Five Stocks That Will Benefit If Donald Trump Wins Presidency

With the polls showing a much closer race as November 8 approaches, many pundits believe Donald Trump has at least a 40% chance of becoming the next President of the United States. If Trump does well in the three Presidential debates, with the first one occurring on September 26, the odds of the Republican prevailing may be even greater.

In this article, we take a closer look at some of the stocks that many analysts believe would do well in a Trump Presidency, Cloud Peak Energy Inc. (NYSE:CLD), Lockheed Martin Corporation (NYSE:LMT), Northrop Grumman Corporation (NYSE:NOC), Continental Resources, Inc. (NYSE:CLR), and Halliburton Company (NYSE:HAL). We also use data from the latest round of 13F filings to see what the smart money thinks of each of them as well.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 700 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

#5 Cloud Peak Energy Inc. (NYSE:CLD)

– Number of Hedge Fund Holders (as of June 30): 8
– Total Value of Hedge Fund Holdings (as of June 30): $17.69 million
– Hedge Fund Holdings as Percent of Float (as of June 30): 14.00%

It’s no secret that Hillary Clinton isn’t a big fan of coal. Seeing as global warming is a serious issue for the Democrats, and given that both renewable energy and natural gas are better from a global warming perspective than coal, it is highly unlikely that the strict regulations concerning the use of coal energy for utilities will be rolled-back under a Clinton administration. It is also no secret that Donald Trump is a big supporter of coal and not so much of an ardent believer in global warming. Given those facts, many investors and analysts believe Cloud Peak Energy Inc. (NYSE:CLD) would do better under a Trump Presidency than under a Clinton one. Andreas Halvorsen‘s Viking Global established a new stake of 2.93 million shares in the second quarter.

#4 Lockheed Martin Corporation (NYSE:LMT)

– Number of Hedge Fund Holders (as of June 30): 39
– Total Value of Hedge Fund Holdings (as of June 30): $1.19 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 1.60%

Given Donald Trump has promised to ‘rebuild’ the military, it stands to reason that the American government will spend more on military expenditures if Trump becomes President. As one of the top military contractors, many analysts believe that Lockheed Martin Corporation (NYSE:LMT) will benefit from more expenditures. With or without Trump, however, analysts and the smart money are bullish on the stock. Collectively, analysts have a price target of $263 per share, as some believe the company could potentially grow earnings by around 20% a year through 2020. Meanwhile, 39 funds from our database were long Lockheed Martin Corporation (NYSE:LMT) at the end of June, up by two funds from the previous quarter.

#3 Northrop Grumman Corporation (NYSE:NOC)

– Number of Hedge Fund Holders (as of June 30): 44
– Total Value of Hedge Fund Holdings (as of June 30): $2.42 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 6.00%

As another defense stock, Northrop Grumman Corporation (NYSE:NOC) would probably benefit more from a Trump Presidency than a Clinton Presidency. If the government spends more on the military, Northrop Grumman’s earnings might grow faster and its capital returns could be higher. The smart money was more optimistic on Northrop in the second quarter. According to our data, the number of funds with holdings in Northrop Grumman Corporation (NYSE:NOC) rose by two quarter-over-quarter to 44 at the end of June. Shares of the company have done well this year, rising 16.4% year-to-date.

#2 Continental Resources, Inc. (NYSE:CLR)

– Number of Hedge Fund Holders (as of June 30): 44
– Total Value of Hedge Fund Holdings (as of June 30): $713.4 million
– Hedge Fund Holdings as Percent of Float (as of June 30): 4.20%

Many believe a substantial number of anti-fracking regulations will be rolled back under a Trump Presidency. In addition, many believe the United States will ask the rich Arab states to do more in terms of paying for various activities in the Middle East under Trump. If that is the case, Saudi Arabia and others would not be able to keep the price of oil down as much to hurt U.S. frackers. If oil prices rise and fracking regulations are rolled back, leading fracker Continental Resources, Inc. (NYSE:CLR) would likely do well. A total of 44 funds out of the around 749 Insider Monkey tracks held $713.4 million worth of Continental Resources, Inc. (NYSE:CLR)’s stock, which accounted for 4.20% of the float on June 30, versus 50 funds and $754.21 million, respectively, on March 31.

#1 Halliburton Company (NYSE:HAL)

– Number of Hedge Fund Holders (as of June 30): 62
– Total Value of Hedge Fund Holdings (as of June 30): $2.27 billion
– Hedge Fund Holdings as Percent of Float (as of June 30): 5.80%

As is the case for Continental Resources, oil service giant Halliburton Company (NYSE:HAL) would likely do better under a Trump Presidency than a Clinton one. Not only would shale fracking activity increase due to the roll-back in regulations, but also crude prices might rise because of Trump’s America-first policy. If the United States no longer tries to be the policeman of the world, more conflicts might arise, and those conflicts could lead to higher and healthier prices for crude. At the end of June, 62 investors tracked by us had a bullish position in Halliburton Company (NYSE:HAL) at the end of June, up by eight funds from the previous quarter.

Disclosure: None