If President Donald Trump wins the election on November 3, 2020, you might want to consider adding these five equities positions to your portfolio: LMT, BAC, AMZN, XLE, TWTR.
Why? Because President Trump is still focused on an “America First” platform, continuing his promise to the American people to lower taxes, repeal and replace Obamacare, end stifling regulations, protect our borders, keep jobs in our country, take care of our veterans, strengthen our military and law enforcement, and renegotiate bad trade deals.
Before the COVID pandemic, economic growth reached 3% for the first time in over a decade. However, the U.S. economy has now been hit by the biggest economic contraction ever recorded and the highest unemployment rate in more than 80 years.
Aside from the pandemic, Trump’s ability to enact his policies will depend heavily on Republicans winning back the House in addition to holding their majority in the Senate.
Should voters return Trump to the White House for another four years, here are five stocks to consider adding to your portfolio.
Lockheed Martin Corporation (LMT)
As we have seen in the past 3½ years, Democrats made it difficult for Trump to accomplish many of his goals. Nevertheless, Trump and his fellow Republicans love the U.S. military and have already allocated $740 billion for 2021 for national security. Therefore you should consider adding a defense and space contractor to your portfolio.
Lockheed Martin Corporation (LMT) is a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles, and Fire Control, Rotary and Mission Systems, and Space Systems.
Lockheed Martin is the highest-quality defense prime contractor, given its exposure as the prime contractor on the F-35 program and its missile business. The stock has performed strongly with a positive performance of 58% since Trump’s election day win in 2016.
Lockheed Martin shares are priced at 17 times next year’s earnings estimates, which is about in line with its average over the past year. Plus, the shares yield a 2.6% dividend. Analysts are giving Lockheed Martin are giving a fair target price of $433 per share.
Bank of America Corporation (BAC)
Despite economic uncertainty due to the pandemic, which often tracks the employment big picture, investment icon Warren Buffett added to his already large investment in Bank of America and now owns 11.8% of total outstanding shares. In a period of higher unemployment and a diminished ability for individuals to repay loans, this was a bullish move as banks recorded sharp losses.
Bank of America Corporation (BAC) through its subsidiaries provides banking and financial products and services for individual consumers, small- and middle-market businesses, institutional investors, large corporations, and governments worldwide.
Bank of America now has one of the best retail branch networks and overall retail franchises in the United States. It is a Tier 1 investment bank, a top-four U.S. credit card issuer, a top-three U.S. acquirer, has a solid commercial banking franchise, and owns the Merrill Lynch franchise, which has turned into one of the leading U.S. brokerage and advisor firms. Analysts have a positive outlook on BAC and have forecasted a target price of $28.
The traditional brick-and-mortar retail industry has undergone a period of rapid transformation the past several years, a trend that will likely continue as the industry recovers from COVID-19. With multiple business interruptions and periods of severe stock, market turbulence has favored companies that can deliver services and goods in a robust online framework. I believe Amazon (AMZN) fits the mold and should be a stock to consider adding to your portfolio.
Amazon engages in the retail sale of consumer products and subscriptions in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It sells merchandise and content purchased for resale from third-party sellers through physical and online stores. The company also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Rings, and Echo and other devices.
One of Amazon’s key advantages is the operational efficiency of its fulfillment and distribution network, which satisfies consumer demand for free and expedited shipping.
While the growth engine at Amazon is unmatched, the stock has been difficult to time from a valuation perspective. However, the forward-looking discounted cash flow valuations and even price-based comparable valuations are quite attractive. Analysts continue to maintained a strong buy with a recent adjusted target price of $3,800.
Energy Select Sector SPDR Fund (XLE)
While oil stocks have been pounded by the pandemic, the energy sector should rebound if Trump wins a second term.
During Trump’s first term the president relaxed or outright removed several environmental protections implemented during the Obama administration. Treasury Secretary Steven Mnuchin has said the government is considering taking stakes in U.S. energy companies to try to stimulate the struggling oil and gas sector amid the coronavirus crisis.
The Energy Select Sector SPDR (XLE), invests in companies that primarily develop and produce crude oil and natural gas and provide drilling and other energy-related services. There are 26 companies in the Energy Select Sector SPDR. Leaders in the group include ExxonMobil, Chevron, Schlumberger, and ConocoPhillips.
XLE has an expense ratio of 0.13%, which is much lower than its category average of 0.42%. Its performance year to date has been down more than 40% but the fund has an attractive current dividend yield of 11.25%.
Consumers overall, and millennials in particular, are cutting the cord on traditional media venues and accessing digital content in a variety of ways through high-end digital devices such as smartphones, tablets, and PCs.
Twitter operates as a platform for public self-expression and conversation in real-time United States and internationally. Twitter remains true to its initial format, with tweets limited to 140 characters of text, but is experimenting with longer-format tweets. Any user can create a tweet, and any user can follow other users with no restrictions. The company now accommodates video, music, sports events, games, and other media content.
While Twitter’s earnings were recently overshadowed by a cyber-attack which affected more than 100 accounts, mostly of celebrities, I feel that advertising revenue will increase based on Twitter’s ongoing feud with President Trump, other political conflicts and uproars, as well as rapid growth in new users expressing their opinions.
In addition, Twitter is attempting to become the go-to source for live events, such as breaking news, sporting events, and entertainment. Analysts have revised their target price on TWTR to $52, moving their opinions to a Buy from Hold as the company is moving forward in the right direction.