With each passing week, it is looking more and more like Hillary Clinton will be the next President of the United States. It seems like every week there is something new that damns her brash billionaire opponent, Donald Trump — from not paying income taxes to the vulgar video to women accusing sexual harassment.
It is getting ugly in the Republican party, and polls prove it to be true.
Therefore, as we brace for yet another Clinton in office, and deal with the fact that most Americans don’t like either choice, the big question for investors is: What does this all mean for the stock market?
And more specifically, what stocks will do best under a President Hillary Clinton?
If you think the presidency will go the other way, check back with us soon — because one of my colleagues will lay out the winning stocks for a Donald Trump presidency. But here are my 16 best stocks to buy in anticipation of a win for the DNC.
Best Stocks to Buy Under President Hillary Clinton: Lockheed Martin (LMT)
Donald Trump and Hillary Clinton don’t agree on many things, but they do agree that this country needs better defense and security, and that foreign affairs are a big problem.
With that, we can conclude that neither candidate wants to cut defense spending, which bodes well for Lockheed Martin Corporation (NYSE:LMT).
Lockheed Martin is the government’s biggest contractor. In 2015, it created nearly $30 billion of its $46 billion in total revenue from the Department of Defense. Hence, the government and spending on defense are very important for LMT. Thankfully, we know that Clinton won’t cut defense spending, and is likely to even increase spending in the first few years as she makes a stand against ISIS and other foreign threats.
With a yield above 3% and essentially no short interest, LMT stock is a good choice to own for those seeking a Clinton rally.
Best Stocks to Buy Under President Hillary Clinton: Textron (TXT)
Like LMT, Textron Inc. (NYSE:TXT) is a company that should gain from increased spending on defense.
Textron is a much smaller company that LMT with a $10 billion market capitalization. In fact, you likely haven’t heard of it. However, it makes a lot of land and air vehicles used by the military, and civilians, along with components for the military. This is a very diversified company with a presence in many of the areas that Clinton plans to help.
It makes Bell Helicopters for the military. TUG Technologies and Douglas Equipment goods are seen at airports helping planes while on the ground. Then, Textron has a number of technologies for electrical, utility, and telecommunication in remote places with Greenlee and Sherman, brands the military are familiar with. These are just a couple of areas where it operates; there are dozens of brands and industries where Textron leaves it mark.
Best of all, the company is growing and trades at less than 13x forward earnings, which makes it a good Clinton bet.
Best Stocks to Buy Under President Hillary Clinton: Tesla Motors (TSLA)
No president in history has invested more in clean, renewable energy sources than Barack Obama.
But Hillary Clinton might spend more.
Clinton has already said on many occasions that a big part of her plan to grow jobs is to invest in clear, renewable energy, which thereby creates new jobs. Furthermore, it is also feasible to believe the incentives and credits that Tesla Motors Inc (NASDAQ:TSLA) has received under the Obama Administration will keep on coming.
With that said, TSLA itself does not gain much more of an advantage with Clinton in office. However, it does if its acquisition of SolarCity Corp (NASDAQ:SCTY) is approved. Combined, Tesla will become the unquestioned leader of all things clean energy. Not only will it have battery-operated cars and solar panels, but it will be able to offer complete home and enterprise solar power, day and night, with its Powerwall and Powerpack.
These are two of the first products produced by Tesla’s Gigafactory. With the acquisition of SolarCity, Tesla will be able to sell solar panels and battery packs that store solar energy for use at night. Thus, if Tesla is able to acquire SolarCity and Clinton gets elected, there is a good chance that Tesla becomes the face of solar, clean, renewable energy.
That’s a valuable presence under the Clinton administration.
Best Stocks to Buy Under President Hillary Clinton: Vivint Solar (VSLR)
Tesla may become the king of all things renewable and clean energy, and also solar, but Vivint Solar (NYSE:VSLR) is a small-cap company with a market cap of only $350 million that has a lot to gain with Clinton in charge, too.
Clinton has promised to extend many of the incentives and tax credits to help the solar industry grow. She has a big goal to have 500 million solar panels installed by 2020. That’s a big goal since only 1% of homes use such panels.
The Obama administration was pockmarked with solar companies — that received some of the biggest incentives — going bankrupt. However, despite VSLR’s 75% loss over the last year, it’s still standing, and it’s still the second largest installer of residential solar panels in the U.S.
Given that so much of Clinton’s plan centers around solar and renewable energy, I expect she will do all that is possible to help companies like Vivint thrive.
Best Stocks to Buy Under President Hillary Clinton: SunPower (SPWR)
Vivint may be a little too risky for some. If that’s the case for you, consider SunPower Corporation (NASDAQ:SPWR), which is a very similar, but larger and safer company than VSLR.
SunPower sells solar panels to residential, commercial and utility customer. It is generally considered the industry leader with a $1.2 billion market capitalization and $1.5 billion in revenue. And it trades at just 15x forward earnings.
Sure, SPWR is so cheaply valued in part because it crashed 65% over the last year due to risks for continued incentives and the bankruptcy of its competitor SunEdison. And yes, SPWR has a debt to asset ratio near 50%.
However, this is a company that will produce profits as incentives continue through 2019 and has a great shot to grow fast with Clinton in charge.
Best Stocks to Buy Under President Hillary Clinton: Deere (DE) and Caterpillar (CAT)
Under the Clinton Administration, the U.S. will spend a lot on infrastructure to improve our highways, roads and bridges. President Obama signed a five year deal last at the end of last year to spend $205 billion on highways and another $48 billion on transit projects. While that’s a lot, Clinton vows to increase federal infrastructure spending by $275 billion over five years. If so, a lot of companies will benefit.
One company is Deere & Company (NYSE:DE), which creates a big bulk of its business from heavy equipment. Likewise, Caterpillar Inc. (NYSE:CAT) competes against Deere in most industries, and will be competing as the increased infrastructure investments require more heavy equipment purchases and construction.
Fact is that whenever you see road work or construction in general, you also see Caterpillar and Deere products. That is only going to increase if Clinton adds another $275 billion to the budget.
Both DE and CAT are well off their respective all-time highs, and should perform very well under the Clinton administration. And while CAT has a 3.5% yield versus a 2.7% for DE, and may look like the better overall investment, I would still go with DE stock if I had to choose just one.
The reason is because Caterpillar seems to have more exposure to the coal mining business, and took too big of a bet ($10 billion in 2013) on commodity prices and mining. Yes, CAT has gained market share in most industries where it operates, and its four consecutive years of revenue declines is a better illustration of the overall market. However, I think DE is better positioned to gain exclusively from an increase in infrastructure spending, whereas Caterpillar will continue to be hard-hit from coal mining and a reduction in Chinese GDP.
Best Stocks to Buy Under President Hillary Clinton: Aecom (ACM)
Deere and Caterpillar have the machinery, and Aecom (NYSE:ACM) is the contractor who does the work.
Aecom is a construction company that, while known for large projects like the Barclays Center, also gets a big chunk of its annual revenue from the government, and by building roads, bridges and utilities.
ACM is a company that does a lot of different things, is very diversified and is one of the first construction companies that the government calls when there are big projects in place.
Well, $275 billion creates a lot of big projects.
That said, ACM does not have a lot of growth right now. After a big acquisition, its revenue will be most flat the next two years. However, current expectations don’t reflect Clinton and these big infrastructure investments. With ACM trading at just 8.5x earnings, I don’t see too many better Clinton investments.
Best Stocks to Buy Under President Hillary Clinton: Bank of America (BAC)
Financial stocks won’t be popular as investments under a President Hillary Clinton. That’s because Clinton has talked so openly about closing loopholes for banks and financial institutions while imposing tougher regulation and vetoing anything that weakens Dodd-Frank. Based on this, many say that Clinton seems disastrous for bank stocks.
Clinton is a career politician, and no politician does everything they say they will do. Also, I think past actions and history should have more weight than words on a campaign trail. If that is accurate, then we should pay more attention to how much support banks have given to Clinton, and her history of very deep ties to Wall Street.
Clinton likely doesn’t make any changes that hurt the banks. In fact, her being elected President likely means that nothing changes at the Federal Reserve, and we continue with a very conservative path to increasing interest rates that does not hurt stocks.
One financial stock that is best positioned to gain under the Clinton Administration is Bank of America Corp (NYSE:BAC). Not only has Bank of America greatly improved its business over the past two years, but the company now buys back stock and has a respectable 2% yield that is certain to rise even more. Furthermore, BAC is one of the cheapest big banks in the entire financial sector. In fact, BofA would have to trade higher by 48% just to match its book value!
In an industry that sees book value as fair value of a stock, BAC looks really good headed into the next four years, where very little is likely to change.
Best Stocks to Buy Under President Hillary Clinton: Citigroup (C)
If BAC is one of the cheapest stocks relative to its book value, then Citigroup Inc (NYSE:C) is the absolute cheapest.
C stock would have to trade higher by 51% just to mach its book value, and with a very similar business to BofA, one could argue that Citi is the best investment in the financial space over the next four years.
That said, Citigroup and Bank of America’s outlooks are very much tied to the idea that Clinton won’t do as she’s said. Of all the big change she wants to make, she will fall short in many areas, and I think tougher regulation on the big banks will be way down her list.
Regardless, Citi and BAC are good low risk high reward options because both are so cheap relative to the industry. For example, Wells Fargo & Co (NYSE:WFC) still trades at a premium to its book value per share despite its recent collapse and an account scandal that could very well make it the next Chipotle! Hence, there is no value in owning the likes of Wells Fargo, investors are better off with cheap stocks like BAC and Citi amid uncertainty.
Best Stocks to Buy Under President Hillary Clinton: Community Health Systems (CYH) and HCA Holdings (HCA)
The Affordable Care Act, aka Obamacare, has been one of the biggest topics of this election. Yes, millions of people are now insured thanks to Obamacare, but it is also expensive, and the increased competition that should have been created has not.
Clinton is not going to abolish Obamacare, because she was instrumental in its creation. Instead, she will force many changes to it. One is incentives for the 30 states that refuse to participate. Many have also suggested that the state lines associated with Obamacare may be taken down, as a way to really encourage a free-market environment for consumers and insurers.
Furthermore, we know that Clinton is going to be tough on pharmaceutical companies and price hikes for needed drugs and treatments. All of these expected changes benefit companies like Community Health Systems (NYSE:CYH) and HCA Holdings Inc (NYSE:HCA).
Both companies operate large networks of hospitals, and many of their respective assets are in states that have not yet adopted the Affordable Care Act.
Community Health has hospitals in 29 states, and only 16 are covered under the ACA. Likewise, HCA Holdings has operations in 20 states but only five with ACA. This leaves room for significant improvements and higher margins for each company as ACA expands into more states.
With that said, HCA is by far the better business. CYH has a near 75% debt-to-assets ratio and a multitude of operational issues that helped push its debt to such high levels. Still, CYH has been at the epicenter of buyout talks, and with Clinton in charge, acquirers will have fewer questions and more incentive to acquire a company whose valuation has fallen 75%.
Meanwhile, HCA has high debt too, but it operates efficiently with consistent growth, and big enough profits to pay back that debt.
At less than 12x forward earnings, HCA has a lot to gain under the right president.
Best Stocks to Buy Under President Hillary Clinton: Tenet Healthcare (THC)
Tenet Healthcare Corp (NYSE:THC) is somewhere in the middle of CYH and HCA. It has the obscene debt that causes most investors to pause, and the breakeven margins that reflect questionable decisions at the top.
However, with the right administration and changes to the ACA that force more competition and more states to participate, many of Tenet’s problems would be solved.
It is no secret that the number of uninsured Americans is a problem for hospitals. People who are uninsured either delay important tests and procedures for lack of insurance or fail to pay bills for services at hospitals. The ACA is a solution, albeit an expensive solution. If Clinton can fix many of the underlying problems that prevent full participation and a free market environment, then hospitals like THC will gain.
Given her role in the ACA, I believe it will be high on her list of priorities. At just 10x forward earnings, that makes THC a good Clinton stock to own.
Best Stocks to Buy Under President Hillary Clinton: Ford (F)
Ford Motor Company (NYSE:F) already has a massive $155 billion business that revolves around auto sales. And essentially all of its sales are tied to traditional, gasoline-powered vehicles that Hillary Clinton is trying to demolish in favor of electric.
While Clinton may have big goals for electric vehicles and renewable energy, it will take some time before the industry is mainstream, and there will always be a big market for Ford. What makes Ford so attractive under the Clinton Administration is its willingness to embrace change, and commit to electric vehicles.
Earlier this year, Ford announced plans to launch 13 new electric vehicles and hopes to have 40% of its lineup “all electric” by 2020. Ford plans to invest $4.5 billion into making this dream a reality.
More importantly, Ford’s outlook to complete this investment goes right to the end of Clinton’s first term.
I think this sets the perfect stage for Clinton to make Ford her poster-child for success with electric vehicles. I think Clinton will work hand-in-hand with Ford to incentivize its marketing campaign to make electric vehicles mainstream, and will aid in making large investments to ensure the investment pans out.
Keep in mind, first-term presidents are always worried about the second term. What better way to make a bold statement than helping the company that the George W. Bush Administration nearly destroyed disrupt the entire auto industry with a high volume of electric vehicles.
Best Stocks to Buy Under President Hillary Clinton: Acadia Pharmaceuticals (ACAD)
By now everyone should have an idea of what Clinton wants to do: invest in infrastructure, defense and clean energy, and improve Obamacare.
Clinton is not seen as particularly inviting for biotech stocks given her focus to fight the price hikes that keep important drugs unaffordable. However, there are some that should gain under a President Hillary Clinton, and to conclude, I am sharing those two stocks.
Clinton has stated that mental health — and more specifically, Alzheimer’s disease — is a big focus for her Administration. Reportedly, there are 57 million Americans, adults and children, who suffer from mental illness, and Clinton vows to invest in research and promote treatment. This bodes well for companies that specialize in antipsychotic drugs, like Acadia Pharmaceuticals Inc. (NASDAQ:ACAD).
Acadia just launched its drug Nuplazid, which is the only drug FDA approved to treat Parkinson’s disease psychosis. It is a large market, and the promise for Nuplazid is even greater as it tests the treatment on patients with Alzheimer’s disease psychosis and schizophrenia. And while Nuplazid has blockbuster potential already, Acadia could get some much-needed funding and marketing from the Clinton Administration because of their common goals.
At the very least, with Nuplazid having essentially no side effects and better efficacy than competing drugs, Clinton does not pose much of a risk for ACAD stock.
Best Stocks to Buy Under President Hillary Clinton: Indivor PLC (INVVY)
Clinton wants to tackle substance abuse head-on, specifically prescription pain medication and alcohol abuse. Her solution is a good one: Clinton wants to make it harder for physicians to prescribe controlled drugs, keep people out of prison and in treatment, then invest in treatment. In fact, Clinton is ready to throw another $2.5 billion at treatment centers.
This all bodes well for Indivior PLC (OTCMKTS:INVVY) the maker of Suboxone Film, Suboxone Tablet and Subutex Tablet, all of which are used to treat opioid abuse. This is a company that already creates more than $1 billion in revenue each year from sales of these products, and has a lot more drugs in the pipeline that all treat substance abuse.
Its candidate RBP-6000 was recently granted FDA Fast Track status. It is a monthly injection of the component that makes Suboxone work — buprenorphine — combined with counseling and psychosocial support. In other words, Indivior’s pipeline is being built around complete treatment, not just drugs, and that sets the company up to receive a big bulk of what Clinton spends on treating the disease.
At less than 17x forward earnings, I think INVVY is a great pharma buy. This company has proven for a decade that it’s at the frontier of treating substance abuse.
As of this writing, Brian Nichols was long BAC.