3 Stocks With a LOT Riding on 2016 Elections (XOM, SWHC, VRX)

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Jaded Americans may not believe that it makes much of a difference who gets elected president this year, but the breakup of the potential Pfizer (PFE)/Allergan (AGN) merger is proof that politics have a big impact on Wall Street. Come November, Exxon Mobil (XOM), Valeant (VRX) and Smith & Wesson (SWHC) have a vested interest in the big election.

Exxon Mobil (XOM)

exxon-mobil-xom-stock-185Maybe it’s cynical to think that a politician born in one oil territory (Calgary, Canada) and raised and representing another (the state of Texas) would show some favoritism for the oil industry. However, in Ted Cruz’s case, he’s got more of a connection to the oil industry than friendships and campaign donor relationships. According to Cruz’s financial disclosure documents, the senator has between $365,000 and $850,000 of his personal investment portfolio in six oil & gas holdings. In fact, Cruz owned at least $100,000 of XOM stock alone as of the filing date. For XOM shareholders, it never hurts to have a fellow shareholder with a six-figure stake living in the White House.

Conversely, Democrats have long been champions of the transition away from fossil fuels and toward renewable energy. In fact, Hillary Clinton was one of the loudest voices calling for an investigation into XOM’s possible cover-up of global warming data last year. Perhaps it’s no coincidence that Clinton’s attacks came shortly after XOM ended its sponsorship of the Clinton Global Initiative.

Smith & Wesson (SWHC)

Another Clinton target in recent debates has been gun makers like SWHC.

“No other industry in America has absolute immunity… and they sell products all the time that cause harm,” she said of gun makers back in March. “You talk about corporate greed? The gun manufacturers sell guns to make as much money as they can make.”

Although she didn’t mention SWHC by name, Clinton certainly seems like bad news for the company.

SWHC would love to see either Donald Trump or Ted Cruz elected over Clinton. Cruz would likely be best for business. Not only has Cruz long been an outspoken defender of Second Amendment rights, he is the only leading candidate with an A+ rated NRA voting record.

Valeant (VRX)

When the leading presidential candidate makes a campaign ad specifically targeting your company, you know you might be in for a rough four years.

Very few companies have ever found themselves facing such intense political scrutiny as VRX currently faces. In a campaign ad released in March, Clinton said that she is “going after” VRX for what she calls “predatory pricing.”

At this point, it’s unclear whether or not VRX’s business practices and drug pricing models are any worse than those of its competitors. However, Clinton has singled the company out and could try to make an example out of VRX.

It’s unlikely that VRX has any friends among the candidates. Clinton is clearly a foe. At this point, VRX needs all the help it can get to turn around its slumping share price. VRX has fallen 84% in the past year.

Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.

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Wayne Duggan has been a U.S. News & World Report Investing contributor since 2016 and is a staff writer at Benzinga, where he has written more than 7,000 articles. Mr. Duggan is the author of the book “Beating Wall Street With Common Sense,” which focuses on investing psychology and practical strategies to outperform the stock market.


Article printed from InvestorPlace Media, https://investorplace.com/2016/04/xom-swhc-vrx/.

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