The re-election of Donald Trump as president has investors wondering who will be the biggest winners and losers during his second term.
By the broad strokes of his election campaign, certain sectors seem poised to benefit the most. With immigration a top priority, private prison operators that also operate immigration holding facilities seem natural winners. Similarly, the energy sector ought to gain from fewer regulations and a friendlier attitude towards fossil fuel production. Same goes for defense contractors that should do well from policies that rebuild the military.
Yet Trump’s trade positions will result in some big winners, too. Although the expected hike in tariffs have some worried it could lead to a trade war, below are three stocks that you will want to buy now, before inauguration day on Jan. 20, to capitalize on the so-called “Trump trade.”
24/7 Wall St. Key Points:
- Donald Trump’s election has investors scrambling to pick for the next four years and getting in before the president-elect takes office in January.
- While a number of industries will benefit from the “Trump trade,” below are three stocks that will have strong tailwinds behind them.
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Sonic Automotive (SAH)
Car dealership Sonic Automotive (NYSE:SAH) is one of the first stocks to buy before Trump takes office. The auto industry as a whole should benefit from as more lax emissions regulations should ease the pressure on carmakers. For example, new rules requiring a 50% reduction in carbon dioxide emissions for light vehicles for model years 2027 to 2032 will likely be eliminated. We can also expect the federal government to not grant further waivers to California under the Clean Air Act to impose stricter regulations.
Trump’s proposed tariffs will likely make imported vehicles more expensive. It should have the effect of boosting sales of domestic cars and used cars, as well as encourage automakers to move manufacturing to the U.S.
Since Trump’s election, Sonic Automotive stock is already up 19% and ought to gain more as auto sales pick back up. While the Federal Reserve seems ready to pause further rate cuts, if inflation comes down due to Trump’s policies, we could see the rate-easing policies resume, providing additional incentives for growth due to lower financing costs.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is the largest U.S. bank and controls some $4.2 trillion in assets. Due to the length and breadth of the money center’s business across commercial and investment banking, and asset and wealth management, JPMorgan should see significant growth in dealmaking under a second Trump term.
Regulations for capital requirements for banks will likely ease over the next four years, benefiting industry giants such as JPMorgan the most. The banking industry as a whole, however, will be able to expand their balance sheets to grow profitability, letting the financial institutions return more capital to shareholders.
Similar to Sonic, the market is expecting JPMorgan to profit handsomely under the coming administration, and JPM stock is up 12% since Trump’s win. JPMorgan was already doing well, having reported third quarter net income of $12.9 billion, or $4.37 per share, far ahead of Wall Street’s $4.01 per share estimates.
Cummins (CMI)
Engine maker Cummins (NYSE:CMI) is the third stock to buy before inauguration day. While the heavy-duty truck market is currently soft, that could change under a Trump administration. Because he is also likely to ease the emission regulations on heavy-duty trucks, kill requirements they be equipped with speed regulators, and oppose more states adopting the concept that independent contractors are actually employees, the industry will have a tailwind behind it.
Because Cummins is the leading manufacturer of truck engines and components, it will be the biggest beneficiary of any actions that improve the industry’s condition. It will also still be able to benefit from existing emissions regulations as its emissions solutions segment helps manufacturers meet those requirements.
They will also increasingly turn to Cummins for drivetrains as it will be more economical to buy its products than develop them in house.
CMI stock jumped in the aftermath of the election and is up 12% so far since then. The trucking industry does face risk from policies that impact trade, but ought to still benefit from locally sourced goods.
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