think the long-term returns could be very attractive. That’s because the firm is building out adjacent growth avenues beyond its core ridesharing and food delivery businesses. These include advertising (both in-car and in-app) and train/plane ticket bookings.
Meanwhile, it ended 2024 with 171m regular monthly customers worldwide and over 30m Uber One subscription members. We’ve seen with Amazon Prime how successful such loyalty programmes can be at scale.
Now, Uber isn’t totally immune to Trump’s tariffs. Trade tensions could disrupt operations or affect local regulations, especially in countries that favour local competitors.
On balance though, I remain bullish here. Uber has just signed a deal with WeRide, which operates the largest robotaxi fleet in the UAE. So Uber’s platform is also well-placed to benefit from the rise of autonomous vehicles.
I plan to buy more shares at anywhere around $70.
