Donald Trump has brought energetic buying interest into certain sectors of the stock market. His surprise victory was not priced into stocks, so the last month has seen some abnormal monthly returns from stocks that will benefit from his presidency.
This initial reaction is not a fluke. Big money is moving aggressively into the stocks that will be more profitable over the next four year. So let’s take a look at the sectors and stocks that have outperformed.
There are two reasons to be bullish everything financial. First, it will be easier to do business once Dodd-Frank is out of the way. Trump has promised to eliminate all the red tape that certain laws have created, allowing for banks to reduce costs and conduct business in a more efficient manner. Second, interest rates have surged higher since the election. Higher interest rates are better for banks as the net interest spread improves, this helps their profit margins.
The main beneficiary has been the Financial SPDR (XLF), up over 13% in November. This ETF is a great way to play and the Trump Presidency and an increase in rates.
Industrials and Materials
The move in the Industrial SPR (XLI), up about 9%, stems from Trump’s promise to spend $1 trillion on infrastructure spending. Engineering, construction and government contractors took off after the election.
Moreover, the materials used to make the roads, bridges and buildings surged as well. The Materials SPR (XLB) shot up 6% in November.
While the EFT returns were notable, the move higher in individual stocks was much more impressive.
The smaller the company the better, with the iShares Russel 2000 ETF (IWM) moving almost 15% higher after the election.
Let’s take a look at some of the biggest stock winners since the election.
The following stocks listed are Zacks Rank #1(Strong Buy) or #2 (Buy) that have surged over 15% since the election.
Triumphant “Trump Stocks”
Health Insurance Innovations Inc (HIIQ) –Up 86.18 over the last 4 weeks, the stock isa Zacks Rank #1 (Strong Buy) that is a developer, distributor, and administrator of cloud-based individual health and family insurance plans, and supplemental products in the United States. Its product portfolio consists of short-term medical plans, accident, sickness & hospital medical plans, ancillary insurance, life insurance, lifestyle and discount services.
The company has a market cap of $170 million with a forward PE of 12. The stock sports Zacks Style Scores of “A” in Growth.
Moneygram International Inc (MGI) –Up 41.88% over the last 4 weeks, the company isa Zacks Rank #2 (Buy) that provides money transfer and payment services in the United States and internationally. The company’s major products and services include global money transfers, money orders and payment processing solutions for financial institutions and retail customers.
The company has a market cap of $550 million with a forward PE of 17. The stock sports Zacks Style Scores of “A” in Growth and a “B” Momentum. The company pays no dividend, but has expected EPS growth rate of over 15%.
Chemical Financial Corporation (CHFC) – Up 27.28% over the last 4 weeks, Chemical is a Zacks Rank #2 (Buy) that offers banking and fiduciary products in Michigan. As of the close of last year they operated 185 branches in 85 counties in Michigan.
The company has a market cap of $4 Billion with a forward PE of 19. CHFC pays a dividend of 2.05%.
Triumphant “Trump Stocks”
Lawson Products, Inc. (LAWS) –Up 30% over the last 4 weeks, Lawson is a Zacks Rank #1 (Strong Buy) that isa distributor of expendable maintenance, repair & replacement products.
The company has a market cap of $200 million with a forward PE of 185. The stock sports Zacks Style Scores of “B” in Momentum. LAW pays no dividend, but has expected EPS growth of 13.5%.
Applied Industrial Technologies (AIT)– Up 23.13% over the last 4 weeks, Applied is a Zacks Rank #2 (Buy) that distributes industrial products in the United States, Canada, Puerto Rico, Mexico, Australia, and New Zealand. The company distributes bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion components, tools, safety products, oilfield supplies, and other industrial and maintenance supplies; and fluid power products, such as hydraulic, pneumatic, lubrication, and filtration components and systems.
The company has a market cap of $2 billion with a forward PE of 23. The stock sports Zacks Style Scores of “A” in Growth and “B” in Momentum. AIT pays a dividend of 1.80% and has expected EPS growth of 12%.
Triumphant “Trump Stocks”
AK Steel Holding Corporation (AKS)– Up 79.90% over the last 4 weeks, AK is a Zacks Rank #2 (Buy) that produces flat-rolled carbon, stainless and electrical steel, and tubular products in the United States and internationally.
The company has a market cap of $3 Billion with a forward PE of 31. The stock sports Zacks Style Scores of “A” in both Growth and “B” in Value. The company doesn’t pay a dividend and has expected EPS growth of 5%.
While these stocks have perhaps traveled too high to buy now, they have signaled what will work over the next four years. Make a watch list and be on the lookout for pullbacks to get back into the Trump Stocks.
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