The new year is coming, and so is a much-deserved (and needed) portfolio re-evaluation. And as we do that, we’ll have one additional consideration to keep in mind:
The Trump Effect.
President-elect Donald Trump is set to take office come January, and his first 100 days will set the tone for what we can expect in the four years to come.
President Donald Trump has made a number of promises about the big things he’ll accomplish within his first 100 days in office. Investors already have been trying to capitalize on those plans by picking stocks thought to benefit from the changes he makes.
Thing is, his sweeping changes surely will make some sort of lasting effect on various companies, but market sentiment will also do its part in swinging stocks around.
Today, we’re looking at a few first-100-day plans for the Trump Administration, and five stocks that should rise (or fall) in response to his new agenda.
5 Ways to Play Trump’s First 100 Days: Nucor Corporation (NUE)
Donald Trump has a lot of beef over America’s trade agreements. Specifically, he thinks the U.S. has gotten some raw deals. Thus, one of his first priorities in the Oval Office will be to renegotiate NAFTA, withdraw from talks on the Trans-Pacific Partnership and reconsider the tariffs paid by Chinese steel and aluminum exporters.
The latter is sure to help steel firm Nucor Corporation (NYSE:NUE).
OK, the latter is sure to help many steel companies, but I particularly like Nucor because it has a relatively low debt-to equity ratio of 0.6, and it pays a respectable 2.3% dividend.
Not only that, but NUE has been able to turn a profit over the past few years thanks to its more diversified business — something many of its competitors can’t boast.
5 Ways to Play Trump’s First 100 Days: Zions Bancorp (ZION)
Donald Trump has promised to undo much of what President Barack Obama has done during his eight-year tenure, and that will begin with loosening some of the financial regulations supported by the Obama administration. That’s why bank stocks shot up almost immediately after Trump was elected.
And shortly after being named Trump’s pick for Treasury Secretary, Steve Mnuchin said he wants to “strip back parts of Dodd-Frank that prevent banks from lending.”
Financial institutions will benefit immensely from these changes, especially mid-sized banks that were particularly hurt by harsh stress tests. Zions Bancorp (NASDAQ:ZION) is one such bank, whose $60 billion worth of assets put it in the same category as its much larger peers.
ZION is poised to see a lift during Trump’s first 100 days as the bank will be a huge beneficiary of loosened regulations.
5 Ways to Play Trump’s First 100 Days: Geo Group (GEO)
Perhaps the most memorable claim that Donald Trump made during his campaign was that he would build a wall between the U.S. and Mexico. Many believe that such a feat would be nearly impossible, but as President, Donald Trump will need to make good on his promises to take a hard line on immigration.
That means that he will likely put regulations into place that will uproot millions of illegal immigrants in the U.S. and begin the process of deportation.
This will be a boon for The Geo Group Inc (NYSE:GEO), the for-profit prison stock.
While the Justice Department announced earlier this year that it would try to end its relationships with for-profit prison stocks like GEO and CoreCivic Inc (NYSE:CXW) — formerly Corrections Corp. of America — that likely will be rolled back now that the White House is going to Trump, who has praised private prisons.
Meanwhile, Geo Group’s relationship with the U.S. Immigration and Customs Enforcement make it a prime candidate to thrive as they hold undocumented immigrants while they go through the judicial process.
5 Ways to Play Trump’s First 100 Days: UnitedHealth Group (UNH)
Another of President-elect Trump’s biggest campaign promises was to repeal and replace the Affordable Care Act, aka Obamacare.
While it will take time for the president to address Obamacare — whether it’s a full repeal-and-replace, or a mixture of hacks and cuts — he likely will at least get the process started in the first 100 days.
That already has started giving insurers like UnitedHealth Group Inc (NYSE:UNH) a lift.
Health insurers have already started to give Washington their opinion on what life should look like after the ACA, including how state marketplaces need to be addressed.
UNH has much to gain from Trump’s presidency, as the insurer has struggled mightily under the added weight from Obamacare. Plus, the firm could be in great position to grow if Trump nixes regulations that keep insurers from doing business across state lines.
5 Ways to Play Trump’s First 100 Days: First Solar (FSLR)
Finally, we reach energy policy.
Among the Obama-era regulations that Trump has promised to do away with are those that reduce U.S. dependence on fossil fuels and focus on green energy sources. Trump is expected to do a complete 180, focusing more on coal and oil, and drop certain considerations for things like solar and wind.
That means renewables companies such as like First Solar, Inc. (NASDAQ:FSLR) could have a tough time ahead.
First Solar already had to slash its outlook for the year by about $1 billion thanks to weakness in China. The company also is restructuring its operations.
These moves were made to make FSLR more competitive, but now it might just be necessary for survival. Government support and subsidies have been critical in building up the country’s solar technology … and without it, the industry could be whittled down.
The rest of the stocks are buys. But FSLR is a sell or a short.
As of this writing, Laura Hoy was long ZION.