After his latest win in the South Carolina Republican presidential primary against Nikki Haley, Donald Trump looks all set for a rematch against President Biden in the November 2024 US Presidential elections. How would stocks react to Donald Trump's arrival in the White House? While there is ample research available on the behavior and performance of financial markets and stocks during Republican and Democrat governments, more are more analysts are weighing in on how 2025 and beyond would look like for the stock market if a new government is formed under Donald Trump.
The "Trump Trade"
In late January, when the Russell 2000 index jumped, Zhiwei Ren, portfolio manager at Penn Mutual Asset Management, reportedly said that investors might be flocking to the "Trump Trade." The Russell 2000 is a small-cap U.S. stock market index that makes up the smallest 2,000 stocks in the Russell 3000 Index. Ren said, according to Wall Street Journal, that since Trump is a supporter of low interest rates and less regulation, small-cap stocks, which thrive under Dovish economic policies, were reacting positively to the increasing chances of Donald Trump becoming the leading Republican candidate for the upcoming elections.
However, some analysts also believe the age-old idea that stocks from certain industries (oil, defense, etc.) perform well under Republicans while others such as green energy outperform under Democrats is becoming outdated. A Bloomberg report published earlier this month cited Christopher Harvey, Head of Equity Strategy at Wells Fargo Securities, who said that dividing stocks in "red" and "blue" baskets before US elections is tempting but latest data shows the market has a tendency to give surprises. For example, according to an analysis by Harvey, defense and oil stocks have outperformed by more than 66% under the Biden administration, while clean energy stocks, which were expected to do well under Democrats, posted lackluster performance. Similarly, shares of Smith & Wesson, one of the top gun companies in the US, tanked during Trump administration.
However, Donald Trump's win in the 2024 elections would shake the markets since Trump has said that he would not reappoint Jerome Powell as Fed chair and his policies of low interest rates and de-regulation could bring new challenges for the Fed in its battle against inflation.
Methodology
Last month, Goldman Sachs published a list of stocks and sectors that can outperform if Republicans come to power in the 2024 elections. For this article we chose some notable stocks from this list, mentioning reasons behind their possible outperformance under a Trump presidency. In addition we also consulted several analyst reports and credible financial websites to see which companies are set to outperform under Donald Trump if he wins the 2024 election. We picked a few stocks as a result of this research. Some top names in the list include JPMorgan Chase & Co (NYSE:JPM), Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX).
These 10 Stocks Can Skyrocket if Donald Trump Wins US Election 2024
Digital World Acquisition Corp (NASDAQ:DWAC) is a Trump-linked SPAC which recently came in the limelight after the SEC declared effective the registration statement for its proposed merger with Trump Media & Technology Group (TMTG), the company behind Truth Social, an alternative social media platform that claims to encourage "open, free, and honest global conversation without discriminating on the basis of political ideology."
Digital World Acquisition Corp (NASDAQ:DWAC) and other Trump-related digital properties and companies could see a huge boost if Donald Trump comes to power after the November 2024 elections.
Founded by US army veterans who served in Afghanistan and Iraq, Utah-based Black Rifle Coffee, or BRC Inc (NYSE:BRCC), has a history of having a pro-Trump, pro-right wing stance on different political and cultural matters including immigration. The coffee company BRC Inc (NYSE:BRCC) has received public endorsements from Sean Hannity and Donald Trump Jr. in the past. The stock is seen as one of the top names to have exposure to during a Donald Trump-led Republican era. Over the past one year the stock has lost about 37%.
In November 2023, BRC Inc (NYSE:BRCC) disclosed that its director Kathryn Dickson bought 30,000 class A common shares in BRC Inc (NYSE:BRCC) at $3.27.
A total of seven hedge funds tracked by Insider Monkey had stakes in BRC Inc (NYSE:BRCC).
Like BRCC, JPMorgan Chase & Co (NYSE:JPM), Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX) are also positioned to benefit from a Donald Trump presidency.
Goldman Sachs in its report last month said engineering and construction company Fluor Corp (NYSE:FLR) could gain if Donald Trump comes to power because of the Republicans' plans for tighter borders. Fluor Corp (NYSE:FLR) was one of the companies involved in border construction activities during the previous tenure of Donald Trump.
The company talked about its guidance and future plans during Q4 earnings call earlier this month:
"Looking ahead, we see additional sizable opportunities in battery metals and iron ore. In infrastructure, as mentioned earlier, we remain focused on executing our legacy portfolio. We also anticipate an award for the next phase of a significant motorway project in the Netherlands that we are currently working on. Within Energy Solutions, we have a robust pipeline of prospects, notably multiple FEED awards supporting mega liquid to chemicals programs in the Middle East. Other opportunities in energy solutions include refineries in Mexico and the U.S. Gulf Coast and in the energy transition space, a large renewable diesel project in Canada. In Mission Solutions, we are well-positioned for recompete scopes of work, including the strategic petroleum reserve renewal.
VALE S.A (NYSE:VALE) is one of the stocks Goldman Sachs believes could gain if Donald Trump comes to power. Goldman picked VALE S.A (NYSE:VALE) along with some other steel stocks on expectations that steel manufacturing in the US would increase under the Republican administration.
As of the end of the fourth quarter of 2023, 34 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in VALE S.A (NYSE:VALE). In addition to Vale, hedge funds also like JPMorgan Chase & Co (NYSE:JPM), Exxon Mobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX).
Last month, VALE S.A (NYSE:VALE) said it produced 89.4 million metric tons of iron ore in the fourth quarter, crushing past the 83 million metric tons estimate.
During Q4 earnings call Vale talked about 2024 plans:
"In 2024, we are at a fast pace to deliver another strong performance. Next slide please. Vale’s major competitive advantage is its potential to grow its high quality portfolio with low capital intensity. In that sense, we are targeting the development of three key projects combined with the development of Mega Hubs, concentration facilities at briquette plants. Our three key projects are being executed. The Vargem Grande Complex expansion, the Capanema project and the S11D plus 20 expansion. With those addings to our current production baseline, we expect to reach 340 million to 360 million tons productions by 2026. Next slide please. In 2023, we continue to mature our agreements for joint assessments on the construction of mega hubs with authorities in the United Arab Emirates, Saudi Arabia, and Oman and with partners in Brazil.
American coal mining company Peabody Energy Corp (NYSE:BTU) could skyrocket during Donald Trump's presidency amid expectations that Republicans would reverse Joe Biden's green energy initiatives and encourage traditional, fossil fuel energy policies.
Last month, Goldman Sachs also named Peabody Energy Corp (NYSE:BTU) among its list of stocks that could be winners if Republicans come to power later this year.
