In this article, we will take a detailed look at the Analyst Says These 10 Stocks Can Benefit if Donald Trump Wins US Election 2024.
Wolfe Research said in a note earlier this month that the odds have shifted in favor of Donald Trump following the first presidential debate. However, the firm believes we can see several “unexpected twists and turns” ahead. Wolfe Research also shared a list of stocks that could be potential winners should Donald Trump become the President of the US.
What could happen if Donald Trump becomes President of the US has been a topic of debate and discussion on Wall Street over the past several months. 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.
In this article, we first scanned Wolfe Research’s basket of stocks the firm believes could be potential winners in case of a Trump presidency. From these stocks we picked 10 companies with the highest number of hedge fund investors.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Don’t Miss: These 10 Stocks Can Skyrocket if Donald Trump Wins US Election 2024
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10. Energy Transfer LP Unit (NYSE:ET)
Number of Hedge Fund Investors: 32
Wolfe Research thinks pipeline company Energy Transfer LP Unit (NYSE:ET) is one of the best stocks to own for a Trump presidency.
Mizuho also added the stock to its top picks list and gave an Outperform rating. The firm set a $20 price target on the stock, saying Energy Transfer LP Unit (NYSE:ET) improved leverage outlook should allow more aggressive capital return beyond the current 3- 5% distribution growth rate.
Energy Transfer LP Unit (NYSE:ET) has an over 7% dividend yield. During the first quarter, the company saw revenue growth of a whopping 13.9% year-over-year. Gross margin increased from 17.7% to 18% year-over-year, while the operating margin expanded from 10.86% to 11%. Cash flow from operations jumped from $3.35 billion to $3.78 billion over the same period.
Energy Transfer LP Unit (NYSE:ET) is being pitched as an AI stock in the energy industry as the rise of data centers will increase energy demand, helping ET. According to an estimate, gas demand for electricity to run data centers is expected to increase by a whopping 8 billion cubic feet a day by 2030.
Last month, Bank of America published a list of stocks poised to benefit from the electrification theme of future technology, driven by AI, data centers and push for electrification. BofA picked Energy Transfer LP Unit (NYSE:ET) for this theme under the oil and gas category.
Energy Transfer LP Unit (NYSE:ET) remains one of the most notable players in the industry. During the March quarter, all segments of ET grew, with net income and adjusted EBITDA increasing by 11% and 13% on a YoY basis, respectively. Energy Transfer LP Unit (NYSE:ET) saw record volumes in its crude pipeline segment.
Energy Transfer LP Unit (NYSE:ET) bulls also argue that just 10% of ET business is exposed to the volatile commodities sector. Energy Transfer LP Unit (NYSE:ET) has also raised its full-year 2024 adjusted EBITDA guidance. Energy Transfer LP Unit (NYSE:ET) expects the metric to total in the range of $15.0 billion and $15.3 billion, compared to the previous range of between $14.5 billion and $14.8 billion.
Energy Transfer LP Unit’s (NYSE:ET) earnings are expected to grow 13% next year and 15% over the next five years on a per-annum basis. The stock’s forward P/E of 9.42 is still lower than the industry median 11.88, which makes the stock undervalued given Energy Transfer LP Unit’s (NYSE:ET) growth projections.
Silver Beech Capital made the following regarding Energy Transfer LP (NYSE:ET) in its fourth quarter 2023 investor letter:
Energy Transfer LP (NYSE:ET) owns and operates the largest and most balanced collection of energy infrastructure assets in the United States. ET’s assets include 125,000 miles of oil and natural gas pipelines, export facilities on both the Gulf Coast and East Coast, and more than 1 million barrels per day of natural gas liquid fractionation capacity. ET accounts for 20% of worldwide natural gas liquid exports. Further, ET is uniquely connected to every major hydrocarbon basin in the United States.
By assembling energy infrastructure to gather, process, transport, and store hydrocarbons, ET connects exploration and production companies (“E&Ps”) with downstream end users such as gas stations, utilities, and export facilities. As an end-to-end midstream solution, ET enables its customers to focus on their portion of the value chain without the burden of significant but essential midstream logistics. ET’s services thus add tremendous value to all constituents of the energy marketplace.
Though natural gas is a relatively clean source of fuel, restrictive federal and state regulations and other permissions severely restrict the building of natural gas pipelines and other infrastructure in North America that would help facilitate abundant hydrocarbon production. Pipelines are by far the cheapest and greenest method of transporting hydrocarbons; pipelines reduce emissions from truck transport and reduce congestion on highways, rail, and shipping routes
9. Dow Inc (NYSE:DOW)
Number of Hedge Fund Investors: 35
Wolfe Research believes Dow Inc (NYSE:DOW) is one of the stocks that can benefit if Donald Trump comes to power.
Dow Inc (NYSE:DOW) is one of the biggest chemical companies in the world. The company operates in three segments: Packing & Specialty Plastics, Intermediates & Infrastructure and Materials & Coatings. The stock is down about 7% so far this year as pricing headwinds, unfavorable environment amid elevated interest rates and lower volumes continue to take a toll on business. But analysts believe the stock is poised for growth in the long term, especially after the interest rate cycle begins. Dow Inc (NYSE:DOW) is expected to deliver about $2 billion in EBITDA growth by 2026. Dow’s business is exposed to market cycles and interest rates. Dow Inc (NYSE:DOW) thrived when interest rates fell to near-zero levels in the midst of the COVID-19 pandemic. Amid unfavorable environment Dow’s management has been cutting costs and improving efficiency. Dow Inc (NYSE:DOW) recently decided to sell its flexible packaging laminating business to Arkema for $150 million.
Dow Inc (NYSE:DOW) has about $3.7 billion in cash and equivalents, up from $2.98 billion at the end of 2023. Over the past 12 months free cash flow came in at $2 billion, while cash from operations in $5 billion.
Dow Inc (NYSE:DOW) has a dividend yield of over 5%, and management is confident it can continue to deliver strong shareholder value, which shows the company has visibility on improvement in the future. During Q1 earnings call, Dow’s CEO Jim Fitterling said:
Over the past five years, we have worked hard to improve our balance sheet, to improve cash-flow conversion and to build a more resilient company that maintains consistent discipline. This was demonstrated when we delivered $12.4 billion in peak EBITDA in 2021, higher than any other timeframe in Dow’s history. This has created the opportunity for us to invest strategically at the bottom of the cycle for long-term profitable growth. And as implementation of our growth strategy increases our underlying EBITDA, we will continue to target at least 65% of operating net income to shareholders as we move up the next peak. This means at least 45% in dividends and 20% in share buybacks.
8. Halliburton Company (NYSE:HAL)
Number of Hedge Fund Investors: 38
Wolfe Research believes oil services company Halliburton Company (NYSE:HAL) could be the potential winner if Donald Trump comes to the White House. Halliburton Company (NYSE:HAL) bulls believe the company is set to benefit from the increase in activity in the energy industry. Halliburton’s moat when compared to peers like Schlumberger and Baker Hughes is its strong market share in North America. As of 2023, North America accounted for about 45% of its total revenue, compared with 20% for Schlumberger and 26% for Baker Hughes. However, Halliburton Company (NYSE:HAL) believes the rise of shale and frac operations could boost its business prospects in the long term.
The company believes West Africa and the North Sea could be areas of strength in 2025 and beyond. Halliburton Company (NYSE:HAL) is also expanding into offshore operations, artificial lift systems, and production chemicals in addition to hydraulic fracturing. Halliburton Company (NYSE:HAL) ZEUS platform is also gaining popularity. It integrates electrification, automation, and subsurface diagnostics to reduce costs and improve operational efficiency. Another significant development is Halliburton Company (NYSE:HAL) SmartFleet fracture monitoring system, an automated solution for real-time subsurface measurement.
Average analyst price estimate on the stock is $47, which presents a 42% upside potential from the current levels.
Carillon Eagle Mid Cap Growth Fund stated the following regarding Halliburton Company (NYSE:HAL) in its fourth quarter 2023 investor letter:
“Halliburton Company (NYSE:HAL) provides equipment and services to the global energy industry. The company’s shares underperformed during the quarter, largely due to downward pressure on crude oil and natural gas prices. Despite this recent move, ongoing discipline among North American shale producers could continue supporting relatively healthy activity growth at current commodity price levels, which should provide stability to service providers such as Haliburton. The company is also poised to benefit from the ongoing, multi-year international and offshore upstream investment cycle that is less dependent on short-term swings in commodity prices.”
7. Nucor Corp (NYSE:NUE)
Number of Hedge Fund Investors: 39
With over 50 years of consecutive dividend increases, steel company Nucor Corp (NYSE:NUE) is one of the best stocks that can benefit from a Trump presidency, according to Wolfe Research. Nucor Corp (NYSE:NUE) has been on an acquisition spree lately, expanding into new growth areas. In April, Nucor Corp (NYSE:NUE) bought data center infrastructure firm Southwest Data Products, Inc. (SWDP) for $115 million.
With the deal Nucor Corp (NYSE:NUE) entered the AI infrastructure market where specific solutions to maintain cool temperatures at data centers are in high demand. To address this market, Nucor Corp (NYSE:NUE) is creating a dedicated group.
Amid a decline in construction activity and pricing headwinds, Nucor Corp (NYSE:NUE) gave a weak guidance and the stock is down about 12% so far. However, analysts believe this has created a strong buying opportunity for long-term investors. Its forward P/E is 14, lower than industry median of 15
Wall Street expects the stock’s price to reach $174 over the next 12 months, which is about 14% higher than the current levels.
Since Nucor Corp (NYSE:NUE) is more exposed to non-residential construction activity and depends on government projects, its interest rate sensitivity is lower. Analysts expect the stock to benefit from the rise in government infrastructure spending. Nucor Corp (NYSE:NUE) expects 5-8 million tons of incremental steel demand over each of the next four to five years due to the CHIPS Act, Inflation Reduction Act, and Bipartisan Infrastructure bill.
6. Coinbase Global Inc (NASDAQ:COIN)
Number of Hedge Fund Investors: 48
Wolfe Research thinks Coinbase Global Inc (NASDAQ:COIN) is one of the beneficiaries of a possible Trump presidency.
As regulators approve crypto ETFs and Bitcoin continues to gain ground, cryptocurrencies are seeing wide acceptability and moving beyond the stage when they were disregarded as something speculative. Being one of the largest crypto exchanges in the world, Coinbase Global Inc (NASDAQ:COIN) is positioned well to benefit from the growth of crypto. During the first quarter Coinbase Global Inc (NASDAQ:COIN) revenue doubled year over year to roughly $1.59 billion, driven by transactional revenue, subscription revenue and fees.
EPS estimate for Coinbase Global Inc (NASDAQ:COIN) this year is $7.24 per share, representing an astonishing 1,856.73% year-over-year growth. In contrast, the sector median growth is a mere 3.42%. However, Coinbase Global Inc (NASDAQ:COIN) valuation has been a concern for many. The stock’s forward P/E is 31. Given Wall Street’s revenue growth estimate of just 0.70% for next year and earnings growth estimate of -36%, this valuation is high. Analysts also believe the popularity of crypto ETFs and retail investors embracing trading platforms like Robinhood does not bode well for Coinbase Global Inc (NASDAQ:COIN) since investors would prefer to directly invest in crypto ETFs and currencies instead of investing in Coinbase stock.
Coinbase Global Inc (NASDAQ:COIN) is a promising play for those with a higher-risk appetite. However, for those who want to avoid the roller-coaster ride of crypto volatility, the stock might not be a good choice.
Patient Capital Opportunity Equity Strategy stated the following regarding Coinbase Global, Inc. (NASDAQ:COIN) in its first quarter 2024 investor letter:
“This quarter we benefited from our exposure in the cryptocurrency space. The approval of 11 new spot Bitcoin ETFs dramatically opened Bitcoin to new investors for the first time. Investors’ interest was material, with assets under management growing to $55B over a single quarter. Coinbase Global, Inc. (NASDAQ:COIN) was a beneficiary of these events as we believe it is building the foundation of the crypto-ecosystem. We continue to believe COIN has the potential to be the platform for crypto as it has continued to widen its moat by investing throughout the most recent crypto winter.”
5. Emerson Electric Co (NYSE:EMR)
Number of Hedge Fund Investors: 53
Wolfe Research identified Emerson Electric Co (NYSE:EMR) as one of the stocks that can be potential winners if Donald Trump wins the upcoming election. Deutsche Bank recently increased its price target on the stock $138 from $123. Emerson Electric Co (NYSE:EMR) focus on industrial automation and software has been one of the biggest growth catalysts. Emerson Electric Co (NYSE:EMR) software controls business is also growing. In the latest reported quarter Emerson Electric Co (NYSE:EMR) Software & Control segment saw a 14% year-over-year revenue growth, while the AspenTech business grew by 21%. Emerson Electric Co (NYSE:EMR) focus on automation and software gives it an edge over peers as it’s no longer competing with them in legacy markets.
Emerson Electric Co (NYSE:EMR) also holds an above-average market share in the LNG market. The emerging hydrogen infrastructure is also a significant opportunity as capital projects expand from chemical and fertilizer industries to others. The power sector remains strong as utilities continue upgrading grid management and automation capabilities, areas where Emerson Electric Co (NYSE:EMR) excels, and are incorporating more solar and wind energy. Emerson Electric Co (NYSE:EMR) has highlighted a strong pipeline in nuclear power, with 55 new plants planned by 2030.
