One thing all market mavens rely on when looking for trends and market direction is history, because things often play out in similar patterns around specific events. This year is no different as one of the biggest events for the country is coming to a conclusion in three months and it will shape how investors positions themselves.

In a new research note, Sean Darby, the outstanding equity strategist at Jefferies, goes to the history books and find three areas that should do well leading up to the election. While he acknowledges that the so-called Misery Index, which combines inflation and unemployment, should favor the Democrats, the income equality and overall displeasure with Washington, D.C., are very prevalent.

The three investments ideas that historically have performed well prior to an election are buying the volatility index (VIX), betting on a stronger dollar and owning financials, which have underperformed this year. We found four large cap stocks to consider buying now.

Bank of America

The company posted very solid second-quarter results, and the overall trend for the company looks better. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers, online and mobile banking platform.

The company is one of the larger lenders to the oil and gas industry, and it told analysts earlier this year that it had set aside more money for coverage of loans to the industry that may go bad. Overall credit quality remained strong, while consumer portfolios continued to improve and commercial portfolios remained stable with energy improving. The equity and debt trading at the firm helped boost the second-quarter results, while low interest rates still remain a drag.

Bank of America investors are paid a small 1.4% dividend. The Wall Street consensus price target is $17.07. The shares closed Wednesday at $14.48.

Citigroup

This top bank stock is still down over 20% from highs that were posted last summer, but the bank also came in with very solid second-quarter results. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

Trading at a very cheap 9.4 times estimated 2016 earnings, this stock looks very reasonable in what is becoming a pricey stock market. A continuing stock buyback program at the bank is a positive. The company’s institutional clients group appeared to be holding its ground last quarter. While investment banking revenue was down in an unsure macro environment, trading revenue remained strong, up 2% from last year.

Citigroup investors are paid a 1.46% dividend. The Wall Street consensus price objective is posted at $54.41. Shares closed most recently at $43.89.
Goldman Sachs

This company continues to be the gold standard of Wall Street banks and trades at a low 11.5 times estimated 2016 earnings. Goldman Sachs Group Inc. (NYSE: GS) has a gigantic institutional equity, debt and derivatives business, an ultra high net worth clientele, top investment banking and capital markets expertise. The bank continues to be a dominant force around the world and is one of the most sought after in the world. And it is one of the very few that dictate who can be a client at the firm.

In investment banking, the company has the preeminent client franchise. Goldman Sachs advised on more than $1.5 trillion of announced mergers and acquisitions transactions last year, the highest level the bank has ever recorded. It also has maintained a leading market share over the past 25 years. It maintained a market position when merger and acquisition activity was dominated by technology in 1999, by financials in 2008 and by natural resources in 2014. The bottom line is, regardless of where market strength is in any given year, Goldman Sachs is up to the task.

Goldman Sachs also posted stellar second-quarter results, However, some on Wall Street were less than thrilled despite the earnings and revenue beats. While revenues dropped year over year, many feel the bank is poised for a very strong second half of 2016.

Goldman Sachs shareholders are paid a 1.64% dividend. The Wall Street consensus price target is $180.57, and the stock closed on Wednesday at $158.34.

Morgan Stanley

Morgan Stanley (NYSE: MS) recently posted outstanding quarterly results, and it may be among the best buys in the banking and investment arena. It is another one of the white glove Wall Street firms that continues to show tremendous growth, and it is running neck and neck with Goldman Sachs as the bank of choice for high-profile initial public offerings, despite this year’s lack of activity.

Trading at a price-to-earnings multiple of 12.2 times estimated 2016 earnings, that seems extremely reasonable given the 2017 expectations for EPS growth of more than 24%. The company also has $497 billion in cash equivalents on its balance sheet versus $283 billion in total debt.

Morgan Stanley investors are paid a 2.81% dividend. The Wall Street consensus price objective is posted at $31.37. Shares closed Wednesday’s trading at $28.42.

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With all four of these top companies posting strong-second quarter results, investors can feel good about adding positions at current levels. Plus, if the Jefferies strategist is right, and history repeats itself, they should all do outstanding over the next three months.

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