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All Contents © 2019The Kiplinger Washington Editors
By Johnson Research Group
| November 11, 2016
Gage Skidmore via Wikimedia (Modified)
Donald Trump has, against all odds, been elected the 45th president of the United States of America. There are many winners, and thus many strong stocks to buy once the dust settles.
All things considered equal, the U.S. stock market and the economy have likely set their course for the next few years, as is usually the case. But there are enough clear differences in the two politicians’ platforms that we can use to determine some select groups of the market — and even specific stocks to buy — that will benefit from either candidate’s victory.
As it stands now, a Trump victory will put attention on infrastructure, privatization of certain segments of the economy and evening the playing field for American companies to compete against cheaper international markets.
With that in mind, these are the 16 best stocks to buy when Donald Trump relocates from Trump Tower to 1600 Pennsylvania Ave.
Courtesy U.S. Steel
United States Steel Corporation (X) and other steel manufacturers have made it clear that they suffer at the hands of the Chinese steel manufacturers “dumping” steel into our domestic markets are prices that they can’t match. For years, Congress has made some small moves to slow the flow of steel with tariffs, that for the most part are short-lived.
Donald Trump, however, has floated the idea of large tariffs to even the playing field for steel companies and other manufacturers affected by the dumping.
U.S. Steel recently started a long-term turnaround that has the price of its stock finally trading in a technical bull market trend. A “President Donald Trump” plan to make pricing more competitive here at home will clearly add to the bottom line — and bullish outlook — of U.S. Steel and other steel companies.
M.O. Stevens via Wikipedia
Another industry that has faced pricing headwinds from the Chinese markets is the paper (and more specifically, corrugated boxing) companies.
I’ve always found it interesting that the Chinese are such a great purchaser of recycled cardboard in the Chinese market. It makes logistic sense. But to ship our waste there to be recycled to packaging … just to be sent back here?
Again, this is an industry that will benefit almost immediately on the “Make America Great” pledge if tariffs are imposed on less expensive paper and packaging products from abroad.
International Paper Co. (IP) still holds a large part of the market domestically. More than 30% of its net profits comes from the industrial packaging segment of the business. This business would get a boost from an increase in domestic demand.
What’s better: If the economy improves, the same segment will get an organic boost as shipping of products will increase, increasing demand for boxes and other items they make.
Junglecat via Wikipedia
The Second Amendment and gun owners’ rights have been a hot button for this election. Clearly, the pending Supreme Court nomination will reflect the platform of whomever is elected and potentially will have an effect on the future of gun rights.
So, does this affect either Sturm Ruger & Company Inc. (RGR) or Smith & Wesson Holding Corp. (SWHC)?
Yes and no.
From our perspective, the gun manufacturers are in line to benefit from either candidate. A Clinton presidency would have put pressure on the gun lobby to fight for Second Amendment rights and likely trickle (slowly) through Congress to affect the actual consumer much later down the road.
A Trump presidency likely will have some pressure from someplace that many haven’t thought about: the makeup of Congress. A shift in power to the Democrats in Congress could have been the real factor here, regardless of who resides in the White House. Because of this, the gun manufacturers are likely to see increased demand on a Trump win.
Prices will initially pull back on a Trump win, but after that, Sturm Ruger and Smith & Wesson will have a tailwind through 2017.
Veteran benefits are another hot button, and Trump is clearly on the side of getting this done. In his case, the approach will be more of a businessperson instead of a politician, which means we’re more likely to see privatization of part of the system.
HCA Holdings Inc. (HCA) operates hospitals and surgery centers in 20 states and would be a great option for part of the solution to the growing problem with veteran care.
The company’s shares suffered, along with the rest of the healthcare sector, as soon as costs became an issue of the election in 2015. Now, shares are trading higher and back in bull market territory as they prepare to break into new one-year highs.
Either candidate in the office would help HCA shares rally as the uncertainty around healthcare regulations will subside.
Another dynamic duo of stocks that will benefit from a Trump administration is the combination of Humana Inc. (HUM) and Anthem Inc. (ANTM).
Healthcare providers and insurers came under fire last year as they were entwined in the political rhetoric of high healthcare costs. We can’t argue healthcare costs aren’t out of control. They are. But while insurers are part of the problem, they’ll also be part of Trump’s solution.
The Affordable Care Act (aka Obamacare) is right in the crosshairs of Donald Trump and the Republicans — that’s one thing they can agree on. Under Trump’s administration, we are likely to see moves away from Obamacare, though it is not likely to go away anytime soon.
Private insurers are shedding some of the costs of operating the non-profitable plans in many states, turning attention back to their core business. This will pay even larger dividends if the focus on defunding parts of Obamacare really move forward.
Outside of a true overhaul of the system, these insurers will return to their strong performance after a Trump victory.
Pedro Felipe via Wikipedia
Outside of Pink Floyd’s epic album, there’s never been more talk of “the wall.”
While there’s a lot of irony around the fact that the Berlin Wall was taken down by the Republicans and now we’re talking about building our own (for different reasons), the potential for “the wall” has to be taken into account with a Trump victory.
Among the top cement-producing companies in the world is Cemex SAB de CV (CX). The company operates subsidiaries which develop, produce and distribute cement and ready-mix products all around the world.
Conveniently, Cemex is headquartered in Mexico, logically putting them in the running for providing materials for a wall.
Especially if Mexico, ahem, has anything to do with the funding.
Trump has made it a point to address the aging fleet of ships and aircraft within our military’s arsenal. At one venue, Donald Trump pointed out that there were B-52s still in commission that were older than anyone in the crowd of supporters watching him speak.
Boeing Co. (BA) and other aircraft manufacturers have been doing well with orders from global companies while the U.S. has been slower in terms of growing both private and government fleets, but that is likely to change under a Trump administration.
Beefing up the military’s aging fleet will mean production and orders for the airline manufacturers, as well as those companies that provide engines, such as Pratt & Whitney and General Electric Company (GE).
Look for Boeing, which has been stuck in a long-term range, to start moving higher on the anticipation of increased demand from the public sector.
Courtesy Lockheed Martin
Also under the headline of increased military has to be the further development of various components that Lockheed Martin Corporation (LMT) develops and produces.
While most voters don’t like it, the threat of war and military action is a constant under any president. Geopolitical concerns are on the rise all over the world; thus, either candidate will be forced to address a likely increase in defense spending.
Lockheed Martin has spent the past four months pulling back from its highs as concerns over military spending grow. This would be reversed almost immediately and likely propel the shares back toward their all-time highs.
According to President Trump, the prison system would get busy, fast, as illegal residents of the country could be rounded up and worked through the legal system in an effort to return them to their countries of origin, where they could possibly begin a new route to U.S. citizenship.
Over the past year, the federal government has been getting out of the private prison game as they are allowing contracts with companies like Corrections Corporation of America (CXW) expire at their maturity.
In the case of a system that would suddenly start growing dramatically, it is likely that the Trump Administration would return to privatization.
These companies have spent the past year on rapid declines and are trading at multiyear lows. Even the slightest mention of returning federal prisons to a privately run corporation will shoot these stocks higher after the election.
Fatherspoon via Flickr
Hillary Clinton and Donald Trump are at opposite ends of the spectrum when it comes to coal. The issue has put the state of West Virginia, which historically votes Democrat, on the side of Donald Trump given his stance that he will increase coal use and production.
Consol Energy Inc. (CNX) will be a direct beneficiary of a decision to move back toward coal. CNX is known for its ability to change production levels quickly due to the process it uses for mining coal. This means Consol could quickly adjust to changes in the energy policy after a Trump victory.
Consol has been stronger of late as the company’s natural gas operations have been picking up slack. But a shift toward a coal-friendly president would provide a firm boost to the company’s top line.
Taxes are among another key difference between the candidates. One aspect of the tax platform for Donald Trump is that he would apply a 15% corporate tax to companies like Apple Inc. (AAPL) and make it easier for them to bring that revenue that is earned overseas back to the U.S.
Companies’ desire to repatriate overseas revenue is growing after the flood of companies that moved their headquarters overseas to take advantage of tax laws. In this case, Donald Trump would potentially increase tax revenue while making companies like Apple — which have been amassing cash overseas — look like heroes as they start dropping cash back into the U.S.
Apple is one of larger offenders when it comes to holding cash elsewhere. But it could start to use the cash for expansion, redistribution to shareholders and acquisitions among a number of other fundamentally positive developments.
That would be a clear positive for AAPL shareholders.
Brian Katt via Wikipedia
Oil and energy companies appear to be in line for a boost from Donald Trump moving into the White House. But larger oil companies with the ability to quickly move into international production fields may have an advantage.
The ongoing war with ISIS has offered Trump to visualize a strategy to defeat the terrorist group by hitting them where it hurts: the purse. The plan, loosely, would be to retake oil fields from ISIS, then get our own companies in there. They would then pull oil from the ground as quickly and efficiently as possible to help fund further attacks and defenses against ISIS.
While there are a lot of companies that can pull oil from the ground, larger companies like Exxon Mobil Corporation (XOM) have the global resources to do this quickly and effectively. As much as it will make some scream that we are in a “war for oil,” the bottom line is that this would be very good for the companies like Exxon Mobil that can handle the task.
Roy Luck via Wikimedia
Infrastructure spending is in the platform for both candidates. America’s roads, bridges and airports are aging — rapidly — and either Clinton or Trump will be forced to address the need.
Trinity Industries Inc. (TRN) is in the simple business of providing everything infrastructure. The list of items that Trinity develops and produces looks like a construction company’s shopping list. Especially if one wanted to start rebuilding the framework of our transportation and energy infrastructure.
Among Trinity’s offerings: railcars and railcar parts, highway products, aggregates, inland barges, structural wind towers, steel utility structures, shields and shoring products.
TRN shares are already on the move higher after a multiyear decline. The stock is breaking into bull market territory and gaining momentum as it becomes clear that infrastructure spending will be on the rise no matter who wins the election in November.
Shaun Greiner via Wikipedia
Another infrastructure-related stock that would fare well under a President Donald Trump is Caterpillar Inc. (CAT).
The heavy machinery manufacturer is No. 1 when it comes to the machinery that is synonymous with infrastructure building. In addition, a win by Trump will give a boost to the coal mining activity, which would also benefit the Big Cat.
Caterpillar shares have been rallying for more than a year on a combination of global demand and the “buy the rumor” activity ahead of the election. Another operator in the same space is Deere & Company (DE). However, because its exposure to mining machinery isn’t as great as Caterpillar’s, we favor CAT.
Look for Caterpillar stock to thrive over the infrastructure boom, but to get an extra boost from the possibility that coal mining operations will fire back up under a Trump victory.
This article is from The Johnson Research Group for InvestorPlace. A
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