President Donald Trump’s first batch of executive orders and commentary since returning to the White House has wide-ranging implications for our stock portfolio. Upon taking office, a new president’s executive orders highlight the high-priority initiatives that their administration is clearly focused on addressing. Not all executive orders have serious “teeth” behind them, but plenty definitely do. In general, when they’re signed, investors need to take note and consider what they mean for their stocks. A similar approach should be taken toward other executive actions and presidential commentary. As we sift through everything that Trump did and said Monday on his first day back in the Oval Office, four areas really caught our attention: trade, energy production, TikTok and artificial intelligence. Tariffs Trump did not officially sign an executive order or take other steps to immediately implement higher levies on imports from Mexico and Canada. However, Trump did sign a memorandum outlining his ” America First Trade Policy ,” while saying he thinks tariffs of as much as 25% on Mexican and Canadian imports could start as soon as Feb. 1. It’s early to know what the tariffs will ultimately target — for example, will they cover all imports, most or maybe just a small subset? — and, by extension, to what extent they will impact our investments. But it’s safe to say that in the meantime, any investment in a company that relies on trade with Mexico and Canada is going to have a hard time realizing upside because investors hate, above all else, uncertainty. The most obvious Club stock in the crosshairs of tariffs is Constellation Brands , the maker and importer of Mexican beer brands such as Modelo and Corona. Even before Inauguration Day, we had soured on Constellation in the wake of its lackluster earnings report in early January and downgraded the stock to a 3 rating, meaning sell into strength. All of Constellation’s beer brands come from Mexico, and with over 80% of sales tied to the beer segment, it’s not surprising to see Constellation shares down Tuesday, the first trading day of Trump’s second term. While Constellation may find ways to avoid the worst of the tariff impact, due in part to currency fluctuations, our concerns with the company at this point are rooted in a more muted outlook for beer growth, irrespective of trade dynamics. Companies selling to consumers are also likely to be under some pressure. That could include Club retailers Costco and Home Depot , though it’s not totally clear what percentage of their goods are sourced from Canada or Mexico. What’s encouraging is that both companies have expressed confidence in their ability to navigate whatever comes and were quick to remind investors that tariffs would impact entire industries, not just specific companies. As Costco CFO Gary Millerchip put it on the company’s December earnings call, “I’ll quote my predecessor Richard [Galanti]. He’d say when it rains, it rains on everybody. And I think for us, we faced tariffs in the past, and we believe that our merchants and buyers are equipped, as anybody is, to sort of work through and navigate and manage that situation.” Home Depot CEO Ed Decker shared a similar view on the company’s third-quarter conference call. In response to a question on potentially steeper Chinese tariffs, Decker said: “First and foremost, whatever happens in tariffs will be an industry-wide impact. It won’t discriminate against different retailers and distributors who are importing goods. The type of product as an industry is generally sourced from the same countries. There has been some diversification of those sources, but clearly, a bit of concentration in Southeast Asia and China, in particular. We source well more than half of our goods domestically and in North America, but there certainly will be an impact.” Our takeaway from those comments: It’s most likely best to avoid the stocks of companies clearly facing an earnings headwind from tariffs, such as Constellation Brands. However, it’s not obvious that best-in-class operators that have no greater exposure than their competitors — but do have more scale — should be avoided. For example, if Mexican beer becomes to expensive due to tariffs, U.S. consumers may look to switch to a brand that offers better value and isn’t pressured to adjust prices to offset tariffs and protect profit margins. Anything that hits a Costco or Home Depot, on the other hand, is likely to hit every other retailer in the space because, as Decker noted, industries typically source goods from the same country. In a setup like this, investors generally want focus on those industry players with scale. That scale gives them more power in negotiations with suppliers and therefore, it makes them better positioned to compete with smaller industry operators on price. As a result, there could be some consolidation as smaller players fail to compete, leading to market share gains for the already heavy hitters. A final note on tariffs: Investors should keep in mind that there are always ripple effects. While we no longer own any shares of Ford Motor , we have to be conscious that Mexico and Canada are both vital when it comes to the U.S. automotive industry, which is a key end market for industrial companies in the portfolio such as Eaton , Honeywell and DuPont . At present, we can’t exactly quantify the tariff headwind that these companies could face. But it’s safe to say that automotive customer orders to these companies would come under pressure if tariffs lead to vehicle price hikes that dampen consumer demand for new cars, trucks and SUVs. Keep in mind: All three companies are exposed to plenty of other end markets and secular themes —such as AI in the case of Eaton and DuPont — and our investments are not predicated on their auto businesses. Energy Trump signed several executive orders targeted at increasing domestic energy production. One, in particular, declares a “national energy emergency”. That’s notable because by declaring a national state of emergency, the Trump administration can more quickly push through policy changes via means not otherwise available to it. The most obvious name to call out here is Coterra Energy . Shares of the oil-and-gas producer are understandably lower Tuesday following the news because more production should be expected to result in lower prices. While lower prices should boost demand, it’s still too early to say where push-pull between “more volume sold but at lower prices” shakes out. That’s now a key uncertainty hanging over the entire energy complex. Indeed, energy is the worst-performing sector in Tuesday’s session. Our exposure to the energy sector is primarily a hedge on inflation rearing it’s ugly face again. The reality is that lower energy prices are good for just about everyone aside from the companies selling it. Amazon needs fuel to deliver millions of products of day, along with natural gas to power it’s massive cloud computing data operation (same goes for Microsoft , Google parent Alphabet , Meta Platforms and Apple ). All else being equal, a crucial input cost being lower — in this case, that input is energy — means room for margin expansion and increased profits to be used for shareholder return initiatives, mergers-and-acquisitions activity or simply organic investments in future growth. Consumers are the other major beneficiary as lower energy costs means that consumers are left with more discretionary money in their bank accounts after filling up their cars and heating their homes. That’s bodes well for retail sales. The bottom line is more oil and gas production is definitely a positive as far as the non-energy sectors of the market go. Increased consumer demand stands to benefit the topline, while lower input costs on the back of cheaper energy stands to benefit profit margins. CTRA 1Y mountain Coterra Energy’s stock price over the past 12 months. Social media TikTok was at the center of another executive order signed Monday, with Trump giving the platform a 75-day extension before the U.S. government looks to force a sale of the company to a U.S.-based operator. Meta Platforms is the most obvious winner of a TikTok ban – though we also think Meta can be successful even if TikTok finds a way to stay in operation beyond this 75-day extension period. The Instagram and Facebook owner has already proven its ability to leverage AI into better content, increased engagement and strong returns for advertisers. If the solution to TikTok staying in the U.S. involves at least a partial sale, it will be interesting to see which companies or investors get involved in that. It’s too early for us to speculate on the financial impact such a transaction could have, but we will be closely watching for updates regardless. The fate of TikTok also could impact more than just Meta. Alphabet also has its YouTube Shorts product, and there’s some chatter on Wall Street that Amazon could be a good strategic fit for TikTok. Artificial intelligence Trump revoked former President Joe Biden’s executive order, first implemented in 2023, that created new safety and security standards while also requiring research on AI’s labor market impact. It also included guidance on equity and civil rights. As we wrote in November , this was expected to happen. Some in the tech industry argued the Biden rules were too onerous and could stifle innovation. Of course, a number of Club names — most notably Nvidia , but the likes of Meta, Salesforce , Amazon and Microsoft too — are heavily involved in AI innovation. We’ll see what kind of replacement, if any, Trump has on AI. But given the criticism the Biden order received within the tech industry, the cancelation is worth highlighting. That’s not to say it’s an AI free-for-all, though. We know Trump views AI as a national security issue and that he isn’t afraid to restrict access to those technologies viewed as national security concerns. We saw this with 5G technology during his first-term, and we believe his administration pull from the 5G playbook in addressing the risks of AI falling into the wrong hands. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Washington , DC – January 20: President Donald Trump signs a series of executive orders at the White House on January 20, 2025, in Washington, DC. (Photo by Jabin Botsford /The Washington Post via Getty Images)
Jabin Botsford | The Washington Post | Getty Images
President Donald Trump’s first batch of executive orders and commentary since returning to the White House has wide-ranging implications for our stock portfolio.
