As Election Day approaches, the rift between the candidates, their supporters, the polls, and betting odds continues to widen. This has resulted in an increasingly daunting task for President Donald Trump and his campaign as the aforementioned factors have all been trending towards a victory by former Vice President Joe Biden.
And while these indicators have all moved alongside each other, bettors have been doubling down that these trends are all wrong. Over this past weekend, bettors went against Vegas betting odds, placing more bets on a President Trump reelection than a Biden victory. So much so that President Trump actually amassed 59% of all bets placed this past weekend, while Joe Biden received 35% of all bets made.
President Trump has fallen behind in the polls over the past couple of months with the incumbent currently polling at 42%, compared to Biden’s 53%. Trump’s betting odds shifted from +188 to +210 over the weekend, which implies that President Trump’s reelection odds fell from 34.8% to 32.3%. Rival Joe Biden saw his odds cut from -192 to -225 implying his odds have grown from 65.8% to 69.2%.
President Trump is running on the slogan “Keep America Great” and tends to emphasize “America First” in foreign policy. Trump has promised bring manufacturing jobs back from overseas and claims keeping corporate taxes low will help accomplish that. Trump has also said he wants to end what he calls America's reliance on China by continuing his ongoing trade war against the country, which has largely consisted of tariffs on imports. Additionally, the President wants to repeal the Affordable Care Act and has also promised to lower drug prices in the U.S. by opening the door to cheaper imported drugs.
Below is a list of some stocks that we expect to outpace the market under a Trump victory:
The Arms Race: LMT, NOC, RTX
A Trump victory would almost undoubtedly be a positive for many defense stocks. These stocks typically get a boost at the threat of conflict, and it is more than fair to assume that a reelection would provide plenty of those threats.
Lockheed Martin (LMT), Northrop Grumman (NOC), and Raytheon Technologies (RTX) are three of the largest defense contractors in the world and certainly would gain new contracts and orders under almost any circumstance that involves war or any threat thereof. Additionally, a President Trump not worried about reelection may be even more abrasive when met with challenges. This speculation alone could be enough for these and other defense contractors to trend higher throughout a second-term.
Additionally, the sixth branch of the military, and President Trump's own creation, the Space Force could also provide a bullish case for defense stocks. The Space Force could see rapid expansion during a second-term of President Trump.
The Git-er Dones: DE, CAT
A President Trump reelection would also provide a bullish case for companies that create construction and farming equipment. Additionally, President Trump’s dreams of a border wall - though certainly not happening in the remainder of his first term - could be revived with vengeance in a second term.
Deere (DE) and Caterpillar (CAT) are two of the largest and longest-standing companies in their industry. They even seem to have a place in President Trump’s heart, who has bragged about these companies multiple times and even said he will use these companies when building his border wall. President Trump has also promised to improve American infrastructure and - despite not passing a deal in Congress during his first term - he may try getting something passed in a second term .
The Autos: GM, F
President Trump has repeatedly promised to bring back manufacturing jobs and strengthen the American auto-industry. During his four years as president, manufacturing jobs increased by about 450,000 jobs (pre-pandemic). If re-elected, it is reasonable to expect Trump to continue to push for more manufacturing jobs.
General Motors (GM) and Ford (F) are two of the largest American auto companies and are both poised to be clear winners under a Trump election. During his first term President Trump said in a tweet in regards to a GM plant in Mexico, "Make in U.S.A.or pay big border tax!". And while there was no resulting tax, there remains the possibility that a second term could see the President place tariffs on more imported goods and push for more American-made goods.
