Trump Stocks: These Are the Companies Profiting From Trump
A couple weeks ago, I talked about the massive rally in investment banks, following Donald Trump’s election.
At the time, Goldman Sachs (NYSE: GS) was up 17%, post election. Now, it’s up 30%.
JPMorgan (NYSE: JPM) was up 15% when I wrote that article on November 15. That gain has since increased to 20%.
Bank of America (NYSE: BAC) was up 19%. Now it’s up 34%.
And Morgan Stanley (NYSE: MS) was up 15%, and now it’s up 26%.
These are Trump stocks.
They’re rallying because Donald Trump’s decision to fill his cabinet with Wall Street insiders is bullish for investment banks.
Trump’s pick for Treasury Secretary, Steven Mnuchin, was himself a Goldman Sachs partner (like his father before him) and hedge fund manager. He worked with George Soros, funded Hollywood blockbusters, and bought a failed bank, IndyMac, with billionaire John Paulson. He was also a member of Yale’s infamous Skull and Bones society.
Yet, Mnuchin, who’s fortune is valued at $46 million, is just a small part of the wealthiest cabinet in American history.
Wilbur Ross, the incoming Secretary of Commerce and co-owner of the Chicago Cubs, is valued at $2.9 billion. And the new Deputy Secretary of Commerce, Todd Ricketts, is worth $5.3 billion.
All told, the total value of Trump’s cabinet is going to be about $35 billion.
This dovetails nicely with Donald Trump’s stated goal of “dismantling” the Dodd-Frank act, which was implemented in the wake of the 2008 financial crisis. Furthermore, we’re likely to see a weakening of the Consumer Financial Protection Bureau which, earlier this year, fined Wells Fargo $100 million for its phony account scandal.
Wells Fargo (NYSE: WFC) stock is up 25% over the past month, recouping more than the value it lost as a result of said scandal.
And beyond that, there’s Trump’s proposed tax plan, which would cut corporate taxes from 39.6% to just 15%.
Taking all of this together, I’d say the outlook for investment banks and financial services companies is decidedly bullish over the next four years.
So load up.
But that’s not all.
Here’s some other Trump stocks…
Defense Contractors & Surveillance Stocks
No pun intended, but the defense budget is going to explode under President Trump.
Defense spending is already on the rise in recent years, growing 4.1% to $583 billion. But that’s still down from the 2010 peak of $691 billion. You may remember the drop was a result of the Budget Control Act of 2011, also called the “sequester,” which raised the federal debt ceiling in exchange for across-the-board spending cuts.
But Trump aims to take it to a whole new level.
The plan on his web site includes 350 new Navy ships, 1,200 aircraft, equipment and weapons for at least 65,000 new Army soldiers, and at least 13,000 more Marines. That’s going to come out to at least $90 billion per year in spending increases.
Trump’s plan also calls for a "serious missile defense system" to counter faraway nuclear threats from Iran and North Korea.
No doubt, there is going to be a lot of money to go around for companies like
- Raytheon (NYSE: RTN); up 7.5% since the election.
- Lockheed Martin (NYSE: LMT); up 8.3%.
- General Dynamics Corp. (NYSE: GD); up 14%.
- Northrop Grumman Corp. (NYSE: NOC); up 3%.
- And Huntington Ingalls Industries Inc. (NYSE: HII); up 21%.
Domestic surveillance stocks are another big opportunity.
Cracking down on illegal immigration was the crux of Trump’s presidential platform.
Infosys (NYSE: INFY) and CACI International (NYSE: CACI), have both told investors that they are poised to take advantage of Trump’s immigration policies.
Which, if any, you choose to invest in is up to you. It might not be a bad idea to wait for a pullback. (That goes for the aforementioned investment banks, as well.)
But it’s a pretty sure bet that defense contractors on the whole are going to see their stocks rise substantially during the Trump presidency.
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Finally, I want to talk about fast food for a second.
Just yesterday, Trump anointed Andrew Puzder, the chief executive of Hardee’s and Carl’s Jr. (technically brands of CKE Restaurants), as secretary of labor.
Puzder was a vocal critic of President Obama’s labor policies, lambasting him for expanding overtime pay for workers and for trying to raise the minimum wage.
Indeed, President Obama earlier this year used his executive power to change the nation’s overtime rules, making them more generous to workers. Under the new rules, which are currently blocked in court, 4.2 million additional salaried workers would be entitled to time-and-a-half pay when they work more than 40 hours in a week.
That initiative is unlikely to stick.
Puzder also opposes raising federal minimum wage, and advocates for automation (i.e. replacing workers with robotic kiosks).
This isn’t good for workers, but it could be a boon for the fast food industry.
Furthermore, fast food chains like Hardee’s and Carl’s Jr. are frequently investigated by the Labor Department for worker abuse.
Over the course of the Obama administration, the Wage and Hour Division conducted nearly 4,000 investigations at the 20 largest fast food brands combined. Those lead to discovery of more than 68,000 violations of the Fair Labor Standards Act and some $14 million in back wages recovered for about 57,000 employees.
That kind of scrutiny will not be part of the Trump administration. So fast food companies will have every opportunity to engorge themselves.
Investment banks, defense contractors, and fast food companies… these are Trump Stocks.
Jason Simpkins is a seven-year veteran of the financial publishing industry, where he's served as a reporter, analyst, investment strategist and prognosticator. He's written more than 1,000 articles pertaining to personal finance and macroeconomics. Simpkins also served as the chief investment analyst for a trading service that focused exclusively on high-flying energy stocks. For more on Jason, check out his editor's page.