Why Boeing and KKR Are Contrarian Winners in a Tariff-Tainted Market

In a world where trade wars and protectionism dominate headlines, investors are quick to write off companies exposed to global supply chain disruptions. Yet, two firms—Boeing and KKR—are turning regulatory headwinds into tailwinds. While markets focus on near-term tariff-related pain, these companies are leveraging infrastructure spending, strategic resilience, and undervalued valuations to emerge as contrarian winners. Here’s why now is the time to bet on them.

Boeing: A Turnaround Machine in a Storm

Boeing’s stock has been battered by escalating tariffs, particularly after China imposed retaliatory 125% duties on U.S. imports. Yet, the company’s Q1 2025 results reveal a hidden strength: its ability to de-risk and adapt.

The Contrarian Case:
- Undervalued Amid Panic: Boeing’s shares trade at just 8.5x forward P/E, a discount of 30% to its 10-year average. This pricing ignores its $545 billion backlog—a record order book that includes over 5,600 commercial aircraft. Even after redirecting 10% of deliveries away from China, Boeing’s production pipeline remains intact.
- Mitigation in Motion: The company absorbs 10% tariffs on non-North American suppliers but has insulated its U.S.-Canada-Mexico supply chain via USMCA exemptions. CEO Kelly Ortberg’s conservative production targets (38/month for the 737 Max by year-end) ensure stability.
- Infrastructure Tailwinds: Boeing’s defense division, while down 9% in Q1, is a cash cow for fixed-price U.S. government contracts, such as the $20 billion F-47 fighter jet deal. These contracts shield the company from tariff volatility while capitalizing on Pentagon spending.

Why Act Now?
Boeing’s 2025 $500 million tariff cost estimate is a worst-case scenario. With $2.3 billion in free cash flow used in Q1 (despite tariffs), the company’s financial flexibility is intact. Investors who buy now at depressed valuations will capture a rebound once trade tensions ease and production scales.

KKR: The Infrastructure Play with a Safety Net

KKR’s Q1 2025 earnings ($1.15 EPS vs. $1.13 estimates) highlight its diversified resilience. The firm’s $482 billion AUM has minimal tariff exposure, with 90% of assets shielded by contractual protections or geographic diversification.

The Contrarian Case:
- Real Assets at a Discount: KKR’s $31 billion in Q1 investments targeted infrastructure, real estate, and credit—sectors insulated from trade wars. For instance, its $10 billion post-April deployment included Japan-focused tech deals (e.g., Fujisoft) and European infrastructure.
- Monetization Machine: With $870 million in embedded performance income and $250 million in pending exits (Q2), KKR’s recurring fee streams ($1+ billion annually) ensure stability. Its insurance segment (e.g., Global Atlantic) delivers 20%+ ROE, a rare safe harbor in volatile markets.
- Fed-Fueled Optimism: KKR’s $116 billion in uncalled capital allows it to “lean into” dislocations. As the Fed signals caution on rate hikes, KKR’s perpetual capital structure (90% locked for 8+ years) positions it to scoop up undervalued assets.

Why Act Now?
KKR trades at a 33x P/E, near its 52-week high, but its fundamentals justify the premium. With $31 billion raised in Q1 (including a $14 billion PE fund close) and a 25% year-over-year jump in unrealized gains, this is a firm built for the next decade’s infrastructure boom.

Contrarian Play: Exploit the Fear, Buy the Future

Markets are pricing in worst-case scenarios for both companies. Boeing’s stock reflects tariff fears, not its $545 billion backlog or defense cash flows. KKR’s resilience is underappreciated in a world obsessed with short-term macro noise.

Key Catalysts Ahead:
1. Boeing’s 737 Max Ramp: A FAA-approved climb to 42/month by year-end would slash unit costs and boost margins.
2. KKR’s Exit Pipeline: $800 million in pending monetizations (Q2-Q3) will fuel EPS upside.
3. Infrastructure Spending Surge: U.S. and EU plans to spend $3 trillion+ on roads, ports, and energy by 2030 will supercharge KKR’s real assets and Boeing’s defense contracts.

Final Call to Action

Investors who ignore fear and focus on fundamentals will profit handsomely. Boeing’s valuation is a gift for long-term holders, while KKR’s diversification and dry powder make it a must-own for the infrastructure era.

The next 12 months will test contrarian resolve—but for those who buy now, the rewards will soar.

Disclosure: The author holds no positions in Boeing or KKR at the time of writing.