Our neighbors to the north are taking an interest in the upcoming US elections – which is no surprise, as the US and Canada are each other’s largest trading partners and have a long history of close relations.
RBC – the major Canadian international bank and investment firm – has released a report from the Global Equity Team, led by chief equity strategist Lori Calvasina, on the November vote. The firm’s stock analysts have put their money down, and listed their picks for stocks to gain or lose based on the election results.
While the polling consistently favors former Vice President Joe Biden, the Democratic nominee, prognosticators – both political and financial – remember that Hilary Clinton, too, was a heavy favorite in her run four years ago. So, President Donald Trump cannot be counted out. And recognizing that President Trump can win re-election, RBC’s analysts have pointed stocks set to benefit should that occur.
Calvasina reminds investors that a “Biden win/Democratic sweep scenario is bearish or very bearish for 58% of the industries [we] cover,” a nod to the Democratic Party platform, which is widely seen as unfriendly to business – both development and investment. Getting into specifics, RBC’s analysts expect a Trump win to be bullish for Technology, Financial, and Energy stocks.
With this in mind, we used TipRanks database to pull the details on three stocks RBC’s analysts have tapped as potential winners in a second Trump second term. Each offers investors considerable upside, starting at 22%.
Synchrony Financial (SYF)
Synchrony Financial is one of RBC’s best bests if Trump gets re-elected. The company provides consumer financing, including credit and savings, through its online banking subsidiary, Synchrony Bank.
Like much of the financial industry, Synchrony saw earnings and revenues decline in 1H20, mainly as customers – put out of work and locked down at home – simply used fewer banking services. Earnings remained in positive numbers, however, and while Q2 EPS was a mere 6 cents per share, it beat the estimates by 50%. The outlook for Q3 is better, predicting EPS climbing back to 43% as the economic restrictions loosen and business returns to a more normal pace.
A more normal pace of business is expected more from a Trump re-election than a Biden term. As a businessman and real estate veteran, Trump is viewed by Big Money as understanding financial concerns – and more importantly, being sympathetic to the financial industry. The tax cuts he signed during his term are popular in corporate America, which would not want them repealed.
Covering the stock for RBC, analyst Jon Arfstrom noted, “We believe that SYF is best positioned to benefit from a Trump election victory. In our view, SYF is most exposed among our coverage to a recovery in retail sales and the broader economy. Additionally, a more rapid economic recovery would help stabilize the credit outlook.”
The analysts outlook is buttressed by his Buy rating and $28 price target. His target indicates a 22% potential upside this year. (To watch Arfstrom’s track record, click here)
Overall, the analyst consensus rating on Synchrony is a Moderate Buy, as the 13 recent reviews break down to 7 Buys and 6 Holds. SYF shares sell for $22.95 and the average price target stands at $25.73, suggesting a 12% upside potential. (See Synchrony stock analysis on TipRanks)
Helmerich & Payne, Inc. (HP)
Next up is Helmerich & Payne, a contract driller in the oil industry. HP doesn’t engage in hydrocarbon exploration; rather, it drills wells where the explorers have found oil. It’s a classic case of splitting tasks to optimize efficiency; HP doesn’t have to worry about finding where to drill, it can focus on the actual drilling.
The energy industry is a bit nervous heading into the election season. Biden has bought in wholeheartedly to the ‘Green New Deal’ policies of the Democrats’ left, and has vowed to end hydrocarbon exploration and drilling on Federal lands – while Trump’s administration has been friendly to the energy industry and encouraged expansion.
A Trump re-election would likely give a boost of confidence to the oil industry generally. For a driller like H&P, RBC’s Kurt Hallead gets right to the point: “[H&P] will likely continue to benefit from Trump administration US energy policies.” Listing some specific strengths of the company, Hallead added, “H&P’s Autonomous Drilling Platform Uses machine learning to drive economic-based decision making in real time. Its FlexApps provide for machine based drilling processes to improve efficiency. H&P’s technology can reduce total cost of well ownership and from a sustainability standpoint enable customers to produce more energy per acre of land impacted.”
To this end, Hallead rates HP a Buy along with a $24 price target. This figure implies a 33% growth potential from current levels. (To watch Hallead’s track record, click here)
H&P could use a shot in the arm. The company’s stock is still down over 50% from February’s pre-crash levels, and earnings remain negative coming out of 1H20. While the company was a solid liquidity position, with over $350 million on hand, it depends on an expansion of the energy industry – which in turn, depends on a Trump win in the fall.
Overall, HP’s analyst consensus rating, a Moderate Buy, is based on 7 Buys, 6 Holds, along with 1 Sell. The average price target of $21.94 suggests room for a 21.5% upside over the next 12 months. (See HP stock analysis on TipRanks)
Altice USA, Inc. (ATUS)
Last our list from RBC is Altice, a cable TV provider with nearly 5 million customers across 21 states. The company owns several brands, and operates both international and local news networks. Taking its brands together, Altice is consistently among the five largest cable providers in the US market.
A Trump win would likely benefit Altice for a simple reason, connected to a 2016 campaign promise. Trump has developed a reputation for cutting regulations and red tape. His Administration has, as a matter of policy, been removing 2 to 5 regulations from the books for every one enacted. It is a policy that is well-liked on the political right, and has been beneficial for heavily regulated industries like cable television.
RBC’s Kutgun Maral likes ATUS in the event of a Trump win, noting: “ATUS remains our preferred pick given the subscriber and financial benefits we expect from the nascent growth initiatives that will start to more meaningfully flow through fundamentals exiting 2020…”
Maral’s Buy rating is supported by a $33 price target, suggesting an upside potential of 31% for the coming year. (To watch Maral’s track record, click here.)
Overall, Wall Street agrees with the bulls on this one. ATUS stock has a Strong Buy analyst consensus rating, based on 7 Buys and 2 Holds. The shares are selling for $25.05, and the average price target of $32.38 implies a one-year upside of 29% (See Altice stock analysis on TipRanks)
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