The current market turmoil has hurt many stocks, but growth players have had a particularly difficult time. This is because these companies rely on a solid economic environment to expand their businesses and lift earnings — and these days, investors are uncertain about what lies ahead.

The reason for the market instability? Investors earlier in the year hoped for an improving economy and ongoing interest rate cuts, but President Donald Trump’s announcement of tariffs on imports threatened such a scenario. The concern is that the tariffs will increase prices, weighing on both corporate earnings and the overall economy. This past week, Federal Reserve Chairman Jerome Powell said the duties could push inflation higher and might “move us further away from our goals.”

All of this has driven investors away from stocks that are most sensitive to economic growth, with the idea that they might suffer the most in the months to come. But this has also left many of these players trading at bargain levels — and that signals buying opportunities for long-term investors. Let’s check out one growth stock down 20% so far this year that should be on your buy list.

Image source: Getty Images.

Growth in return on invested capital

This particular company operates in both the consumer goods and the technology markets. I’m talking about Amazon (AMZN -1.01%), a leader in e-commerce and cloud computing. Over time, the company has built a strong track record of growth, with earnings and return on invested capital (ROIC) steadily climbing — with just one exception.

During the most recent period of high inflation, Amazon suffered, even shifting to an annual loss in 2022. But the company did something extremely important: It revamped its cost structure to accelerate recovery, and this move also put it in a better position to excel in the future, through any market environment. Amazon returned to profitability a year later and has since seen earnings advance quarter after quarter. I also would like to note that ROIC is once again on the rise, showing that Amazon is benefiting from its investments.

AMZN Return on Invested Capital (Annual) data by YCharts.

All of this is positive, and combined with Amazon’s strong e-commerce business — offering everything from essentials to general merchandise and entertainment — positions the company well for long-term growth.

The potential impact of Trump’s tariffs

But what about the near term? Trump’s final tariff plan hasn’t yet been established — the president earlier this month launched tariffs on countries worldwide, then put them on pause for 90 days to allow for negotiations. Tariffs of 145% remain in effect on China, however, and this brings me to the subject of the potential impact on Amazon.

To some degree, Amazon will face headwinds because it imports certain products from China. This could result in higher prices that Amazon has to absorb or pass on to the consumer. And some third-party sellers on Amazon are based in China; they might decide to no longer sell on the platform if demand for their products drops. This could weigh on Amazon’s revenue since the company collects various fees from sellers on its platform.

At the same time, though, Amazon could see some benefit from tariffs on China as the company also faces competition from e-commerce businesses there, such as Shein, that offer low-cost products. If consumers view these rivals as too expensive due to the tariffs, they could turn to Amazon to purchase alternative items. This could limit some of the negative impact on the e-commerce giant.

It’s also important to remember that Amazon Web Services (AWS), the cloud computing unit, drives the company’s overall profit. Though Amazon may face some higher costs here, potentially for hardware, for example, the artificial intelligence (AI) market is booming. So, AWS could still be a significant revenue driver in the coming quarters and years.

So, yes, Amazon may feel some pressure from the import tariffs, but the company has what it takes to manage challenges — as it showed us during the recent higher-inflation period — and long-term prospects remain bright. That’s why today, trading for only 27 times forward earnings estimates, Amazon looks very reasonably priced and makes a great stock to buy on the dip.