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 the final showdown between Trump and Mueller is now inevitable; perhaps it always was.
In order to win, Mueller will have to provide clear and convincing evidence that the Trump campaign colluded with Russian agents in order to tip the 2016 election. Any other wrongdoing he uncovers will likely be ignored, at least as long as Republicans control the House of Representatives. Ah, but is it really so unlikely that he will provide such evidence? Rather than weigh in on that question, I’ve provided two lists of stocks: one to own if Trump wins (on Friday) and one to own if Mueller wins (today).
There will probably be a few surprises on today’s list, particularly as I didn’t say that fortunes would necessarily be made by holding stock long. Yes, a few stocks are likely to go up, but it’s the short-sellers who are truly going to have a field day. For the first five short selling ideas, simply consult the list of stocks to hold long offered in Friday’s article. For more ideas, long and short, read on.
Remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.
Short sell First Solar (FSLR)
For good or ill, President Trump has raised or created tariffs on many goods imported from China, including solar panels. There’s not much disagreement as to whether the Chinese are dumping cheap solar panels on the world market, they are, and they are doing so in an effort to put European and American solar panel companies out of business so that they will dominate the global solar power market. It’s a cunning long-term strategy, as solar power will make up nearly half of total world power generation
in just 22 years. By hitting back hard against Chinese solar panel dumping, President Trump is providing a tremendous benefit to the US solar power industry, meaning companies, such as First Solar, that make solar panels. Trade wars, it seems, create strange bedfellows. Unfortunately for First Solar, Democrats attacked Trump on the grounds that his tariff would actually hurt the US solar power industry. They were referring to US solar power installation companies such as Tesla (TSLA) and companies that build US solar power plants such as SunPower (SPWR). Having locked themselves into this position, Democrats will likely lift, or at least lighten, tariffs on Chinese solar panels, and that will be a devastating blow to First Solar.
Chart courtesy of
www.stockcharts.com
Buy Tesla on the dip (TSLA)
I don’t mean to minimize the probability that Trump’s impeachment would roil the markets. That will certainly happen, and while some stocks will fall because their prospects are pinned to Trump’s, most will fall simply due to uncertainty. That sort of dip is temporary by nature, as uncertainty calms down once the market decides (as it always does) that it again thinks it knows what’s coming. This creates a buying opportunity, particularly in the most volatile stocks, and there’s seldom any stock more volatile than TSLA. Another reason to buy TSLA on an impeachment dip is the likelihood that impeachment will lead to a Democratic presidency and congress in 2020. A Democrat controlled government will likely reverse Trump’s expansion of the rights of oil drillers, leading to higher oil prices, higher gas prices, and greater need for electric vehicles.
Chart courtesy of
www.stockcharts.com
Buy Alcoa (AA)
President Trump announced tariffs on imported steel and aluminum on March 1. Many analysts, myself included, foresaw good things for the American steel industry, but little or no effect on America’s aluminum giant, Alcoa. That’s because Alcoa itself warned that the tariffs would disrupt its supply chain. Since then, shares of US Steel (X) have fallen from $46.01 to $35.08, which is a bit odd, as US Steel prices have risen slightly. Shares of AA have behaved more as expected, which is to say, they didn’t move much, at least until quite recently. World aluminum prices have been rising for about two weeks, lifting shares of AA, and the trend was given a major shot in the arm when the Trump administration announced sanctions on Russian companies, including RUSAL, the third largest aluminum smelting company in the world.
Because Americans are now completely banned from buying aluminum from RUSAL, many have been left scrambling for a new supplier, and this has pushed aluminum prices, as well as shares of AA, higher still. The reason that AA is still a buy here is that until the matter of whether Trump colluded with Russian agents is settled, neither political party would dare lift the sanctions against Russia: Democrats would look hypocritical; Republicans would look guilty. With the Chinese facing tariffs and Russia out of the picture entirely, Alcoa has clear field, and you can bet they are going to make hay while the sun is shining.
Chart courtesy of
www.stockcharts.com
Buy Microsoft on the dip (MSFT)
Just four years ago, Microsoft was just a stodgy old nurse waiting patiently at beside the PC’s deathbed. Since then, Microsoft has reimagined itself as a provider of cross-platform cloud computing services and Internet of Things solutions. At the same time, the PC has shown signs of recovery and, for the moment at least, is in serious but stable condition. The result has been that the company’s earnings per share have risen from $2.63 in fiscal 2014 to a projected $3.63 in fiscal 2018 with two quarters left to report. (Numbers here come from S&P Capital IQ, not Microsoft, which still uses non-GAAP accounting.) Microsoft is such a money-making machine today, that the only compelling argument against owning it is its high valuation (t P/E: 76.1, f P/E 23.9). That, along with its apparent immunity to political change, make it the perfect stock to buy on a market pullback.
Chart courtesy of
www.stockcharts.com
Buy Amazon.com (AMZN)
Amazon.com doesn’t rack up big profits the way Microsoft does, but it continues to expand in nearly every conceivable direction under the direction of its founder, Jeff Bezos, the wealthiest man in the world. Amazon is rapidly climbing in value, racing along with Microsoft towards a market cap of $1 trillion. Apple (AAPL) is still in the lead, but both AMZN and MSFT appear to have more upward momentum. There’s absolutely nothing stopping AMZN from continuing to rise for years to come, so of course it makes sense to buy the stock on a pullback, which, as it happens, there has already been, from $1,600 to $1,450. But what, you may ask, should you do if you buy now, then Trump is impeached causing stocks to fall across the entire market? Easy: buy more.
Chart courtesy of
www.stockcharts.com