Trump, Trump, Trump … he’s all the rage on Wall Street. He’s also all the rage among pundits like me, as we attempt to identify the best stocks to buy for a Donald Trump “green light.”
The term green light here is often used in my hometown of Hollywood, where film studios give projects the green light to get made. For President Donald Trump, his epic film project (I suspect he’d want it to be a biopic) is one replete with the passage of every component of the Trump agenda.
That means a nationwide green light on massive infrastructure spending, including building a “yuge” wall on the Mexican border. It also means massive regulatory rollbacks in the energy sector, and in particularly in the banking sector via Dodd-Frank reform. Then there’s the societal albatross that is Obamacare — the president and Republicans in Congress want to slice through most of this federal leviathan’s tentacles.
Perhaps the most important part of the Trump agenda — one that I think could be a game-changer — is tax reform, and particularly corporate tax reform.
If Donald Trump gets the green light on infrastructure, regulatory reform and Obamacare, a lot of stocks will be big winners. If Trump gets the green light on tax reform, not only do a lot of stocks win … every American wins.
Here, then, are the seven best stocks to buy for a Donald Trump green light.
Best Stocks to Buy for a Donald Trump Green Light: Amazon (AMZN)
If the Trump tax cuts get the green light, then that means more money in your pocket, and less money in the federal leviathan’s pocket. More money in your pocket also means more money to spend.
And more money to spend means more revenue for Amazon.com, Inc. (NASDAQ:AMZN).
The online seller of everything has become destination shopping for millions around the globe, and the company’s numbers just keep growing every year. And despite being the king of e-commerce, Amazon stays hungry. Its brilliant move into cloud computing has been an unambiguous success, with the company raking in some $3.2 billion in cloud computing revenue in Q3 2016.
Since Election Day, AMZN shares are up nearly 9%. If Donald Trump’s tax reform gets the green light, that bump in the stock will be looked upon as its stagnant phase.
Best Stocks to Buy for a Donald Trump Green Light: American Express (AXP)
Buying things online means using digital payments, and for most that means using credit cards. My preferred form of electronic payment is American Express Company (NYSE:AXP). The credit card issuer offers what is I think is the best customer service in the financial services industry.
The company also is an aspirational brand — one that fits right into the new Trump-induced national zeitgeist calling for a return to greatness.
Yet the real reason AXP is among the best stocks to buy if Trump gets the green light is that if personal tax reform is passed, it will disproportionately help higher-income and higher-net-worth consumers. These are the consumers that use American Express more than rival credit cards.
That means a reduction in marginal tax rates could funnel right down to AmEx’s bottom line … and that’s bullish for AXP shares.
Best Stocks to Buy for a Donald Trump Green Light: Goldman Sachs (GS)
What do you get when you mix a neutered Dodd-Frank law with corporate and personal tax cuts? You get a profit cocktail that the biggest Wall Street banks will stay drunk on for years.
My preferred financial destination for a Trump green light is Goldman Sachs Group Inc (NYSE:GS).
The premier investment bank has been at the heart of the financial world since 1869, and one look at a list of America’s fiscal royalty reveals the dominance of Goldman Sachs in both the private sector, and the public sphere.
Even the ultimate outsider president has former Goldman men in key positions, including head economic adviser Gary Cohn, Treasury Secretary Steve Mnuchin, and what I suspect could be the “brains” behind the Trump administration, Chief Strategist Steve Bannon.
If President Trump gets a green light, there’s a good chance Goldman will get that green light, too.
Best Stocks to Buy for a Donald Trump Green Light: Caterpillar Inc (CAT)
A massive, $1 trillion infrastructure bill may have just been election rhetoric. Yet for the sake of argument, let’s stipulate a spending bill of this magnitude gets the green light. What stocks will benefit most?
Well, start with the companies that reshape the earth in man’s image, which means start with Caterpillar Inc. (NYSE:CAT).
The unmistakable CAT brand is involved in more infrastructure spending than just about any other company. Whether it be single-family homes, office buildings, roads, bridges, tunnels or dams, very few infrastructure projects could be accomplished without the use of a Caterpillar.
If the Trump agenda gets the nod, and the president’s desire to make America’s infrastructure great again is realized, then CAT is one of several no-brainer “Trump stocks” to buy.
Best Stocks to Buy for a Donald Trump Green Light: Kinder Morgan (KMI)
Deregulation, as well as infrastructure spending and corporate tax cuts, will be a big benefit to the nation’s energy industry, and particularly for the oil, gas and pipeline industries. Already, the president has signed executive orders making it easier to construct the Keystone XL pipeline and the Dakota Access pipeline.
President Donald Trump also moved to expedite environmental reviews for what he called “high-priority infrastructure projects.”
When it comes to oil and gas infrastructure, there are no bigger or better stocks to buy than Kinder Morgan Inc (NYSE:KMI). The company is the largest energy infrastructure player in America, operating some 84,000 miles of pipeline. Flowing through those miles are gas and oil supported by mostly long-term transportation contracts.
That’s important, as it shields KMI from commodity price risk (a real issue if the U.S. dollar gets stronger — another thing President Trump hopes to swat down).
Best Stocks to Buy for a Donald Trump Green Light: Boeing (BA)
Premier American aircraft manufacturer Boeing Co (NYSE:BA), which has been flying high in 2017, also is one of the largest defense contractors in the U.S. The company supplies Western military forces with the F-15 and F-18 fighter jets, which are capable of precision strategic bombing runs crucial to defeating enemies such as the Islamic State.
Another one of President Trump’s wishes is to, as he said on the campaign trail, “knock the hell out of ISIS.” If the president’s military strategists give him a plan that he OKs, then BA will be among the best defense stocks to buy.
Of course, with Boeing you also get exposure to economic growth, which is what the entire Trump agenda is ostensibly designed to achieve. With economic growth comes expanded consumer travel, and with expanded travel comes the need for airlines to buy more planes. And what company do you turn to upgrade your existing fleet? Boeing.
Best Stocks to Buy for a Donald Trump Green Light: U.S. Steel (X)
Is there any company that embodies American manufacturing more than United States Steel Corporation (NYSE:X)?
This company is a beneficiary of the Trump green light like perhaps no other. It’s in perfect position to take advantage of lower corporate taxes, massive infrastructure spending and the building of that “big, beautiful, powerful” wall with Mexico.
Wall Street agrees with my X thesis, too, as the shares have soared more than 75% since Election Day. Yet despite that big rise in U.S. Steel, the stock is capable of much more if the Trump agenda goes through.
Think of X as a bellwether for American manufacturing, for infrastructure spending and for economic growth: three rosy outcomes if the president gets all the goodies he wants.