Anything could happen between now and the U.S. presidential election on Nov 3. Despite the latest poll numbers and comments from pundits, there’s no way to know for certain whether President Donald Trump will win a second term or if Democratic challenger Joe Biden will unseat him. That may make it harder for investors looking at presidential election stocks.
Regardless of the election outcome, there are some stocks that should benefit from the U.S. presidential race over the next two months and beyond. These are stocks of companies that could be directly involved in the race for the White House and ones that could benefit after the vote no matter who occupies the oval office.
“If President Donald Trump is re-elected, the principal beneficiaries are likely to include financial and defense stocks,” says David Kass, a finance professor at the University of Maryland’s Robert H. Smith School of Business. “If Joe Biden is elected president, infrastructure, renewable energy and health care related companies should benefit.”
Whether you’re a Democrat, Republican, independent or somewhere in between, here are four presidential election stocks worth a look regardless of the vote.
Presidential Election Stocks: Facebook (FB)
Let’s start with the stock of a company that has been very influential and involved in presidential elections past and present, Facebook. The social network founded and run by Chief Executive Officer Mark Zuckerberg was heavily criticized for being a hub or misinformation and manipulation during the 2016 presidential election, notably from Russian hackers.
Since the 2016 vote, FB’s stock price has risen more than 200%. Now, during the current presidential election, Facebook is again being targeted by outside forces who are trying to influence the outcome of the vote. Only this time, the company is taking action to better manage the misinformation.
Zuckerberg has said that Facebook is taking down posts that contain false information and plans to restrict new political ads on the social media platform in the week leading up to the November vote. The company has also identified and disrupted Russian hackers who have been targeting Facebook after the company received a tip from the FBI.
However, it is not all unwanted attention that Facebook receives during an election year. The company also benefits from a surge in political advertisements. As of Sept. 1, the Trump campaign spent $74.7 million advertising on Facebook, while the Biden campaign spent $46.5 million advertising on the platform that reaches three-quarters of Americans, according to Facebook’s Ad Library.
The ad spend will only increase in the coming weeks as the race for the White House intensifies.
Cybersecurity is increasingly important as people work, bank and stream online. And threats and risks from hackers are pushed into the public spotlight even more during the election cycle. The 2016 presidential race was rife with media reports of Russian hackers, leaked emails and false social media posts.
All this attention helps Sunnyvale, California-based CrowdStrike, which is a market leader in online security, threat intelligence and cyberattack responses.
In fact, CrowdStrike was hired to investigate the cyberattacks on the Democratic National Committee and email leaks during the 2016 U.S. presidential election. CrowdStrike has numerous government contracts and has been involved in multiple cybersecurity investigations for the U.S. federal government. These contracts are likely to continue regardless of who wins the November election.
And CrowdStrike has been on a tear lately. The company recently reported better-than-expected fiscal second quarter results that included revenue of $199 million, up 84% from a year ago, and ahead of its guidance range of $185.8 million. Subscription revenue at CrowdStrike came in at $184.3 million, up 89%, and annual recurring revenue was $790.6 million, up 87%.
While CRWD stock has pulled back with the broader tech sector, the company’s share price is still up 163% year-to-date.
Lockheed Martin (LMT)
Defense stocks tend to do well after a presidential election. And industry heavyweight Lockheed Martin is positioned to capitalize no matter who occupies the White House. Not only is Lockheed Martin a major manufacturer of munitions and missiles, it is also a leading aerospace company and major producer of manned and unmanned military aircraft.
During his first term, Trump pushed for the privatization of the space industry, including the international space station, and Lockheed Martin is increasingly involved in the space sector. The company developed the technology behind the “aeroshell” that is used to protect NASA’s Mars rover. And, Democratic presidential nominee Joe Biden has focused much of his campaign on the U.S. military, to the point where he is leading polls when it comes to the voting intentions of military men and women.
Lockheed Martin has been performing well this year, reporting net revenues increased 12.5% year-over-year to $16.2 billion in the second quarter ending June 2020. Net earnings of $1.6 billion were up 14.2% from the same period last year, and the operating profit of $1.79 billion rose 15.4% on an annual basis.
LMT stock has risen 55% since hitting a 52-week low of $266.11 in March at the height of the Covid-19 pandemic.
And while Alibaba’s stock has performed well this year, up 60% from its March lows to $282.50 share, many analysts grumble that the Chinese company’s performance has been held back by political and diplomatic tensions between Washington and Beijing.
Indeed, BABA stock does tend to rise and fall on news of trade battles and political threats between the U.S. and China. However, that could change after the November election. Regardless of the vote’s outcome, a new comprehensive trade deal between the two superpowers is more likely to take place after Election Day. Plus, diplomatic relations between the U.S. and China are likely to simmer down whether Trump wins a second term or Biden unseats the incumbent.
Any normalization in U.S.-China relations will be good news for BABA stock moving forward. The company is doing well on nearly all fronts and should receive a boost of confidence from investors once the uncertainty of the U.S. presidential election outcome is removed in early November.
On the date of publication, Joel Baglole held positions in FB and BABA.