One thing we learned well in 2016 is not to trust the polls. Even a week before the election Hillary Clinton was considered a lock to win the presidency, but she ended up losing the electoral vote by a wide margin. The early handicapping has former Vice President Joe Biden with a sizable lead over President Trump, but given the shaky work of polls, and the history of four years ago, plus the possibility of a massive “silent majority” vote, Trump could hold the office for another four-year term.
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A new and outstanding UBS report handicaps every angle of this year’s races for president and Congress. They show the results of a blue wave with the Democrats regaining the presidency and the Senate, and they also show a red wave where Trump is reelected and the Republicans take back the house. Plus, they show the scenario if things remain the same as they are now.
To avoid a problem that we have encountered more and more in media and reporting these days, the UBS team said this as a forward to the report:
This report focuses exclusively on the investment aspect of the upcoming election. The authors are citizens and residents of the United States and, like all people around the world, hold a range of opinions and concerns about the issues of the day. You will not find those opinions in this report. Our jobs require us to be impartial observers, to view the world as it is, not as we think it should be. In line with that perspective, the objective of this report is straightforward. We aim to help investors prepare, as effectively as possible, for the upcoming US presidential election, which will be held on 3 November 2020.
Here we focus on the stocks the UBS team likes for investors to own for a Trump victory. While 28 stocks made the list, we selected 10 in various sectors with solid upside potential. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Citigroup
Shares of this top bank are trading at the lowest levels since 2018. Citigroup Inc. (NYSE: C) has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. It also had one of the 50 highest-paid CEOs last year.
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 still very cheap 8.4 times estimated 2021 earnings, this company posted solid second-quarter results this week that topped the analysts’ expectations on both the top and bottom lines.
Investors receive a sizable 3.91% dividend. The Wall Street consensus price objective is $69.29, and Citigroup stock closed Wednesday trading at $51.84. That was a gain of more than 3% on the day.
Concho Resources
In 2018, this company bought RSP Permian for $9.5 billion, and most on Wall Street continue to love the deal. Concho Resources Inc. (NYSE: CXO) is an independent company engaged in the acquisition, development and exploration of oil and natural gas properties.
It offers investors a unique combination of investment themes, including valuation, rate-of-change and resource expansion themes. The company is the largest acreage holder of the publicly traded Permian large-caps and provides investors peer-leading exposure to three of the most impactful catalysts across the Delaware Basin, including the Wolfcamp XY, Wolfcamp D and Bone Spring Shale.
Owning Concho Resources stock comes with a 1.54% dividend. The posted consensus price objective is $73.53. The shares closed trading on Wednesday at $52.05 apiece.
Crown Castle International
This top cell tower company offers incredible growth and income possibilities. Crown Castle International Corp. (NYSE: CCI) is one of the largest U.S. wireless tower companies, with over 40,000 towers across the country. Its core business is leasing space on its wireless towers primarily to wireless carriers, government agencies and broadband data providers.
Crown Castle is one of the best stocks in the group for more conservative investors as the high-yield distribution and low volatility make it a good holding for accounts seeking growth and income with less risk.
Investors receive a very solid 2.86% distribution. The consensus price objective is $171.43. Crown Castle International stock closed most recently at $168.00 per share.
24/7 Wall St.CVS
This top stock has been trading sideways and may be offering an excellent entry point. CVS Health Corp. (NYSE: CVS) is one of the largest health care companies in the United States, providing retail, mail and specialty pharmacy dispensing services and pharmacy benefits. Upon the completion of its acquisition of health care giant Aetna, CVS became one of the most vertically integrated publicly traded health care companies.
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The company completed its $69 billion purchase of health care provider Aetna in November of 2018 and remains one of the top picks for 2020 and beyond, as CVS has become one of the most vertically integrated publicly traded health care companies. It also had one of the 50 highest-paid CEOs last year.
CVS stock investors receive a 3.1% dividend. The analysts have a $78.87 consensus price target, but the shares closed at $64.58 on Wednesday.
Intel
This legacy leader in semiconductors has continued working hard to focus more on Internet of Things and data center cloud spending, and it was one of the top picks at Merrill Lynch for 2020. Intel Corp. (NASDAQ: INTC) designs, manufactures and sells integrated digital technology platforms worldwide.
The company’s platforms are used in various computing applications, comprising notebooks, two-in-one systems, desktops, servers, tablets, smartphones, wireless and wired connectivity products, wearables, retail devices and manufacturing devices, as well as for retail, transportation, industrial, buildings, home use and other market segments.
Investors receive a solid 2.24% dividend. The consensus price objective is $63.19, and the last Intel stock trade on Wednesday came in at $59.03 per share.
Lockheed Martin
This is one of the top aerospace and defense stocks to buy, and many on Wall Street are expecting a very solid continuation of U.S. and foreign defense spending. Lockheed Martin Corp. (NYSE: LMT) researches, designs, develops, manufactures, integrates, operates and sustains advanced technology systems, products and services. It also provides a wide range of defense electronics products and IT services.
Being the Pentagon’s prime contractor, Lockheed Martin offers a diverse portfolio of global aerospace, defense, security and advanced technologies. Its leveraged presence in the Army, Air Force, Navy and IT programs guarantees a steady inflow of follow-on orders, not only from the U.S. government but also from many foreign allies of the nation. This company had one of the 50 highest-paid CEOs last year as well.
Investors receive a 2.72% dividend. The consensus price target is $433.72. Lockheed Martin stock closed most recently at $364.56 a share.
Northrop Grumman
This is another top defense play, and it was ranked as one of the top five defense contractors by sales last year. Northrop Grumman Corp. (NYSE: NOC) provides innovative systems, products and solutions in unmanned systems, cyber, C4ISR and logistics and modernization to government and commercial customers worldwide. It is also one of the companies profiting most from war.
The Aerospace Systems segment designs, develops, integrates and produces manned aircraft, unmanned systems, spacecraft, high-energy laser systems, microelectronics and other systems and subsystems.
The Information Systems segment offers advanced solutions for Department of Defense, national intelligence and federal civilian, state, international and commercial customers. It provides products and services primarily in the fields of command and control, communications, cyber, air and missile defense, intelligence processing, civil security, health information technology, and government support systems.
The Technical Services segment provides logistics, modernization and sustainment services, as well as other advanced technology and engineering services, including space, missile defense, nuclear security, training and simulation services.
Investors in Northrop Grumman stock receive a 1.93% dividend. The consensus analyst target is $393.18. The shares closed trading on Wednesday at $300.76 apiece.
Steel Dynamics
Many on Wall Street remain very positive on this steel company. Steel Dynamics Inc. (NASDAQ: STLD) operates six steel mini-mills in Indiana, Virginia, Mississippi and West Virginia. Production capacity has been nearly 10 million tons, of a total 110 million U.S. capacity.
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The company makes flat-rolled products, special/merchant bars and structural steel products. Steel Dynamics can process about 7 million tons of ferrous scrap and has a downstream operation that processes finished steel.
Shareholders receive a nice 3.70% dividend. The consensus price objective was last seen at $28.10, and that compares to a closing price of $27.00 for Steel Dynamics stock on Wednesday.
UnitedHealth
This is a top stock to buy in the rapidly consolidating managed health sector. UnitedHealth Group Inc. (NYSE: UNH) offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and contracts directly with more than 850,000 physicians and care professionals and 6,000 hospitals and other care facilities.
This Dow Jones industrial average component is considered the most diversified payer, either by product line, geography or customer type. Its operating segments include United Healthcare, OptumRx, OptumInsight, and OptumHealth.
UnitedHealth stock investors are paid a 1.64% dividend. The $332.32 consensus price target is well above the most recent close at $304.07.
United Rentals
This stock has rallied smartly but still has solid upside potential. United Rentals Inc. (NYSE: URI) is the largest equipment rental company in the world. It has an integrated network of 876 rental locations in 49 states and 10 Canadian provinces. With approximately 12,200 employees, the company serves construction and industrial customers, utilities, municipalities, homeowners and others.
United Rentals offers for rent approximately 3,300 classes of equipment with a total original cost of $8.7 billion. Trading at 10.0 times trailing 12-month earnings, the stock remains very cheap.
The consensus price objective is $156.21, but United Rentals stock closed trading on Wednesday at $160.80 per share.
After his over three and a half years in office, investors have a pretty solid idea about the direction a Trump administration would go in a second term. A continued focus on trade deals and agreements, continuing the tax cuts, moving the military out of the seemingly endless wars and rebuilding the economy after the COVID-19 pandemic probably will remain top priorities.
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