The first 100 days of the Donald Trump presidency are about to come to a close. But investors should look at things from a different perspective. That is, love him or hate him, once Trump hits that 100-day milestone, he’ll still have 1,361 days left in his term (one’s a leap year) … and that assumes he won’t be re-elected.
Point being, there’s a lot more time left for him to accomplish his goals. Investors looking for the best stocks to buy for the intermediate- to long-term would be wise to keep thinking about his agenda.
It’s not going away.
With that as the backdrop, it’s hardly too late to start a new search for stocks to buy with Trump at the nation’s helm. He tipped his hand of priorities even before the election was a done deal, and his agenda hasn’t changed in the meantime. Those policies favor some clear sectors, and some specific stocks as well.
Here’s a closer look at the 10 best stocks with Donald Trump in the White House, in no particular order:
The 59 Tomahawk missiles President Trump ordered to be fired at chemical weapons targets in Syria? They were made by defense contractor Raytheon Company (NYSE:RTN).
And they’ll all have to be replaced/replenished by the Navy.
OK, the new ones the Navy needs to replace the ones used won’t make or break the company. Though the Tomahawks cost about a million bucks apiece, Raytheon is a $45 billion company that does $24 billion in annual sales.
That’s not the point. The point — and the purpose of putting RTN on a short list of the best stocks to buy for at least the next three-plus years — is that Trump has made it clear he’s not afraid to use military hardware, regardless of the cost. The “mother of all bombs” (MOAB) dropped on the cave system in Afghanistan cost $170,000, and with U.S. ships headed toward North Korea, who knows what’s next?
Another one of Donald Trump’s ambitions is the mass lowering of tax rates … corporate and personal. The effort has been met with a little too much resistance thus far, but it’s still on the radar.
The proposal currently on the table isn’t too specific, but it does include a tax rate of just 15% for businesses, and just three individual tax brackets — 10%, 25% and 35%.
Lower tax rates will help make all U.S. companies more profitable, who on average dish out 28% of their net income to the IRS. But it will be of the biggest benefit to a company like Lowe’s Companies, Inc. (NYSE:LOW), which sports a hefty tax rate of 42.4%.
There’s also the added bonus that Lowe’s finally seems to be firing on all cylinders. Its fourth quarter was a blowout affair that saw the DIY retailer grow same-store sales by more than 5% — without sacrificing margins!
Although it’s usually a Democrat priority, President Donald Trump has made it clear that he’s ready, willing and able to spend big on restoring the nation’s infrastructure.
All told, the president wants to spend $200 billion on the country’s roads, bridges, utilities, and more.
That bodes well for the construction industry, but not necessarily all the players in the construction business. Most of the outfits that are capable of building a fine new home lack the equipment, scale or experience to lay miles and miles of new roads, or to construct a bridge.
MasTec, Inc. (NYSE:MTZ) — a nearly $4 billion infrastructure construction firm headquartered in Florida — is one of the few contractors with a track record of doing government-scale work.
A bet on Donald Trump’s economic growth plan is indirectly a bet on higher interest rates. Growth drives inflation, and higher interest rates keep inflation at palatable levels. The Federal Reserve usually has to put a string of rate hikes in place, however, to keep inflation in check over a period of time.
While that creates a certain amount of misery for borrowers, it’s a boon for banks in that the higher interest rates mover, the more money they make.
The pick of the litter: Bank of America Corp (NYSE:BAC).
Bank of America’s bottom line improved in the fourth quarter of last year on rising rates then, and grew even more in the first quarter for the exact same reason.
Take the hint.
To say Donald Trump is a fan of coal is an understatement. He loves it, more than once describing it as “beautiful.” He’s also already axed regulatory hurdles that made it all but impossible to mine and use, and since September, coal prices have advanced 30%.
It bodes well for the entire coal industry, but Cloud Peak Energy Inc. (NYSE:CLD) is the proverbial diamond in the rough.
Don’t misunderstand. Cloud Peak Energy is still a risky bet. Not only is it a micro-cap with a stock priced at less than $5.00 per share, but coal is still a politically charged word. Nobody can really see its long-term future.
On the other hand, Cloud Peak Energy is one of the few names that has been able to maintain at least a little profitability. That’s something.
It’s also worth noting that its primary operation is in the Powder River Basin, in Montana and Wyoming, leaving it close to the west coast where it can easily ship to Asia … an area that’s still hungry for coal. Better yet, Cloud Peak’s resource is low in sulfur, making it much less of an environmentalism target.
The Coca-Cola Co (NYSE:KO) is a fine organization, making a product loved the world over. But, it doesn’t necessarily seem like a name poised to thrive under a Donald Trump Presidency. What gives?
There’s actually a savvy but subtle theory here.
It may be hard to believe, but roughly 60% of Coke’s business comes from overseas customers. An unusually strong dollar has made that business look and feel less fruitful than it really is, simply because the exchange rate saps its value upon conversion. If the greenback was weaker, Coca-Cola would mathematically become more profitable.
It matters simply because on more than one occasion Trump has commented he thinks the dollar is too strong for our own good. Whether he ever explicitly says it or not, he’s going to work to devalue the U.S. dollar.
Another part of President Trump’s proposes tax overhauls is lowering — at least temporarily — the penalty for repatriating the funds so many U.S. companies are currently sitting on overseas.
Apple Inc. (NASDAQ:AAPL) is generally treated as the poster child and top beneficiary of this idea. A recent look pegged its potential tax liability on the near-$200 billion it held in overseas bank accounts at around $60 billion if-and-when it brings it home under existing tax laws.
Apple is hardly the only outfit itching to redeploy a huge stack of cash trapped in foreign banks, however. General Electric Company (NYSE:GE) is one of the best stocks for this particular play, boasting roughly $100 billion worth of cash that would also be heavily taxed if the company ever wanted do something with it stateside.
Anthony Mirhaydari has some good points in his idea that General Electric is actually a stock to bail on in May, based on current circumstances. No doubt, GE is struggling. But Trump could change that.
It has become a forgotten detail of Obamacare’s advent, but to help fund some pieces of the healthcare system’s overhaul, the new rules imposed a 2.3% excise tax on the medical equipment manufacturers. The exact adverse impact on these companies has been difficult to measure, though nobody would argue it hasn’t created some sort of headwind.
If President Trump gets his way — and looks like he will sooner or later — that excise tax is going away, and that bodes well for medical equipment makers.
There are plenty to choose from, but Stryker Corporation (NYSE:SYK) has earned a spot on the list of stocks to buy on expectations that the restrictive cost of doing business will be lifted.
Despite the imposition of the added cost, the company just topped its Q1 earnings and revenue estimates. It could do even more without the financial sandbag it’s forced to drag along.
Railroad outfit CSX Corporation (NASDAQ:CSX) is another way to play a coal rebound, but even if the coal industry never fully recovers, it’s a way of stepping into the nation’s backbone of any economic recovery Trump may be able to spur.
Indeed, it’s already happening.
Year-to-date, CSX’s total shipping activity is up just a hair, and coal shipments — its biggest single revenue driver — are up 4.2%. It’s not earth-shattering, but in light of the fact that the entire industry is seeing more demand from the U.S. as well as Canada this year than it did at this point last year is encouraging.
The X-factor reason CSX has earned a spot on a short list of stocks to buy with Trump in the White House: While new CEO Hunter Harrison has a reputation for being a bit of a maverick, nobody can deny he gets good results.
Last but not least, and speaking of it, add Apple Inc. (NASDAQ:AAPL) to your list of stocks to buy with Trump at the helm.
OK, there has never really a bad time to own Apple, in that even a bad quarter for the consumer technology giant would still be a good quarter by any other company’s standards — Apple is a cash-generating monster. If Trump’s recently unveiled tax agenda is put into place, though, the world’s most profitable organization could become stunningly more profitable, with corporate tax rates slated to slide from a top rate of 35% to only 15%.
Such a move would absolutely benefit Apple more than any other company.
Bonus: As was noted, the proposed plan would allow companies with large cash balances stored overseas to bring that money home without a massive tax bill siphoning off as much as 40% of its value. Though the exact revised tax rate on repatriated money has not yet been determined, any help would be a boon to Apple, which has more than $200 billion parked in overseas bank accounts.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.