Donald Trump continues to prepare for his January 20, 2025, inauguration as the 47th President of the United States, naming former hedge fund manager Scott Bessent as his nominee for Treasury secretary, for example, and proposing new tariffs for China, Canada and Mexico.
The major U.S. equity indexes have rallied to new highs during the transition. But, over the long term, not even U.S. presidents have much direct impact on the stock market.
At the same time, though, a particular president's policies can benefit or hinder certain sectors and industries. Take Trump's reversal on cryptocurrency. During his first administration, Trump made clear he was not a fan of digital assets.
In July 2019 he posted on what was Twitter and is now X that the value of cryptocurrencies are "highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity."
But in August Trump took to X to announce he will unveil a "plan to ensure the United States will be the crypto capital of the planet," though the details have yet to be announced. In September he promoted a new cryptocurrency business, and in October World Liberty Financial launched its own token.
In November, Trump won the election. And he nominated Paul Atkins to lead the Securities and Exchange Commission, noting in his announcement that the former SEC commissioner "recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before."
Then, in December, bitcoin broke the $100,000 barrier for the first time, the market perceiving that a second Trump administration and its initiatives and policies will create tailwinds for cryptocurrency. Price action for bitcoin and crypto ETFs reflects this bullishness.
But crypto isn't the only area of the market that could get a lift from Donald Trump's victory. Indeed, here are five stocks to buy for a Trump presidency, representing the banking, defense, energy, steel and prison industries.
Data is as of December 11.
JPMorgan Chase
- Market value: $685.6 billion
- Sector: Financial services
- Industry: Banks - Diversified
- One-year total return: 56.7%
- Three-year total return (annualized): 18.4%
- Five-year total return (annualized): 16.0%
JPMorgan Chase (JPM) reported total assets of $4.2 trillion as of September 30, 2024. That makes it the biggest U.S. bank – and one of the largest financial institutions in the world.
During the first Trump administration, the 45th president was relatively good to the banking industry, favoring deregulation and a hands-off approach to overseeing financial institutions.
"Trump was also able to enact significant changes throughout the banking industry during his tenure in the White House," wrote American Banker contributor Frank Gargano in July.
Gargano identified several steps Trump took to cut red tape for banks, such as unwinding the Department of Housing and Urban Development's Affirmatively Furthering Fair Housing rule and signing a regulatory relief bill that included numerous pro-banking reforms.
JPMorgan CEO Jamie Dimon recently gave some advice to both Trump and the Democratic nominee, Vice President Kamala Harris: The CEO wants to see the winner unite the country by being completely transparent with the American people about its problems and listening to input and analysis from both the left and the right.
"America has all the advantages, and we can win the future with smart policy, courageous leaders and everyone with a seat at the table moving in concert," Dimon wrote in an August 2 op-ed for The Washington Post. "We need to elect a president who is dedicated to the ideals that define and unite us, and who is committed to restoring our faith in America and our indispensable role in the world."
As for the financial stock, analysts generally like it. Of the 22 analysts following JPM that are tracked by S&P Global Market Intelligence, six say it's a Strong Buy, seven have it at Buy, seven call it a Hold and two say it's a Sell. This works out to a consensus Buy recommendation.
Speaking for the bulls is Argus Research analyst Stephen Biggar, who has a Buy rating on the Dow Jones stock.
"We like JPM among the large banks given its better lending-growth profile, strong credit-card franchise, and expected market-share gains in its capital-markets businesses," the analyst wrote in a recent note, adding that JPM is undervalued at current levels.
Lockheed Martin
- Market value: $118.5 billion
- Sector: Industrials
- Industry: Aerospace & Defense
- One-year total return: 14.7%
- Three-year total return (annualized): 16.5%
- Five-year total return (annualized): 8.4%
Over the years, the consensus has been that defense stocks benefit from Republican administrations. Trump is especially hawkish about defending American interests.
Further, he's not inclined to continue providing military support to NATO members that don't spend 2% of their gross domestic product (GDP), as the alliance requires. He'd like to see the amount raised to 3% when he takes office next month.
Between the wars in Ukraine and Israel, global conflicts have become a part of everyday life. And continued geopolitical uncertainty could benefit Lockheed Martin (LMT), which manufactures F-35 fighter aircraft.
Although there were some concerns about Trump's commitment to the F-35 early in his presidency, by July 2019, he was more than happy to support the workers building the F-35.
"From here in Milwaukee, you are supporting magnificent aircraft, and soon you'll support the unstoppable, stealth F-35 Lightning II," said President Trump in a July 2019 visit to Derco, a Lockheed company providing parts warehousing and distribution sustainment for the aircraft.
As for the industrial stock, Wall Street is bullish. Half of the 22 analysts following LMT that are tracked by S&P Global Market Intelligence say it's a Buy or Strong Buy. Of the remaining analysts, 10 call it a Hold and one has it at Sell. This works out to a consensus Buy recommendation.
Argus Research analyst John Eade is one of those with a Buy rating on Lockheed Martin.
"The company has consistently delivered positive surprises to the Street in recent years, regardless of whether defense expenditure is rising or falling or a Republican or a Democrat occupies the White House," Eade says. "We have a favorable view of the company's focus on international revenue diversification (now more than 25% of sales), and expect ongoing geopolitical tensions to benefit sales and earnings going forward."
Exxon Mobil
- Market value: $491.9 billion
- Sector: Energy
- Industry: Oil & Gas Integrated
- One-year total return: 16.2%
- Three-year total return (annualized): 25.5%
- Five-year total return (annualized): 15.7%
It's unlikely Trump will tap current Exxon Mobil (XOM) CEO Darren Woods as Secretary of State. Woods succeeded Rex Tillerson as CEO of the energy giant on January 1, 2017, after the re-elected president nominated Tillerson as his first chief foreign affairs adviser.
Trump has always been an anti-regulation candidate, so the oil and gas industry will likely do well with his victory.
After all, in an August 2 commentary in Barron's, financial journalist Patti Domm noted that the Energy Select Sector SPDR Fund (XLE) has doubled since the Biden administration took office in January 2021. Domm argued that energy stocks would do well under either candidate, though Trump's anti-regulation stance appears to have appealed to voters in at least one battleground state.
"If elected, Trump is expected to strip away the Biden ban on new liquefied natural gas projects, which is now being challenged in court. That ban was seen by many in the industry as a temporary, politically motivated policy aimed at appeasing younger voters and others concerned with climate and environmental issues," Domm wrote.
Domm noted that the ban has not gone over well in the key swing state of Pennsylvania, where "natural gas fracking is an important business." Exxon Mobil's fracking business just happens to drill in the Appalachian Basin in Pennsylvania and neighboring West Virginia.
XOM stock has given up some of its year-to-date gains in the aftermath of the election but is still up more than 15% on a total return (price change plus dividends) basis, trailing the S&P 500's return of near 30%.
But UBS Global Research analyst Josh Silverstein (Buy) sees even more upside, as evidenced by his $149 price target, which sits more than 33% above Exxon Mobil's December 11 close.
There are "multiple positive drivers across XOM's business over the next five years – visible Upstream growth, new Downstream capacity additions, ramping Low Carbon investments, and cost reductions," Silverstein said in a recent note, adding that Exxon Mobil remains one of the best stocks to buy in the energy sector over the next half-decade or so.
Nucor
- Market value: $32.5 billion
- Sector: Basic materials
- Industry: Steel
- One-year total return: -14.8%
- Three-year total return (annualized): 8.5%
- Five-year total return (annualized): 21.4%
Nucor (NUE) and its steel industry peers could use some good news. HRC (hot-rolled coil) steel was trading near $2,000 an ounce in August 2021. The front-month futures contract closed at $677 on December 11.
In addition to lower prices, U.S. steelmakers are experiencing slower sales volumes, squeezing profits. In Nucor's case, revenue for the three months ended September 28 was $7.4 billion, 15% lower than in the same period a year ago. And net earnings per share were $1.05, 77% lower than the third quarter of 2023.
CEO Leon Topalian, who noted in June that market conditions had "softened compared to recent record-setting years," said in Nucor's third-quarter earnings release that the company's "market leadership, product diversity, and strong balance sheet" will allow it "to provide meaningful returns to shareholders and execute our growth strategy even in the face of market uncertainty."
And the tide could turn for NUE with Trump's victory. Indeed, American steelmakers could benefit from Trump administration tariffs of as much as 20% on all imported products as it could offset the impact of price competition from Chinese and Brazilian steelmakers.
The materials stock could certainly use a boost, considering its share price was down more than 20% for the year through December 11. But Argus' Eade says this recent weakness presents a buying opportunity for investors.
"We view Nucor as a well-run company with a strong track record in its industry," Eade says. "The company is poised to take advantage of megatrends such as the rebuilding of U.S. infrastructure, the transition to alternative energy sources, and manufacturing onshoring."
The analyst concedes the company's financials have been hurt by lower demand and inflationary pressures but adds that "the balance sheet is clean and management has experience navigating difficult conditions."
GEO Group
- Market value: $3.9 billion
- Sector: Industrials
- Industry: Security & Protection Services
- One-year total return: 170.7%
- Three-year total return (annualized): 56.8%
- Five-year total return (annualized): 18.7%
GEO Group (GEO) is the smallest of the five stocks expected to benefit from a Trump presidency. The company designs and delivers support services for prisons, immigration processing centers and community reentry centers.
Founded in 1984, Geo Group is best known for its ICE (Immigration and Customs Enforcement) processing centers and USMS (U.S. Marshals Service) detention centers.
The company has shown steady growth on the financial charts. In its third-quarter results, Geo Group said revenue was up to $603.1 million from $602.8 million a year ago, while adjusted net income was up 23.3% to $29.1 million compared to the third quarter of 2023.
On the price charts, GEO has been much more exciting. Indeed, the small-cap stock spiked on the announcement that Trump intends to nominate immigration hardliner Tom Homan as his "border czar" and is now up more than 170% year to date.
Wedbush analyst Brian Violino has an Outperform (Buy) rating on GEO stock and raised his 12-month price target to $30 after the company released its third-quarter results. "A Trump presidency would be a more clear positive for the company, in our view, both from an investor sentiment perspective and from the belief that Trump would look to increase detention utilization," the analyst wrote in a September 19 note.
Another reason GEO is on this list of the stocks to buy for a Trump presidency: A July report from CREW (Citizens for Ethics) indicated that the private prison group has made significant political contributions over the years to Trump and Republican causes.
"GEO Group has a long history of disproportionately supporting Trump and other Republican candidates," the report says. CREW highlighted Trump's promise "to carry out an extreme immigration agenda that includes detaining undocumented people already in the United States in 'vast holding facilities' yet to be built."
In other words, a Trump presidency is expected to lead to GEO Group winning more contracts, which could help reignite its growth.
