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.
4. Linde PLC (NASDAQ:LIN)
Number of Hedge Fund Investors: 65
Linde PLC (NASDAQ:LIN) is one of the notable chemical and industrial gas companies in the world. Linde PLC (NASDAQ:LIN) growth prospects are strong. For 2024, it expects adjusted EPS for the full year 2024 to range between $15.30 and $15.60, reflecting an 8% to 10% growth. This guidance aligns closely with the analyst’s annual EPS estimate of $15.52. Wall Street expects Linde PLC (NASDAQ:LIN) earnings growth to average over 11% per annum over the next five years. Average analyst price target on the stock set by Wall Street is $473, which presents a 9% upside potential from the current levels.
Linde PLC (NASDAQ:LIN) is benefiting from the global de-carbonization trend. As of the end of March this year, the company had $8.5 billion project backlog, set to convert into revenue over time. These high-quality projects, characterized by double-digit IRR, secure cash flow, and reputable customers, include over one-third related to clean energy.
Linde PLC (NASDAQ:LIN) talked about this trend during Q1 earnings call:
At the same time, we are seeing project backlog opportunities pick up for new low-carbon electric arc furnaces or EAF as well as existing steel customers exploring ways to reduce their carbon footprint. Linde has recently signed a long-term agreement with H2 Green Steel to supply industrial gases for the world’s first large-scale green steel production plant in Northern Sweden. In addition, Tier 1 producers like Baowu in China have expanded their relationship with Linde, by decaptivating their ASUs into our existing supply network further increasing supply reliability and efficiency.
3. Cheniere Energy Inc (NYSE:LNG)
Number of Hedge Fund Investors: 69
Wolfe Research expects Cheniere Energy Inc (NYSE:LNG) to benefit if Donald Trump assumes the Presidential office.
Cheniere Energy Inc (NYSE:LNG) is one of the biggest LNG companies in the world. The stock is set to grow amid rising demand of LNG across the world. According to a latest report by Shell, the global gas demand is expected to rise 50% by 2040 amid increasing LNG appetite in Asia. Cheniere Energy Inc (NYSE:LNG) is operating with a wide moat since it’s the second biggest LNG company with huge production infrastructure. Cheniere has facilities with 45 million metric tonnes per annum as of this year. Its Sabine Pass LNG Terminal in Louisiana has six operational trains. Cheniere Energy Inc (NYSE:LNG) has already secured orders or agreements for 95% of its anticipated production capacity extending into the middle of the year 2030.
During its Q1 earnings call Cheniere Energy Inc (NYSE:LNG) talked about this and guidance:
Today, we are reconfirming our full year 2024 guidance ranges of $5.5 billion to $6 billion in consolidated adjusted EBITDA and $2.9 billion to $3.4 billion in distributable cash flow. As we’ve noted previously, 2024 represents our most contracted year-to-date. We still expect 2024 to represent a trough year for EBITDA as we expect our results to trend higher after this year as Stage 3 commences and eventually reach its run rate by the end of 2026.
As a reminder, our operating and financial results and forecast reflect some degree of seasonality as typically higher winter production at our facilities, coupled with typically higher pricing international markets, can provide for a somewhat seasonal weighting of our results to the colder quarters versus the hotter ones. For the balance of the year, we don’t expect meaningful changes to our earnings forecast for the remaining 3 quarters with an immaterial amount of unsold capacity remaining. We still expect to produce approximately 45 million tonnes of LNG this year, inclusive of planned maintenance at both sites, and our guidance continues to reflect only contributions from completed portfolio optimization activities as we do not forecast potential contributions from future opportunities.
During the first quarter, Cheniere Energy Inc (NYSE:LNG) achieved a new record by repurchasing 7.5 million shares for $1.2 billion. It also successfully refinanced $1.5 billion in debt and repaid $150 million in long-term debt. Cheniere Energy Inc (NYSE:LNG) payout ratio is just 10%, which means it’s dividend is extremely safe. It also expects to grow FCF to $3.4 billion in 2026.
TimesSquare Capital U.S. Focus Growth Strategy stated the following regarding Cheniere Energy, Inc. (NYSE:LNG) in its first quarter 2024 investor letter:
“The strategy’s top detractor was the -5% retrenchment from Cheniere Energy, Inc. (NYSE:LNG), which operates liquid natural gas (LNG) liquefaction facilities for the global transportation of LNG. While revenues and earnings were as expected, management’s initial guidance for the new fiscal year was lower than anticipated. Cheniere was conservative—appropriately so in our view—regarding plant volumes as election-year noise surrounding the regulatory environment could dampen LNG exploration and export activities.”
2. Citigroup Inc (NYSE:C)
Number of Hedge Fund Investors: 94
With an over 3% dividend yield and P/E of under 20, Citigroup is a notable financial stock that Wolfe Research believes could benefit if Donald Trump comes to power.
Analysts at BofA expect Citi to clock in EPS growth of 8% this year. According to Yahoo Finance data, Citigroup Inc’s (NYSE:C) EPS estimate for the next year (2025) is around $7.21. Assuming the banking sector’s average multiple of 10.32, the stock is currently undervalued. Wall Street’s average analyst estimate for Citigroup Inc (NYSE:C) is $66, while the stock was trading at around $62 as of June 1.
Warren Buffett, Leon Cooperman, Ken Fisher, Cliff Asness, Israel Englander – the list of billionaires having stakes in Citigroup Inc (NYSE:C) is long, thanks to Citigroup Inc’s (NYSE:C) strong fundamentals and dividend history. Citigroup Inc (NYSE:C) has upped its dividend every year since 2011. Citigroup Inc (NYSE:C) expects annual revenue growth of about 4%-5% by 2026, and it’s targeting an 11-12% return on tangible common equity in the same period.
Citigroup ranks fourth among major U.S. banks in terms of deposits and net loans. As of Q1, Citigroup reported total deposits of $1.307 trillion and net loans of $656.3 billion. Additionally, Citigroup has the lowest percentage of non-interest-bearing deposits to total deposits at 15.3%.
The company’s “Project Bora Bora” is expected to rake in huge cost savings. It resulted in 7,000 job cuts and anticipated annual savings of $1.5 billion. Citigroup plans to cut a total of 20,000 jobs globally over the next two years. The company also plans to fully or partially exit several markets, including Mexico, South Korea, Russia, and China. Recently, it sold its Consumer Wealth portfolio in China to HSBC and plans to transfer its Chinese credit card portfolio to Fubon Bank. However, Citigroup still plans to establish a China-based investment bank by the end of the year.
Diamond Hill Capital Long-Short Fund stated the following regarding Citigroup Inc. (NYSE:C) in its first quarter 2024 investor letter:
“Other top Q1 contributors included Meta Platforms, Citigroup Inc. (NYSE:C) and Walt Disney. Banking and financial services company Citigroup’s restructuring efforts are ongoing, and it continues remediating regulatory issues and building capital in anticipation of increased requirements. The company expects to see expenses fall meaningfully in the second half of 2024, bolstering the outlook from here.”
1. UnitedHealth Group Inc (NYSE:UNH)
Number of Hedge Fund Investors: 104
Wolfe Research expects UNH to benefit from a Trump presidency.
Analysts expect Unitedhealth Group Inc’s (NYSE:UNH) EPS to expand by about 10.5% to $27.75 by the end of 2024. The global health insurance industry is set to grow at a CAGR of 6.2% from 2024 through 2032. This growth would bode well for industry leaders like UNH.
In May, Bank of America Securities analyst Kevin Fischbeck reiterated a Buy rating on UnitedHealth Group Incorporated (NYSE:UNH) with a price target of $675.00. The analyst highlighted UnitedHealth’s efforts to grow its long-term EPS to 13-16%, strong value-based care model, and adaptable business strategy.
UnitedHealth revenue in the first quarter increased by 8.6% year-over-year to $99.8 billion. Its net loss per share of $1.53 was due to the $7.1 billion charge from the sale of its Brazil operations. In 2025, the company’s adjusted EPS is expected to jump 12.3% and by 13.2% in 2026.The company’s forward P/E of 17 is still lower than its 10-year average P/E of 20.2.
ClearBridge All Cap Growth Strategy stated the following regarding UnitedHealth Group Incorporated (NYSE:UNH) in its first quarter 2024 investor letter:
“We were also active in adding to stable bucket investments PayPal and UnitedHealth Group Incorporated (NYSE:UNH) where negative near-term sentiment led to more attractive risk/reward profiles. We added to our UnitedHealth position after shares were pressured due to fears over competition among managed care providers and rising medical loss ratios in the industry. We believe the company will be able to “re-price” for higher medical costs, making this pressure transitory and we see competitive concerns as overblown.”
While we acknowledge the potential of UnitedHealth Group Incorporated (NYSE:UNH), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than UNH but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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