"Trump's Domestic Demand Boost Benefit"... This Company Emerges as an Alternative to US Big Tech

Big tech companies, including Nvidia, which led the US stock market rally last year, have seen their stock prices underperform this year, leading to the consumer goods sector being identified as an alternative investment destination.

Lee Ji-seon, an analyst at Toss Securities, highlighted in a report on the 18th that "since big tech stocks have risen significantly over the past two years, this year there is a high possibility that stocks which have not received much attention but are good to accumulate in the mid to long term will attract interest," spotlighting the growth potential of consumer goods stocks such as Gap, Carnival (CCL), and DraftKings (DKNG).

The analyst's analysis is that the policy direction of former US President Donald Trump, focusing on national prosperity and strengthening the economy through domestic demand activation (tax cuts, deregulation), along with calls for interest rate cuts, will lead to increased consumption. As Millennials and Generation Z gain substantial purchasing power, new investment opportunities (e-commerce, value/preference/experience consumption, etc.) may also emerge.

Gap, a US apparel brand that owns Old Navy, Banana Republic, and Athleta, currently has a stock price ($20) with a 40% upside potential to the market target price ($28). The analyst stated, "Although it was overlooked by the market for a while, the new management's rebranding strategy has hit the mark, showing a stable recovery in performance," and added, "This year, the company is actively pursuing shareholder-friendly policies such as ongoing share buybacks and a 10% dividend increase." The fact that less than 10% of its products are sourced from China, and less than 1% from Canada and Mexico, limiting tariff impacts, is also a positive factor.

Carnival, which holds the number one market share in the cruise industry, is also noteworthy. The analyst noted, "Although cruise demand, which shrank during COVID-19, has recovered significantly over the past two years, Carnival's stock price has risen less compared to competitors," and predicted, "Its stock price is expected to be revalued as profitability and financial structure improve simultaneously." Earlier, concerns that the Trump administration might impose taxes on cruise companies caused cruise stocks to plunge 20-30% in the past month, but since most are registered as foreign corporations and there is a possibility of relocating headquarters overseas, the industry consensus is that the likelihood of this happening is low.

DraftKings is a leading company in the online sports betting and casino service sector. Although the industry is currently legalized only in some US states, benefits from President Trump's deregulation policies are expected. The analyst diagnosed, "Although it has struggled to secure profitability due to high marketing and promotion costs, in the first quarter of last year, it recorded positive free cash flow (FCF) for the first time in 13 years, continuing a positive trend," and added, "A turnaround to profitability is also expected this year."