President Trump announced his plan to create a federal agency called the Foreign Revenue Service to handle the collection of tariffs and fees from other countries. Trump had previously stated that he would impose a global tariff ranging from 10% to 25% on all countries and up to 60% on exports to China. The agency will eventually replace the Internal Revenue Service as the federal government will be funded by tariffs, not its citizens.
The plan would need to be approved by Congress, but Republicans already control the House of Representatives and the Senate. If the plan were to come to fruition, it would lead to an increase in consumer spending and saving, as taxpayers would be able to keep up to 37% of their income that would have gone to the IRS. Here are three stocks that stand to benefit if the External Revenue Service (ERS) becomes a reality.
Charles Schwab: Savings, Investing and Trading Actor
Charles Schwab Today
- 52 week range
- $61.01
▼
$83.35
- Dividend yield
- 1.31%
- P/E ratio
- 29.90
- Price target
- $81.41
The pandemic stimulus checks have shown how consumer spending, investment, and saving activity can rise if citizens receive a portion of their tax dollars. The financial services sector will be the main beneficiary with all surplus funds returned to taxpayers. Charles Schwab Company New York Stock Exchange: Shaw It is the largest retail brokerage in the United States, with $9.92 trillion in assets under management (AUM). They will boost their bottom lines by increasing wealth management fees, trading volumes, and net interest income. Schwab generates the most net interest income among retail brokers.
In Q3 2024, Schwab was already reporting record year-to-date inflows into Schwab Wealth Advisory, up 65% year-over-year (YoY). About 35% of that came from converting Ameritrade retail customers. Combined net assets grew 10% to $95 billion. Schwab generated $2.2 billion in net interest income in the quarter. Creating an ERS would cause these numbers to rise.
Target: Donor of discretionary consumer spending
Target today
- 52 week range
- $120.21
▼
$181.86
- Dividend yield
- 3.35%
- P/E ratio
- 14.17
- Price target
- $158.23
The formation of the ERS would benefit both the consumer staples and consumer discretionary sectors thanks to the significant rise in disposable income for most Americans. Target Company New York Stock Exchange: TGT It is a large department store that offers basic goods such as groceries and discretionary items such as video games, televisions, clothing, and jewelry.
It was exposure to discretionary items that hurt its bottom line in its third-quarter 2024 earnings report, sending shares down 22% the next morning. while Walmart Inc New York Stock Exchange: MT Since it has less exposure to discretionary items, it is also the country’s largest importer and will have to deal with the impact of export tariffs (margin compression) which the same ERS agency will be responsible for collecting.
Textile: Fashion, clothing and accessories donor
Today’s fabric
- 52 week range
- $35.23
▼
$72.09
- Dividend yield
- 1.96%
- P/E ratio
- 20.66
- Price target
- $64.76
With a surplus of discretionary spending money, consumers are often drawn to spending on luxury items such as wallets, handbags and shoes. Textile company New York Stock Exchange: TPR She runs luxury brands Coach, Kate Spade and Stuart Weitzman.
Its attempt to acquire $8.5 billion CAPRI HOLDINGS LIMITED New York Stock Exchange: CBRI It was squashed by the US Federal Trade Commission (FTC) over antitrust concerns. The deal would have created a powerhouse for fashion, and Tapestry could have added additional luxury brands, such as Jimmy Choo, Versace and Michael Kors, to its portfolio. Tapestry decided to move on.
Putting the past behind us and moving forward and upward
Shareholders expressed great relief when Tapestry announced the termination of its attempted merger on November 14, 2024, especially when CPRI was trading 64% below its original stock purchase price of $57. Tapestry didn’t lose much ground as the company reported Q1 2025 EPS of 84 cents, missing consensus estimates by 9 cents, and revenue fell 0.4% year over year to $1.51 billion, still beating consensus estimates of $1.47 billion.
Tapestry also raised its full-year 2025 EPS guidance from $4.50 to $4.55, up from $4.45 to $4.50 previous guidance versus consensus estimates of $4.45. Fiscal 2025 revenue is expected to reach more than $6.75 billion, up from its previous estimate of $6.7 billion versus the consensus estimate of $6.71 billion. Tapestry announced a $2 billion stock buyback program to underscore its commitment to its shareholders.
Unfortunately, Capri Holdings shareholders weren’t so lucky as the company fared much worse in terms of wear, reporting an EPS loss of 8 cents, a revenue decline of 16.4% year over year, and no further guidance.
Before you think about texture, you’ll want to hear this.
MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches up… and Tapestry wasn’t on the list.
While Tapestry currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
View the five stocks here
Are you thinking about investing in Meta, Roblox, or Unity? Click the link to find out what street investors need to know about the Metaverse and public markets before making an investment.
