Trump's Tariffs: 2 Growth Stocks That Are No-Brainer Buys on the Dip

On March 9, President Donald Trump decided to pause the previously announced expanded tariffs on most countries. The news sent equities soaring, but nobody knows what will happen next. Even with the jump that stocks experienced, many are still in the red for the year -- and some of them are worth investing in while they are down. That's the case for Amazon (NASDAQ: AMZN) and Cava Group (NYSE: CAVA). Here's why these companies are worth investing in right now.

1. Amazon

Amazon could feel the impact of tariffs on its business in several ways. If the current situation leads to inflation or a recession, we can expect a pullback in economic activity, affecting its e-commerce unit. Many sellers on the platform could see their costs rise and then pass them on to customers, who might, in turn, purchase fewer items on Amazon. Even the company's advertising and cloud computing units -- its most significant growth drivers -- could generate less revenue during a recession.

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With these threats looming, it's unsurprising that Amazon's shares have plunged this year, but this represents an excellent opportunity for investors. It wouldn't be the first time the tech giant encountered significant economic issues. In 2022, Amazon reported a rare net loss, largely because of a challenging economic environment. Here's how the stock has performed since the end of that year.

AMZN Total Return Level data by YCharts.

Amazon's strengths include its ruthless focus on customer service, which has earned it over 200 million Prime subscribers; strong cash-flow generation that grants it the flexibility to deal with challenges by making astute investments; and exciting long-term, high-margin growth opportunities. The company's growth avenues, cloud computing, and artificial intelligence are still in their early innings, according to CEO Andy Jassy -- Amazon is already a leader in both.

Even if a recession leads to less business for Amazon's cloud unit, it's worth pointing out that tariffs won't directly affect this pay-as-you-go digital service. Further, Amazon benefits from a wide moat thanks to switching costs, network effects, and a strong brand name. The stock might not have bottomed out yet. We can't predict what will happen in the next few months. But the company's long-term prospects remain rock-solid, making it a no-brainer buy while its shares are down.

2. Cava Group

Cava is an increasingly popular restaurant chain that's also been a bit of a market darling since its 2023 initial public offering (IPO). It's not hard to understand why. The company's financial results have been on fire, and last year was no different.

Cava's revenue grew 33.1% year over year to $954.3 million, backed by 13.4% same-restaurant sales growth. Cava's adjusted net income soared to $50.2 million -- up from $13.3 million reported in 2023 -- while other key metrics, including gross margins and free cash flow, also moved in the right direction.

However, Cava's shares declined substantially this year for two main reasons (beyond marketwide issues). First, investors did not like Cava's guidance for the fiscal year 2025 since it suggests that the company's growth may be slowing. Second, and relatedly, Cava's shares looked expensive based on traditional valuation metrics. As of this writing, the company's forward price-to-sales ratio stands at 8.6; the undervalued range typically starts at 2.

Richly valued growth stocks tend to fall hard when they fail to meet the market's expectations with their results or guidance. That said, considering its prospects, Cava's southbound descent this year creates a much more attractive entry point for investors. Cava is still growing -- it had only 367 restaurants as of the fourth quarter, an increase of almost 19% year over year. Cava has already opened several stores this year, including in South Florida and Indiana.

The company's long-term ambitions are clear, and as it expands, expect consistent revenue and earnings. Further, Cava is built to cater to modern trends. In 2024, the company's digital revenue mix was 36.4%. Many brick-and-mortar stores have suffered because they failed to embrace the switch to digital channels. That doesn't look likely to happen to Cava. The stock is still somewhat expensive, but it is about as cheap as it has been in a year. Given its long-term prospects, Cava could deliver strong returns from here on out.

Should you invest $1,000 in Amazon right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Prosper Junior Bakiny has positions in Amazon. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Cava Group. The Motley Fool has a disclosure policy.