The 2024 U.S. presidential election is fast approaching, with all eyes on tonight's first scheduled debate between contenders Joe Biden and Donald Trump. With the start of campaign season comes plenty of speculation about how the outcome could impact financial markets. With every policy proposal under scrutiny, there's growing interest among investors as to how specific stocks and sectors might fare, depending on who wins the White House this November.
Analysts at major investment banks like UBS are already highlighting stocks that could see tailwinds if Trump makes his way back to 1600 Pennsylvania Avenue, especially if Republicans also secure control of Congress. Three companies that stand out from the brokerage firm's “red sweep” lineup are natural gas name Cheniere Energy (LNG), domestic automaker General Motors (GM), and steel stock Nucor Corporation (NUE).
According to UBS, a second Trump administration would likely pursue an agenda of lower regulations and taxes, increased domestic energy production, and a more hawkish stance on trade - all of which could boost these companies.
Of course, the election outcome is far from easy to predict, and investors should be cautious about making any portfolio changes based on polls. But keeping an eye on how different election scenarios could impact specific industries and stocks can help you be prepped for any scenario that might unfold as the big day gets closer.
#1. Cheniere Energy (LNG)
Cheniere Energy (LNG) is leading the charge as America's largest liquefied natural gas (LNG) exporter. Now, Trump has always been a big fan of the oil and gas industry, and he's made some pretty bold promises to roll back regulations and speed up approvals for LNG exports. This could be a major boost for Cheniere if the presumptive GOP nominee gets back into the White House. These commitments are part of a broader "deal" Trump offered to the industry in exchange for $1 billion in campaign funding.
In terms of stock performance, LNG shares have had a bit of a bumpy ride lately. They're up just 0.5% on the year, which isn't too impressive. Longer term, though, LNG is up 14.8% over the last 52 weeks.
Dividend investors will also appreciate that Cheniere has been steadily growing its payout, with the quarterly dividend now at $0.435 per share. At current prices, that works out to a respectable 1.02% yield. Cheniere is also putting its money where its mouth is with a massive $4 billion share buyback plan through 2027. This shows they're very confident about the future.
LNG's latest earnings were a mixed bag. They posted Q1 earnings of $2.13 per share, missing the consensus estimate - but revenues hit $4.25 billion, beating expectations by 6.93%, even as the top line declined 43% from $7.31 billion the previous year.
For Q2 2024, analysts expect EPS of $1.74 per share on $3.72 billion in revenues, with the full-year estimate calling for $8.33 in EPS on $15.96 billion in revenues.
On balance, analysts are bullish on Cheniere. Out of 18 analysts, no fewer than 15 rate it a “strong buy,” 2 say it's a “moderate buy,” and only 1 says it's a “hold.” The mean target price is $200.39, suggesting 16.8% upside potential from here.
#2. General Motors (GM)
General Motors (GM) is a global automotive powerhouse, designing and selling a wide range of vehicles and parts. They operate through segments like GM North America, GM International, Cruise, and GM Financial, and market under brands like Buick, Cadillac, Chevrolet, and GMC.
If Trump wins and follows through on his "America First" policies, GM could benefit from tariffs meant to boost U.S. manufacturers, according to UBS.
GM stock has been on a nice upward trend lately. The auto stock is up 21.7% over the last 52 weeks, and GM has rallied nearly 27% in 2024 alone.
GM is shelling out $0.12 per share in dividends every quarter, which adds up to a nice little 1.05% yield each year. They also just announced a $6 billion share buyback, on top of the $10 billion they authorized in November, in a bid to boost shareholder value.
Plus, they're teaming up with Costco to revitalize slowing electric vehicle (EV) sales, leveraging Costco’s Auto Program to reach a broader audience. Smart moves, if you ask me - it shows they're serious about staying competitive, especially in the electric car market.
The company's first-quarter 2024 earnings were pretty impressive, too. Revenue hit $43.0 billion, up 7.6% from last year, and they raked in $2.98 billion in net income - that's a 24.4% jump. Their adjusted earnings per share of $2.62 beat expectations, and their cash flow looks healthy. It's clear GM is starting to fire on all cylinders operationally.
With numbers like that, GM is feeling good about the rest of the year. They've bumped up their full-year guidance, expecting net income between $10.1 billion and $11.5 billion.
Analysts seem to like what they're seeing from GM, with an average “moderate buy” rating. Out of 21 analysts in coverage, two-thirds recommend buying the stock, with a mean target price of $54.91 - that's a 20.5% upside from where it trades now.
#3. Nucor Corporation (NUE)
Nucor Corporation (NUE) is a key player in the U.S. steel industry, known for its innovative approach and commitment to sustainability. They operate through three segments: Steel Mills, Steel Products, and Raw Materials. UBS believes that Trump's policies, particularly his focus on steep tariffs to protect domestic manufacturing, could create a favorable environment for Nucor's operations.
Nucor has been good to its shareholders, paying a quarterly dividend of $0.54 per share, which adds up to $2.16 annually. With a dividend yield of about 1.40%, they've been increasing dividends for 50 years straight - giving Nucor “Dividend King” status. That's impressive, and speaks to their solid financial discipline.
NUE is down 3.3% over the past 52 weeks, and has shed 10.7% on a YTD basis.
Their Q1 2024 earnings report, released on April 22, was mixed. Net sales were up 6% from the previous quarter at $8.14 billion, which beat consensus estimates. However, earnings per share of $3.46 fell short of the expected $3.62.
Nucor's steel mills were busier during the quarter, operating at 82% capacity compared to 74% in Q4 2023. This shows Nucor's doing a good job of keeping things running smoothly, even when the market's a bit tough.
Looking ahead, analysts expect Nucor to earn $2.30 per share in Q2 2024, with revenue around $7.7 billion. For the full fiscal year, Wall Street is predicting earnings of $10.78 per share and total revenue of about $31.1 billion.
Overall, analysts seem cautiously optimistic about Nucor, with a "moderate buy" consensus rating. Among the 11 analysts covering the stock, 5 have issued "strong buy" recommendations, while the remaining 6 advocate a "Hold" position. This group has a mean price target of $190.56, which is a potential 22.8% increase.
The Bottom Line on These Election Stocks
In summary, a Trump victory in 2024 could boost certain stocks due to his policies. Cheniere Energy (LNG) may benefit from his support for the oil and gas industry, and particularly LNG exports, while both GM and Nucor (NUE) could catch a boost from Trump's penchant to leverage tariffs in defense of domestic manufacturers. While tonight's first presidential debate should give us plenty more talking points to consider going forward, these companies are worth watching as campaign season starts to heat up in the months ahead.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
