In November 2020, Americans will run to the polls, either re-electing U.S. President Donald Trump or choosing his replacement. As we get closer to the election, more and more investors are asking a very important question: how will each candidate, if elected, impact the stock market as a whole, and certain stocks in particular?
At present, there are widely considered to be seven “major” candidates. On the Republican side, there’s Donald Trump. On the Democratic side, there’s Bernie Sanders, Elizabeth Warren, Pete Buttigieg, Joe Biden, Mike Bloomberg, and Amy Klobuchar.
Each of these six candidates will have a very different impact on the stock market if elected. That’s because, as Ansley Chua, Department Head of Finance and Associate Professor at
Kansas State University, told InvestorPlace in an email, “the market generally likes two main pieces: the ease of doing business and certainty in the investing environment.”
In the 2016-20 Trump presidency, Chua notes that ease of doing business has dramatically improved, which has helped the stock market in a big way. “The corporate tax and maximum income tax rates were lowered, some regulations were relaxed or repealed, and the fiscal policy is very loose. These three things provided a boost to the markets, and the decreased corporate tax rate increased the profitability of companies,” observes Chua.
Meanwhile, Chua observes that the Trump presidency hasn’t really knocked it out of the ballpark when it comes injecting certainty into the investing environment: “President Trump’s rhetoric has been less than helpful. The very public trade war with China, EU, and NAFTA has been detrimental for companies.”
Both of these dynamics will change if Americans elect a new president.
The ease of doing business will be very different in a Biden or Buttigieg presidency, and even more different in a Warren or Sanders presidency. Similarly, certainty in the investing environment will differ significantly between a Bloomberg presidency, a Klobuchar presidency and a Trump presidency.
It’s important for investors to understand these differences so that they can adjust their portfolios accordingly, depending on who wins the 2020 U.S. Presidential Election.
Without further ado, then, let’s take a deeper look at stocks to buy for each candidate (assuming that candidate wins the election).
Stocks to Buy if Trump Wins: Facebook (NASDAQ:FB)
Sitting U.S. President Donald Trump has attacked big tech companies like Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOG), and Amazon (NASDAQ:AMZN) before. But, Trump’s attacks against big tech have been a lot of talk, and not a lot of walk. After all, since Trump was elected, Facebook stock, Alphabet stock, and Amazon stock are all up more than 70%.
In other words, while Trump has attacked big tech companies, his Presidency has not hurt the performance of big tech stocks. That likely won’t be the case if he doesn’t get re-elected. Both Bernie Sanders and Elizabeth Warren have vowed to break-up big tech companies, while many of the other Democratic candidates have hinted that they might do the same. Consequently, if Trump doesn’t win in 2020, big tech stocks could get hit hard.
On the flip-side, if Trump does win, the fear of him not winning will disappear completely, and big tech stocks will rise. In particular, Facebook stock will rise, because of all big tech companies, Facebook has been most at the center of regulation and break-up talk.
Stocks to Buy if Trump Wins: Exxon Mobil (NYSE:XOM)
The 2020 Democratic candidates stand largely unified in their stance that global warming is a serious issue, and all have plans to tackle climate change, many of which include promoting clean energy adoption and discouraging fossil fuel usage. Meanwhile, Trump’s policies are almost the exact opposite.
Consequently, the 2020 U.S. Presidential Election is a very big deal for fossil fuel companies like Exxon Mobil (NYSE:XOM). If any of the Democratic candidates win, especially Sanders or Warren, then Exxon Mobil stock will tank on the idea that those candidates will have a significantly negative impact on U.S. fossil fuel demand. But, if Trump gets re-elected, Exxon Mobil stock will rally on relief that none of other candidates won (and that fossil fuel demand will remain relatively steady).
Big picture — a Trump victory should provide a relief rally to Exxon Mobil stock and the entire fossil fuel industry.
Stocks to Buy if Trump Wins: Teva (NYSE:TEVA)
Another industry which the Democratic candidates stand largely unified against is big pharma. That is, the Democratic candidates largely believe that big pharma companies are getting away with murder in consistently hiking prices on drugs that U.S. consumers need, and are vowing to stifle big pharma’s ability to do so going forward.
Thus, if any of the Democratic candidates win, big pharma stocks like Teva (NYSE:TEVA) will get hit hard. On the flip-side, if Trump wins, big pharma stocks like Teva will rally, on the idea that business in the pharma industry will remain stable for the next four years.
As such, much like fossil fuel stocks, big pharma stocks have a lot to lose (or gain) in the 2020 U.S. Presidential Election. A Trump victory would be a big positive, while a Trump loss would be a big negative.
Stocks to Buy if Sanders Wins: Canopy Growth (NYSE:CGC)
There are a lot of unique characteristics about Mr. Bernie Sanders’ presidential campaign. One of the more unique ones is that Mr. Sanders is exceptionally pro-cannabis, and has said that one of his day-one priorities is to legalize marijuana in all 50 U.S. states.
That’s a big deal. Currently, only 33 U.S. states have legalized medical cannabis. Just 11 have legalized recreational marijuana. It remains illegal at the federal level. Thus, going from where we are today to federal legally across all 50 states, is a huge jump. Naturally, it would mean that greener days are ahead for cannabis companies, many of whom have been patiently waiting for marijuana to become federally legal in the U.S.
One such company is Canopy Growth (NYSE:CGC). They are the biggest and deepest-pocketed cannabis player in the Canadian market, and they plan to jump into and replicate their success in the U.S. market… but only once marijuana becomes federally legal. Thus, if Sanders wins the presidency and legalizes weed, Canopy Growth will jump into action. The company will become a giant in the U.S. market. Revenues, profits, and the stock price will all march higher.
Stocks to Buy if Sanders Wins: Tesla (NASDAQ:TSLA)
One of the other unique pillars of Sanders’ presidential campaign is his Green New Deal, which — as the name implies — calls for the creation of several initiatives to support more robust uptake of green technology across the United States.
One of those initiatives includes spending $86 billion on creating a national electric vehicle charging network. Another one is upping the electric vehicle tax subsidy. Both of these initiatives will up electric vehicle demand in the U.S. And that’s great news for Tesla (NASDAQ:TSLA), America’s leading electric vehicle maker who appears to be only increasing their lead in the electric vehicle world.
Consequently, in a Sanders presidency that more aggressively supports green technology adoption, Tesla will sell a lot of electric vehicles to a lot of U.S. consumers. The more vehicles the company sells, the higher Tesla stock will go.
Stocks to Buy if Warren Wins: NextEra Energy (NYSE:NEE)
Many view an Elizabeth Warren presidency as being net negative for the stock market, since many of her policies will make it harder for U.S. companies to do business and inject uncertainty into the U.S. economic landscape. But, one industry which a Warren presidency would be good for is the clean energy sector.
More so than many of her Democratic peers, Warren believes in immediately and aggressively accelerating America’s transition to clean, renewable energy. She wants to invest trillions of dollars into subsidizing the transition to clean and renewable electricity, and has a stated goal for 100% carbon-neutral power in the U.S. by 2030.
Naturally, then, if Warren wins the 2020 U.S. Presidential Election, the clean energy sector will rally on the idea that the next four years will be arguably the best four years for clean energy companies ever. One particularly attractive stock in this sector is NextEra Energy (NYSE:NEE), the world’s largest generator of renewable energy from the wind and sun. If Warren wins, NextEra Energy stock — which is already red-hot because of natural clean energy tailwinds — will only get hotter.
Stocks to Buy if Warren Wins: Plug Power (NASDAQ:PLUG)
Continuing to think along the lines that a Warren presidency will be hugely beneficial for the clean energy industry, another stock which should do really well if Warren wins is Plug Power (NASDAQ:PLUG).
Plug Power makes hydrogen fuel cells, and their business strategy revolves around selling those hydrogen fuel cells into the materials handling industry (think hydrogen fuel cell forklifts). Companies like Walmart (NYSE:WMT), Amazon (NASDAQ:AMZN), and BMW are already starting to deploy Plug Power’s forklifts in their warehouses, mostly because these forklifts are a cost-effective way to reduce carbon emissions.
But, if Warren wins the 2020 election, then the pressure on companies to reduce carbon emissions will increase significantly. As it does, there will be more urgency across corporate America to find cost-effective ways to hit sustainability targets. This increased urgency will accelerate adoption of Plug Power’s hydrogen fuel cells, and the company’s business will gain tremendous momentum. As it does, Plug Power stock should power higher.
Stocks to Buy if Biden Wins: iShares U.S. Healthcare ETF (NYSEARCA:IYH)
Mr. Biden is one of the few leading Democratic candidates that is not preaching Medicare for All. Instead, he proposes protecting and building on the Affordable Care Act, put forth by former U.S. President Barrack Obama (under whom Biden served as Vice President).
Extension of the Affordable Care Act — not a total switch to Medicare for All — would be a huge tailwind for healthcare stocks and the iShares U.S. Healthcare ETF (NYSEARCA:IYH). Going back to Chua’s two big things, ease of doing business and investment certainty, a switch to Medicare for All would make it very hard for healthcare companies to profitably do business in the U.S. and it would simultaneously inject a ton of uncertainty into the healthcare world (after all, no one really knows how Medicare for All would actually look at scale).
Consequently, if Biden wins the election and the whole idea of Medicare for All gets scrapped, then healthcare stocks and the U.S. Healthcare ETF will rally.
Stocks to Buy if Biden Wins: American Water Works Company (NYSE:AWK)
One of the unique pillars of Mr. Biden’s campaign is an infrastructure overhaul, which includes replacing outdated water pipes all across America.
That’s exactly what American Water Works Company (NYSE:AWK) already does. U.S. water pipe infrastructure is very old, and not that great. Already, over 40% of U.S. pipe infrastructure is classified as poor, very poor, or life elapsed. American Water Works is doing all they can to fix that issue, and implement new U.S. water pipe infrastructure to improve water quality and reduce waste.
Under a Biden presidency, there will be more urgency to make progress with this initiative at a federal level. That will provide a significant tailwind for American Water Works’ business, and the stock will likely benefit.
Stocks to Buy if Buttigieg Wins: SPDR Homebuilders ETF (NYSEARCA:XHB)
Housing stocks and the SPDR Homebuilders ETF (NYSEARCA:XHB) should rally if Pete Buttigieg wins the 2020 U.S. Presidential Election.
That’s because a core piece of Buttigieg’s campaign is creating more affordable housing. Of note, he wants to create a federal program which would help millions of Americans buy family homes. Naturally, such assistance would lead to a huge surge in affordable housing demand across America. Homebuilders would consequently up the supply of homes in the market to keep pace with rising demand.
Higher demand and higher supply will lead to higher revenues and profits for homebuilders. In that world, housing stocks go up.
Stocks to Buy if Buttigieg Wins: SPDR S&P 500 Trust ETF (NYSEARCA:SPY)
Interestingly enough, Buttigieg may be the candidate on this list who will have the most positive impact on the stock market, and if so, a good stock to buy if he wins the 2020 U.S. Presidential Election would the SPDR S&P Trust ETF (NYSEARCA:SPY), which tracks the S&P 500.
As CNBC personality and former hedge fund manager Jim Cramer notes, Buttigieg is a centrist candidate who believes in free market capitalism and doesn’t want to enact radical change in corporate America, such as breaking up the banks and big tech, or top to bottom healthcare reforms. Indeed, if we go back to Chua’s two main things (ease of doing business and investment certainty), a Buttigieg presidency would likely be a positive for both.
As such, it seems reasonable to say that a Buttigieg victory would provide a tailwind for the whole stock market. If so, the SPDR S&P Trust ETF would be a good pick-up to gain exposure to these market tailwinds.
Stocks to Buy if Bloomberg Wins: JPMorgan (NYSE:JPM)
Mr. Mike Bloomberg is broadly seen as the best Democratic candidate for the financial sector and bank stocks like JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC), Citi (NYSE:C), and more.
That’s because Bloomberg has previously stated that overly tight restrictions on financial institutions can restrict growth, has ties with many of these big banks, and is seen as the most pro-free-market Democratic candidate. Consequently, if Bloomberg wins the 2020 election, bank stocks should rally on the idea that Bloomberg will make it easy for the big banks to do business, and that the investing environment will be as it always has been (so there will be a lot certainty).
All bank stocks will outperform under a Bloomberg presidency. But, JPMorgan stock will likely be the best-performer, simply because the bank remains the most innovative in the bunch and has the best management team.
Stocks to Buy if Bloomberg Wins: iShares Dow Jones U.S. ETF (NYSEARCA:IYY)
Many analysts and investors also view Bloomberg as being the best Democratic candidate for the stock market in general, meaning that if he wins the election, buying the iShares Dow Jones U.S. ETF (NYSEARCA:IYY) may be a good idea.
Professor Chua said in an email to InvestorPlace that, ” Bloomberg, based on reputation only, will probably have the strongest positive market reaction because of his centrist policy coupled with his extensive market experience.” At the same time, the analyst team over at Wolfe Research has said that a Bloomberg presidency would be a good thing for the stock market. Investment manager Mike Holland has sounded a similar tone, saying that stocks will go up if Bloomberg wins the election.
Big picture — it is widely believe that a Bloomberg win will be a good thing for the stock market. Regardless of if this is true or not, the belief alone will create a short-term rally in stocks if Bloomberg wins. Consequently, buying the iShares Dow Jones U.S. ETF if Bloomberg wins the election seems like a smart investment strategy.
Stocks to Buy if Klobuchar Wins: Deere (NYSE:DE)
As the senior United States Senator from Minnesota, Amy Klobuchar is big on protecting and promoting the U.S. farming industry. Indeed, she has made it a core tenant of her campaign to improve conditions for farmers across America, mostly through more significant investment in rural communities.
Such investment will improve economic conditions in the U.S. farming community, which will help support increases in demand from those communities for U.S. farming products. Deere (NYSE:DE) sells a lot of U.S. farming products. Consequently, if Klobuchar wins, Deere could see a sizable and enduring domestic demand boost.
That boost paves the path for Deere stock to outperform in a Klobuchar presidency.
Stocks to Buy if Klobuchar Wins: United States Steel Corporation (NYSE:X)
An interesting and unique economic pillar of Klobuchar’s campaign deals with steel dumping. Specifically, as a senator, Klobuchar has been huge on curbing low-priced steel dumping from China in order to support domestic steel producing industries. If elected as president, she has promised to further this fight against low-priced steel dumping from China.
In this lens, a Klobuchar presidency would be a great thing for U.S. steel producers, like the United States Steel Corporation (NYSE:X). It would translate into less foreign steel dumping, higher demand for U.S. steel, higher prices on that steel, and higher revenues, margins, and profits for the United States Steel Corporation.
Long story short, then, a Klobuchar win should provide a big tailwind for U.S. Steel stock.
As of this writing, Luke Lango was long FB, CGC, and PLUG.