By now you’ve seen the articles about which election stocks to buy if President Trump wins. And conversely, you’ve read about the stocks to buy if former Vice President Joe Biden wins. Of course, for some investors there is a third option. That would be to sit out the election entirely. And you couldn’t blame them. But according to at least one academic, that might be a mistake.
In an email sent to InvestorPlace, Joshua Della Vedova, assistant professor of finance at the University of San Diego’s business school, wrote that election years are good for stocks. “The election year has generated positive returns 74% of the time,” argued Della Vedova, “so even if you don’t take action, history suggests you may still be ok.”
One thing you shouldn’t do is try to pick a winner. In fact, Wall Street is having a hard time doing that. The CBOE Volatility Index (INDEXCBOE:VIX), commonly called the “fear index,” has come down recently. But as Della Vedova remarked, it has been higher than its five-year average for most of 2020.
But that doesn’t mean you shouldn’t try to pick winning election stocks. To do that you should look at stocks that are likely to perform well no matter who occupies 1600 Pennsylvania Avenue. And this year, despite all the uncertainty — or, maybe because of it — there are several attractive stocks to choose from.
Here are five picks for election stocks that should deliver solid performance up to and through the election.
Election Stocks: Apple (AAPL)
The iPhone 12 is coming! Sometime this year. Almost definitely. At least that’s the word from Apple. All kidding aside, it’s going to happen. The company’s factories are rumored to be working around the clock in China to ensure its timely release.
The big deal of course is that this will be Apple’s first iPhone to feature 5G technology. Apple is set to release four new iPhone models including what is being termed the iPhone “mini” which will have a 5.4-inch screen.
And the company has been showing the ability to successfully pivot away from the iPhone in recent quarters. The Services business has been growing steadily. Apple has also been seeing strength from its Wearables unit which includes the Apple Watch, which has been a pandemic winner for the company.
Remember also that Apple gave investors an early holiday gift by executing a 4-for-1 stock split in late August. That split, combined with a 15% drop in the company’s stock price in September, is setting up a nice buying opportunity to close out the year.
Best Buy (BBY)
Two additional technology toys that are arriving just in time for the holidays are new versions of the Sony (NYSE:SNE) Playstation and the Microsoft (NASDAQ:MSFT) Xbox. And Best Buy is well positioned to capture a good deal of the traffic from gamers looking to up their game.
In the last quarter that the company reported earnings, Best Buy reported more than 5% growth in comparable store sales. In addition the company posted almost 250% growth in digital sales and an over 50% growth in earnings per share. Some of this was fueled by the pandemic which forced individuals and businesses to outfit their homes for the new normal.
But that really just gave Best Buy another opportunity to demonstrate what many investors have already noticed. The company has made an impressive makeover in recent years. And in the process, it has managed to make its brick-and-mortar stores relevant while holding its own against Amazon (NASDAQ:AMZN) in the omnichannel/e-commerce space.
There are two reasons why you should add FedEx to your list of election stocks to buy. The first is somewhat obvious. The pandemic sparked by the novel coronavirus has tilted the world toward e-commerce. When people had no other option, they got things delivered. And as a result, FedEx has been able to pass along higher shipping costs to its customers who are (seemingly) happily paying it.
This holiday season will probably accelerate the e-commerce trend as consumers will want to make sure their packages get to loved ones who they may not be able to get together with due to the virus. So that’s one reason you should ignore those that say the stock is overvalued.
And that brings me to my second catalyst. At some point, we hope, there will be a vaccine. And when that happens, it appears that FedEx will be a major part of the effort to distribute the vaccine to the healthcare workers handling the injections. Vaccine candidates have to be shipped at specific temperatures in a specific amount of time.
The company’s ability to deliver vaccines was one reason that Rick Paterson of Loop Capital increased his price target for FedEx. According to Paterson, “FedEx (UPS, and DHL) could well be the primary global transportation networks for the Covid-19 vaccines, assuming of course they’re developed as currently expected.”
Home Depot (HD)
If there’s one thing the pandemic has shown us, it’s that consumers had pent-up demand to fix up their homes. Home offices and basement classrooms were created on the fly. Open-concept floor plans got a little less open. Long-neglected yards got a makeover. And one company helping consumers through all of it was Home Depot.
Like Best Buy, Home Depot was ready for the moment. The company embraced the omnichannel model several years ago. Not only was its digital business prepared for the pandemic, it allowed the company to thrive during it. In its most recent fiscal quarter, Home Depot reported a 23.4% increase in sales, and net income rose to $4.02 per share, a 26% year-over-year increase.
And let’s not forget that home sales are on the rise. This should give Home Depot an additional catalyst for the remainder of 2020. Plus investors can continue to collect a nice dividend along the way.
Rite Aid (RAD)
The last of the election stocks I want to focus on is Rite Aid. Just a month ago, I was concerned that the company was a stone’s throw away from bankruptcy. But the drug store operator has seemed to get its liquidity situation in order.
The question for investors now is where the growth will come from. Rite Aid was cautious in its forward guidance. Investors will rightfully wonder if that was the company being conservative or issuing an early warning. Still, RAD stock is looking oversold.
Rite Aid was a pandemic winner because its stores were Covid-19 testing locations. The company should continue to generate traffic by offering flu shots. And, it’s widely expected that Rite Aid will be one of the locations where Covid-19 vaccines could be dispensed.
Rite Aid is seeing strong growth from its Elixir pharmacy services business. The company added over 250,000 new Medicare Part D members in the quarter. And Rite Aid initiated Pay and Go at all of their stores to expedite prescription pickup. But even with those initiatives and the company’s expansion of its business with Instacart, it will still face tremendous competition in the pharmacy space.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.