3 Stocks to Buy Ahead of Midterm Elections This Year

As we kick off a New Year, investors looking to rebalance their portfolios or put new capital to work in retirement accounts have plenty to consider. Which sectors, markets, and economies investors choose to put their capital to work in matter a great deal.

Of course, for those who expect to retain a significant amount of exposure to the U.S. market, politics matter a great deal. And on this note, I think one of the only realities that’s indisputable about the first year and a bit of Trump’s second presidency is that unpredictability appears to be a feature, not a bug. Economists, analysts and market experts largely have no idea where trade, monetary or fiscal policy is headed. And while the market appears to want to continue to climb the proverbial wall of worry, there remain plenty of bearish headwinds in the back of investors’ minds that can derail this bull market over the course of this year.

I thought it would be interesting to take a look at the upcoming midterm elections here in the U.S., and how these may re-shape the outlook for specific companies. Here are three companies I think could benefit, no matter how the power dynamics may change in Washington over the course of this year.

Lockheed Martin (LMT)

I think one company that’s likely to be a beneficiary of the current power dynamics in Washington (with little likely to change as a result of upcoming midterm elections) is Lockheed Martin (NYSE:LMT | LMT Price Prediction).

Lockheed Martin is a top U.S. defense contractor with exposure to many of the top defense programs the government relies on for its air, missile, space and cyber systems. Indeed, if there ever was a company with a dominant market position one would equate with a monopoly or oligopoly, the U.S. defense industry is one such area I’d suggest is perhaps the “text book example” of such a sector. Accordingly, with this dominant market power, Lockheed Martin and a few of its peers have outsized pricing power, and can charge a government (which can effectively print money to pay whatever price is demanded) with whatever they think they can get away with.

Thus, it should be no surprise to investors that Lockheed is among the most profitable players in the market in recent decades, at least from a cash flow standpoint. Still trading at a reasonable price-earnings multiple of less than 20-times forward earnings, I’d suggest that this is a company with solid fundamentals worth considering.

Of course, that’s to say nothing of the increasing and unsettling geopolitical shifts we’re seeing around the world. With more saber rattling expected over the course of this year (and for some years to come), this is one stock I think investors certainly want to have on their watch lists right now.

Exxon Mobil (XOM)

Another likely beneficiary of the current geopolitical and trade environment right now is Exxon Mobil (NYSE:XOM). The energy giant has continued to perform well over the course of the past year. However, the company’s future remains brighter than many of its large-cap energy peers, in part due to the company’s strong presence in Venezuela (as the only American company currently operating in this market).

The idea that Trump will unleash a wave of American energy around the world is one that he’s been very open and vocal about. That was one of his big campaign promises, for those who can remember back to the “drill, baby, drill” rallies that took place in many of the oil-producing regions across America.

So, with U.S. global affairs policies seeming to continue to shift toward an “America-first” strategy, the value that a company like Exxon can provide this administration in furthering its goals of stabilizing a country that now appears to be directly influenced by the Trump administration could lead to much higher profitability. That is, assuming the government comes in and finances a great deal of the spending that will be required to retrofit production in Venezuela and allow Exxon to add more production capacity over time.

Palantir Technologies (PLTR)

A company I’m still generally bearish on, but could benefit from whichever dynamics are ahead, is Palantir Technologies (NASDAQ:PLTR).

Palantir’s CEO David Karp has been a known proponent of the Trump administration, and these political leanings have allowed Palantir to shore up its government contracts (still a massive part of its business) with an administration that was previously intent on removing waste, fraud and abuse from the system. Thus, concerns around the potential for some of Palantir’s highly-profitable and valuable contracts being wound down is out of the way, and investors are free to look at the company’s significant growth among its commercial customer base as a reason to buy this stock.

Now, I’m going to make no qualms about the fact that Palantir is one of the most expensive stocks in the market, and definitely the most expensive stock in the market at its size. However, I can also understand the bull case around why many in the market may believe that the company’s AI-powered big data tools could deliver very impressive results in the years to come.

For those looking for a more speculative way to trade a Donald Trump presidency (at least ahead of upcoming midterm elections, set to start mid-year), this is a stock I that can certainly provide trading opportunities for those in this cohort.