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In this article: 10 Best Stocks to Buy Before the 2024 US Election Season. Check out our article for an overview of these stocks. Five The best stocks to buy before the 2024 US election season.
As if expectations for interest rate cuts, the Fed’s fight against inflation, and AI’s response to rising stock prices weren’t enough for investors, worries surrounding the upcoming election are starting to spook financial markets. There are a number of reliable reports available that discuss the behavior of financial markets during the US election period. For example, a Morgan Stanley report analyzed several data to see how the S&P 500 performed during the election period. This analysis shows that during his presidential campaigns from 1928 to 2016, the stock market performed more positively than negatively. The report also said the S&P 500 rose an average of 15.3% with the election of a Republican president, compared to a 7.6% gain when a Democratic president took the White House.
A 2020 report by T. Rowe Price analyzed historical data on the relationship between U.S. elections and the stock market and found some interesting patterns. For example, data shows that strong stock market performance ahead of a U.S. election increases the likelihood that the incumbent party will remain in power, the report said. On the other hand, when the stock market is weak in the run-up to an election, the incumbent party often loses. But does that mean President Joe Biden could win a second term if the Fed starts cutting rates in the summer and stocks continue to rise leading up to the election? It would be the wrong conclusion to draw from this pattern, since T. Rowe’s report identifies numerous factors that influence the relationship between stock market performance and election outcomes. The report also said that historical data shows that if the incumbent party loses the election, there will be a recession in that year.
“Conventional wisdom holds that stock markets tend to perform poorly before elections. 70% of years in which the incumbent party loses are followed by a recession year; It’s no wonder the stock market performed poorly after the 2017 election.” The party lost. ”
If you ask the average American today about the hottest issue likely to be the focus of this year’s American election, their answer will likely be inflation. But with the election still months away, a lot can change. Morgan Stanley analyst Michael D. Zezas recently said in his report that in 2008, the election was expected to revolve around U.S. foreign policy. But the financial crisis changed everything. Similarly, presidential candidates in the 2020 US election focused their energies on health care and the pandemic.
Photo by History in HD on Unsplashmethodology In this article, we reviewed multiple research reports and expert analyzes that examine which stocks and sectors typically benefit during election periods. The analyst has selected his 10 stocks that he specifically recommends to investors in 2024 due to election-related catalysts. Top stocks include JPMorgan Chase (NYSE:JPM), Exxon Mobil (NYSE:XOM), and Pfizer (NYSE:PFE).
10. Sempra (NYSE:SRE)
Number of hedge fund investors: 33
In its November 2023 report, Goldman Sachs focuses on the name Sempra (NYSE:SRE), a California-based utility company with a dividend yield of about 3.38%, as a 2024 election stock. Goldman Sachs analyst Carly Davenport said of Sempra (NYSE:SRE):
“This quarter further strengthened our belief that Sempra’s (NYSE:SRE) Texas utility Oncor is a key strength for the company. Reduced regulatory delays, potential increases in capital spending, and the region’s The clear runway for organic load growth in Sempra (NYSE:SRE) all underscores why we view Oncall as an undervalued asset for Sempra (NYSE:SRE). , we believe there are several important catalysts, including the aforementioned capex increase, the conclusion of the California GRC (General Rate Case), and the FID announcement for the Cameron expansion and Port Arthur Phase 2 in 2024.Sempra (NYSE:SRE) continues to trade at a discount of 0.7x to our coverage group on 2025 numbers, which we believe is unreasonable given these strengths.”
ClearBridge Large Cap Value Strategy commented on Sempra (NYSE:SRE) in its Q3 2023 investor letter:
“Our two utilities are Sempra (NYSE:SRE) and Edison International were also negatively impacted by rising interest rates, but both companies outperformed utility benchmarks. We maintain Sempra as a significant active overweight and added Edison opportunistically to reflect Edison’s strong fundamentals. ”
9. Fox Corp Class B (NASDAQ:FOX)
Number of hedge fund investors: 38
Fox Corp Class B (NASDAQ:FOX) will be one of the biggest beneficiaries of massive political ad spending in the US ahead of the 2024 election. The latest Reuters report, citing data from Insider Intelligence, says political ad spending will be 30% higher in 2024 than in 2020. According to the data, a whopping 71.9% of this total spending goes into television.
Earlier this month, Fox Corp Class B (NASDAQ:FOX) announced its fiscal second quarter results. Adjusted EPS for the period was $0.34, beating estimates by $0.22. Sales for the same period decreased 8.2% from the same period last year to $4.23 billion, exceeding expectations by $20 million.
Fox Corp Class B (NASDAQ:FOX) management spoke about expectations regarding political advertising revenue and other important updates during an earnings call earlier this month.
“We’re affected by election-related preemption programming and, unfortunately, war coverage. So preemption programming is having an impact, and ratings continue to improve. So all these trends are steadily increasing. I’m happy with the current state of FOX News because it’s improving. The local stations are probably the most complex. But at the current pace, especially with the Super Bowl programming this time last year, the comparison is poor. Last year. The Super Bowl revenue for the station group alone this time of year is probably about $50 million.
So the comparisons going forward are going to be very tough, but we believe we’re going to see a record political cycle. I think this situation has improved a little bit this quarter now that we don’t have any competitive primary competition, but from a political perspective, we’re seeing business for the first half of next year already starting to flow in. That’s natural. Because our station has a large number of stations in major political markets such as Georgia, Michigan, Pennsylvania, Arizona, and Wisconsin. So we’re confident that once the political cycle actually gets going, we’ll have a very strong political cycle. And finally with Tubi. Tubi’s TBT for her continues to grow and I think it’s 62% or 63%. And clearly as TBT grows, its revenue has followed suit, and its revenue growth is only slightly to slightly lower than last year. ”
Read the full earnings call here.
8. Caterpillar Inc. (NYSE:CAT)
Number of hedge fund investors: 48
Caterpillar Inc. (NYSE:CAT) is one of the biggest beneficiaries of the massive infrastructure spending plan launched by the Biden administration. Goldman Sachs believes infrastructure stocks like Caterpillar Inc. (NYSE:CAT) will continue to grow if Republicans take over as the new administration begins construction at the border to deter illegal immigration. ing.
Earlier this month, Caterpillar Inc. (NYSE:CAT) announced its fourth quarter financial results. Adjusted earnings rose 35% year over year to $5.23 per share, beating expectations for earnings of $4.75 per share.
In addition to Caterpillar, hedge funds have also acquired JPMorgan Chase (NYSE:JPM), Exxon Mobil (NYSE:XOM), and Pfizer (NYSE:PFE).
Diamond Hill Large Cap Strategy commented on Caterpillar Inc. (NYSE:CAT) in its Q3 2023 investor letter:
“Caterpillar Company” The world’s leading construction and mining equipment manufacturer (NYSE:CAT) also had a strong quarter. Caterpillar was successful in leveraging increased capital investment from various end markets, contributing to better-than-expected results in the second quarter. The company is expected to be one of the biggest beneficiaries of several government funding initiatives, including the IRA Act, CHIPS Act and Infrastructure Act. These measures are expected to support construction spending for several years and provide a strong backdrop for Caterpillar’s continued growth. ”
7. MONDELEZ INTERNATIONAL INC Common Stock (NASDAQ:MDLZ)
Number of hedge fund investors: 51
In November 2023, Goldman Sachs released a report discussing the US election and its potential impact on the stock market. Goldman Sachs cited several stocks it believes are poised to gain traction during the election period. MONDELEZ INTERNATIONAL INC Common Stock (NASDAQ: MDLZ) was one of these stocks. Goldman Sachs said consumer defense is one of the sectors that will perform well during the election period.
Goldman Sachs analyst Jason English praised Mondelez International Inc.’s (NASDAQ:MDLZ) spending on commercial and business expansion in other countries. Analysts have set a “buy” price target on the stock at $82.
6. Lockheed Martin Company (NYSE:LMT)
Number of hedge fund investors: 58
Defense stocks will continue to attract attention amid rising security concerns and an unstable geopolitical landscape. The conflict in the Middle East and the escalating war in Ukraine will continue to force the United States to increase defense spending, regardless of the outcome of the 2024 presidential election.
Lockheed Martin (NYSE:LMT) plans to ramp up production of weapons systems to meet growing demand amid heightened security concerns, according to a recent report from Reuters. The report said Lockheed Martin Corp. (NYSE:LMT) plans to double production of the High Mobility Artillery Rocket System (HIMARS).
In addition to Lockheed, JPMorgan Chase & Co. (NYSE:JPM), Exxon Mobil (NYSE:XOM) and Pfizer (NYSE:PFE) could also post profits this year, analysts say.
RiverPark Advisors commented on Lockheed Martin Corporation (NYSE:LMT) in its Q3 2023 investor letter:
“lockheed martin company (NYSE:LMT): LMT is the world’s largest aerospace and defense contractor. The company derives approximately 70% of its $66 billion in revenue from the U.S. government and is well-positioned to benefit from historically 5-6% annual increases in the U.S. defense budget and increased global military spending. be. With an order backlog of $158 billion, nearly 30% of revenue comes from manufacturing the F-35 aircraft, with deliveries expected to reach 180 aircraft annually over the next few years (up from 141 in 2022). As a result, we believe we can grow at a higher rate than this. Overall defense budget growth and expectations on the street for the next few years. In addition, strategic acquisitions, debt repayments, a 2.9% dividend yield, and continued share buybacks from more than $6 billion in annual free cash flow should result in even greater shareholder returns. We resumed a small position in August. ”
Click to keep reading to find out the 5 best stocks to buy before the 2024 US election season.
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Disclosure: None. 10 Best Stocks to Buy Before the 2024 US Election Season Originally published on Insider Monkey.
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