The big day is now just 16 days away. On Nov. 3, Americans across the country will head to voting booths to decide what path the U.S. will take over the coming four years. Some of you may have already mailed in your ballots.
For the past few months, Democratic Party presidential nominee Joe Biden has consistently led national and swing state polls over incumbent Republican Donald Trump. Still, if we've learned anything about polling (ahem, 2016), it's that its predictive powers are limited. With one national television debate to go and the coronavirus disease 2019 (COVID-19) pandemic response evolving daily, anything could happen over the remaining weeks.
What's for certain is that select sectors, industries, and companies will see continued benefits if Donald Trump serves a second term.
If Trump wins on Nov. 3, the following four stocks will become no-brainer buys.
Perhaps the starkest difference between Trump and Biden lies in their respective views of the energy industry's future. Trump has been adamant in his support for Big Oil, while Biden's climate proposal would be a big blow to oil stocks. Were Trump to surprise at the polls again and win a second term, integrated oil and gas giant ExxonMobil (NYSE:XOM) would be an intriguing buy.
COVID-19 led to a record drawdown in crude oil demand this year that has absolutely clobbered ExxonMobil. It's unclear when this demand will recover, which has been problematic for the highly indebted oil industry.
However, ExxonMobil's size affords it certain advantages that smaller U.S. shale producers lack. For instance, ExxonMobil announced a roughly $10 billion cut to capital expenditures earlier this year to counteract weakness associated with COVID-19. The company is also paying out over $14 billion annually in dividends and could, as a last resort, pare back to conserve capital.
Furthermore, ExxonMobil's downstream refinery and chemical operations are picking up the slack while upstream drilling margins are depressed. This hedged operating model should help ExxonMobil emerge from this recession as a financially sound company.
If Trump wins a second term, there will be virtually no concern about significant healthcare reforms, at least for drug pricing. That would give investors the green light to buy bargain-priced Irish drug developer Jazz Pharmaceuticals (NASDAQ:JAZZ).
Over the years, Jazz has taken a lot of heat for its pricing practices on blockbuster narcolepsy drug Xyrem. Plenty of brand-name drugs have gone up in price, but Xyrem stands out; data from Bloomberg found that its cost per milliliter jumped by 841% between 2007 and 2014. Meanwhile, demand has increased for Xyrem, and label expansion opportunities have further padded Jazz's pockets. Jazz and other brand-name drug developers would be unlikely to face any repercussions for pricing practices like this in the next four years if Trump is president.
Aside from Xyrem, which accounted for 78% of sales through the first six months of 2020, Jazz plans to launch next-generation sleep disorder therapy Xywav this quarter. Xywav contains 92% less sodium than Xyrem, making it safer for patients with heart failure, hypertension, or renal impairment who are sensitive to sodium intake.
Considering that Jazz Pharmaceuticals has the potential to grow its sales by a high single-digit percentage, its forward P/E of 9 will be too cheap to pass up if Trump wins.
A second term for Donald Trump would feature a consistent corporate and individual tax rate, or perhaps even include a second round of tax cuts, depending on which party helms the House of Representatives and Senate. Low taxes would be a boon to online retailer Etsy (NASDAQ:ETSY).
The bull case for Etsy is twofold. First, workers able to keep more of their income will presumably be more likely to spend it. After all, the U.S. is the No. 1 economy in the world by gross domestic product, of which 70% derives from consumption.
Second, we can expect the status quo to continue regarding the coronavirus response. A vaccine will likely become available to the public at some point, eventually normalizing business and social interactions. Given that most Americans believe federal efforts to combat COVID-19 are lacking, consumers might stay out of brick-and-mortar establishments long after a vaccine becomes available. That would make online specialty retailers like Etsy clear winners.
If we needed any more proof that Etsy would be successful under a Trump presidency, just look at what it's done this year. Shares of the company are up almost 240% year to date, with consolidated revenue and net income rising 87% and 119%, respectively, through the first six months of 2020.
Finally, social media kingpin Facebook (NASDAQ:FB) will become a clear buy if Trump wins reelection. Though you might think Trump's penchant for tweeting would make Twitter the logical buy, the nod goes to Facebook for two reasons.
Facebook was one of four companies recently named by the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law as having "significant market power over large swaths of our economy." This conclusion implies that the Democrat-led House would like to see Facebook broken up in some meaningful way to increase competition in the social media space. I highly doubt Trump supports the idea of breaking up Facebook.
Continued low corporate tax rates under a Trump presidency would also work in Facebook's favor. The company logged more than $10 billion in net income through the first six months of 2020, and has a penchant for reinvesting a lot of its operating cash flow. With corporate tax rates at roughly an eight-decade low, Facebook would be free to reinvest heavily in its workforce and product or service innovation.