Trump will win, and when he does, you’ll want to be holding these stocks


On Monday morning, FBI agents, acting on a referral from Robert Mueller, the special counsel investigating the Trump campaign’s possible Russia ties, raided the NY office and hotel room of Michael D. Cohen, President Trump’s lawyer. With this move, Mueller is now within striking distance of Trump himself, and most everyone agrees that such a strike is very likely forthcoming. Perhaps a final showdown between Trump and Mueller is now inevitable; perhaps it always was.

By my lights, most everything hinges on the question of whether the Trump campaign actively and knowingly colluded with Russian agents to tip the election in Trump’s favor. If Mueller attempts to pull the trigger on Trump without such evidence, Trump will almost certainly remain in office. Even if Mueller were to find compelling evidence of some other wrongdoing, Republicans in the House would likely refuse to impeach Trump on the grounds that Mueller had acted beyond the scope of his investigation. Such an argument wouldn’t persuade many Democrats, but it wouldn’t have to, with Republicans firmly in control of the House. As for the possibility of a blue wave reshaping congress, the election is still many months away, and it looks increasingly as though this showdown will be over by then. High noon is now.

The stocks on today’s list have done well under Trump and are likely to continue to do well if he remains in office. Remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.

US Steel (X)

There can be little doubt that on paper, US Steel looks like a screaming buy. The company’s revenue is growing at 18.2% year over year, and while it’s operating margin, 4.23%, isn’t the highest in the industry, it is quite high for an industry leader, and more than enough to suggest that the company’s earnings are about to explode. US Steel has a trailing P/E of 15.86 and an estimated forward P/E of just 6.98. Furthermore, it has the President’s complete attention and devotion. Steel was once the backbone of the American economy, and if President prevails over his enemies, he will surely attempt to protect and grow the industry.

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Bank of America (BAC)

Since the morning after the election of President Trump, shares of BAC have risen and fallen more or less in sync with the rising and falling fortunes of the president. Stocks of other banks have demonstrated the same correlation, but for reasons I don’t know and won’t speculate about, the effect seems to be particularly strong where BAC shares are concerned. Optimism about new consumer loans (thanks to a corporate tax cut) and higher net interest income (thanks to rising interest rates) have caused analysts to forecast that BAC’s earnings per share will rise from $1.56 in 2017 all the way to $2.50 in 2018 and have caused S&P Capital IQ to give the stock a rare five-star rating. Throw a Trump victory onto this fire, and you’re likely to see some fireworks.

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Lockheed Martin (LMT)

Earnings forecasts for Lockheed Martin are nothing short of astonishing. President Trump once argued that Lockheed Martin’s F-35 jets were too expensive, and that they were ultimately unnecessary, but the President appears to have completely reversed himself on this issue, giving the greenlight in his proposed 2018 budget to $448 billion in new defense spending. The money can’t come from revenue, of course, since revenue is down, though President Trump wants to offset it with $752 billion in spending cuts for overseas military contingency operations. In effect, that means shutting down overseas military operations in many countries. Ah, but who needs overseas operations when you have enough F-35s to turn any identifiable portion of the globe into a sea of fire merely by clicking your heels together three times? Be aware that if there is a blue sweep of congress and Trump is removed as president, Lockheed Martin’s war chest will be the first thing liberals raid in their efforts to put their unsound economic theories into practice by raising wages, improving access to higher education, and other such tom-foolery.

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Boeing (BA)

Boeing can’t claim as large a share as Lockheed Martin of the money being allocated to our next generation air defense program, but in all other ways, it looks like a terrific stock, and one that will only continue to see improving fortunes as a result of a Trump victory over Mueller & pals. Boeing can boast a huge quarterly year over year earnings increase, as in its most recently reported quarter, it earned $5.17 per share, while in the year-previous quarter, it had earned only $2.59 per share. Keep in mind as well that Boeing’s combination of military and commercial customers gives it a bit more security than purely military stocks. Finally, in a joint venture with Lockheed Martin, Boeing builds satellite launch vehicles powered by Russian rockets, many of which are used by NASA and by private US industries. If Trump were to be defeated by the sort of fuzzy-thinking hippies who might prefer to use American made rockets rather than support the expansion and improvement of the long-range attack capability of America’s greatest nemesis, it would be a serious blow to Boeing, and the share value of BA.

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Morgan Stanley (MS)

It goes almost without saying that America’s economic ties to Russia would suffer a serious blow if blow if Trump were to be defeated, and the ripples would expand outward to damage all sorts of innocent companies—including some that don’t have a single lifelong friend of Vladimir Putin on their boards. Morgan Stanley has a major office in Moscow where it also has major investments in commercial real estate and makes a great deal of money recommending stocks in which investors have no voting rights. On Monday, Morgan Stanley finally began to hedge its bets by ceasing to recommend rubles as a good buy. Certainly Trump purists may never forgive the company for its disloyalty to Mother Russia, but the rest of us can take heart from the knowledge that Morgan Stanley still has plenty of irons in the Russian fire.

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Symbols: BA BAC LMT MS X
Julian Close

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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