The head that wears the crown can also change the way the markets march.
During George W. Bush’s presidency, defense and oil stocks gushed. Under President Barack Obama, health care stocks came back to life. Now economists are peering into the crystal ball to see which industries stand to gain from Democratic presidential frontrunner Hillary Clinton becomes president.
And the possibility is looking ever more likely. Clinton won the New York primary Tuesday night.
Granted, it’s hard to separate rhetoric during a presidential campaign from what will become actual policy, and, even if Clinton were to become president, a Democrat in the executive office will likely “be thwarted by the House” in many issues, said Greg Valliere, Horizon Investment’s chief strategist. “The way the districts are drawn I don’t see the house going back to the Democrats.”
Clinton has pledged not only to defend the Affordable Care Act against naysayers, but also to expand coverage. On the campaign trail, Clinton has made plans to incentivize the 30 states that have refused to participate in the ACA, to take on the program. Roughly 32 million American were uninsured as of 2014, according to the Henry Kaiser Population.
So while insurance companies and pharmaceutical stocks may cringe, Clinton’s expansion plans could bring more foot traffic to hospitals as they tap in to a large, previously uninsured public, said Jefferies health care analyst Brian Tanquilit.
Stock Picks: Large hospital networks such as Community Health Systems (CYH) and the Hospital Corporation of America (HCA). Both have a large national presence, even in states that haven’t expanded under the ACA. For example, while Community Health has 200 hospitals in 29 states, about 13 are not covered under ACA. Similarly, HCA owns a network of 180 hospitals in 20 state—15 of which have not expanded.
Aerospace and Defense
On the campaign trail, the democrat frontrunner has said she plans to crack down on ISIS and hold China accountable in the territorial dispute over the South China Sea. And Clinton also has a track record as Secretary of State that suggests she will be more aggressive than Obama when it comes to military force.
As Secretary of State, Clinton advocated for the U.S.’s intervention in in Libya, backed Israel, and also pushed Obama to arm Syrian rebels in the fight against ISIS. That suggests that should Clinton take the White House, the aerospace and defense pipeline is likely to stay pumping, said Greg Valliere, Horizon Investment’s chief strategist.
Stock Picks: Northrop Grumman (NOC) is among top defense contractors for the U.S. government. Most recently, the company has ramped up a series of highly attractive contracts with the government, including a “highly important” $333 billion deal to replace the Ohio-class submarines, and a potentially $80 billion deal to create the U.S. Air Force’s B-21 long range strike bomber. The former product would be more pertinent with a confrontation in the South China Sea, while the latter would have applications all around, said Jefferies analyst Howard Rubel. Jefferies has a buy rating on the stock, and says it could reach $233, from a recent $202. The company is also a leader in producing unmanned aerial vehicles, which has become more pertinent in warfare.
Though Rubel noted, “major suppliers in one way shape or form (will) benefit from global tensions.”
Solar power and clean energy are the bread and butter of any Democrat’s platform—but Hilary Clinton’s pledge to install 500 million solar panels by 2020 is enormous even by Green Party standards. That would equal roughly 135 to 175 gigawatts of solar capacity, increasing the U.S.’s current capacity five to seven fold. That “by far exceeds our estimates,” said Credit Suisse analyst Patrick Jobin.
Though even if that pledge doesn’t come through, a Clinton presidency would boost stock sentiment when it comes to solar energy. Already the solar industry is one that is headed for growth. More than 25 states have some form of incentive for solar power, while the federal government has renewed tax credits for solar investments through 2023.
Stock Picks: Installer Sunrun (RUN), Elon Musk’s SolarCity (SCTY), and SunPower (SPWR) all have exposure to the fast growing residential solar arena paired with strong fundamental. Clinton has also mentioned plans in her platform to encourage even lower income families to get into solar power.