Ignore Trump and Biden, These 3 Stocks Are Buys No Matter Who Wins

In just two short weeks, the results of the U.S. presidential election will provide clarity on the country's direction for the next four years.

Instead of basing investment decisions on which candidate will win, if promises will be fulfilled, and whether certain policies are right for your portfolio, you're better off going with companies that have thrived throughout various administrations and crises. Caterpillar (CAT 1.58%), Procter & Gamble (PG 0.60%), and United Parcel Service (UPS 2.42%) are among the best of them. Here's why.

Image source: Getty Images.

Caterpillar

Equipment manufacturer Caterpillar continues to be one of the best performing industrial stocks on the market today, hitting a new intraday 52-week high on Tuesday. 

Part of Caterpillar's success is that the company now generates less than 50% of its sales from North America, meaning it is diversified enough to handle domestic challenges. Often regarded as an economic bellwether, Caterpillar's performance depends more on the growth of the global economy than it does if Joe Biden or Donald Trump is president for the next four years.

In the short term, all three of Caterpillar's segments are struggling due to a global economic slowdown, but the company has plenty of room for long term growth. Touting the strength of its balance sheet, Caterpillar just agreed to acquire Weir Oil and Gas for $405 million in cash. The Weir deal should help Caterpillar grow its energy and transportation segment even further.

Unrelated to domestic sales is Caterpillar's growing Asia Pacific presence, which has been timely considering the strength of that region compared to others in the short term. Caterpillar is facing only a minor slowdown in the Asia Pacific region thanks to strong demand from China. Its China Tianjin Ltd. (CTL) facility is one of the company's largest manufacturing plants in the world. In operation since 2010, the facility has grown to produce more and more of Caterpillar's leading products, and most recently, produced its first gas engine. Asia Pacific is now Caterpillar's second-largest region by revenue. 

Aside from its diversified revenue stream, Caterpillar is a Dividend Aristocrat, having increased its dividend for 26 consecutive years. Caterpillar yields 2.4% at the time of this writing.

Procter & Gamble

On Tuesday, Procter & Gamble reported its fiscal year 2021 (FY21) first quarter results for the period ending Sep. 30, 2020. They did not disappoint.

Compared to the same period last year, America's largest consumer staple company was able to grow net sales by 9%, organic sales by 9%, and diluted net earnings per share (EPS) by 20%.

Data Source: Procter & Gamble 

Even more impressive was a revision of the company's guidance. P&G now expects organic sales to grow between 5% and 6% in FY21 compared to its original estimate of 2% to 4%. It also raised its guidance for core EPS growth to 5% to 8%, up from its original estimate of 3% to 7%. 

It's no secret that P&G has enjoyed a bit of a sales bump from the COVID-19 pandemic, particularly in its healthcare and fabric and home care segments. In its earnings release, the company noted that "Home Care organic sales increased more than 30% driven by increases in consumer demand for home cleaning products during the pandemic, resulting in double digit growth in every region. Dish Care, Air Care, and Surface Care each grew 20% or more." 

P&G's guidance increase for FY21 suggests that it expects higher demand for its products to carry its performance for the next year. Of the company's 9% increase in organic sales growth, 7 points were due to higher volume, 1 point was from price increases, and 1 point was from a positive mix. A positive mix simply means that the average selling price of P&G's products was higher this quarter than in the comparative quarter, which is a result of segments with a higher average selling price, like healthcare, growing sales faster than segments with lower average selling prices.

For comparison, P&G reported organic sales growth of 5% in its 2019 annual report, of which 2 points were due to higher volume growth, 2 points were from higher prices, and 1 point was from a positive mix. This is all to say that P&G's outperformance in FY20, and its expected outperformance during FY21, are based on growing sales volumes, not just upping prices.

Aside from its strong revenue and earnings growth, P&G is one of the longest-tenured Dividend Aristocrats, having increased its dividend for 64 consecutive years. P&G yields 2.2% at the time of this writing. 

United Parcel Service

UPS's business to consumer (B2C) segment is thriving as customers turn to online ordering. UPS noted that the U.S. e-commerce market increased by a whopping 34.4% during the second quarter, which contributed to UPS's record 22.8% increase in daily volume. Even with lower business to business (B2B) sales -- which are more profitable than B2C sales -- UPS has been able to grow its earnings, an unexpected accomplishment that has sent its stock blasting to new all-time highs.

CAT data by YCharts

Contributing to UPS's bottom-line growth are sizable savings thanks to lower fuel costs. As America's largest transportation stock, UPS spends billions on fuel each year but was able to save $367 million during the first half of the year thanks to lower gasoline, diesel, and jet fuel prices. 

The rise of transportation stocks like UPS and FedEx is one of the least talked about growth stories of 2020. It has nothing to do with politics, and everything to do with the flourishing e-commerce market. The beauty of UPS' business model is that as the economy improves, its B2B business will likely balance out declines in B2C sales, with the natural tailwind of e-commerce underscoring long-term success in B2C.

After this year's surge, UPS is now the largest industrial stock by market capitalization. And like Caterpillar and P&G, it pays a growing and sizable dividend, which has increased by nearly six-fold over the past 20 years and yields 2.4% at the time of this writing.