Certain stocks are poised to perform better under Republican or Democratic leadership this coming November, according to Strategas. The year 2024 is shaping up to be quite a pivotal year, with a potential economic slowdown and Federal Reserve rate-cutting cycle all on the table. And of course, there’s also a landmark presidential election ahead. On Wednesday night, former president Donald Trump clinched the victory in the New Hampshire primary over former South Carolina Gov. Nikki Haley . The win now means it’s “highly likely” Trump will secure the Republication presidential nomination, according to Strategas analyst Daniel Clifton. Given this backdrop, Strategas compiled a basket of stocks that are most levered to a Republican presidency and sweep, as well as another basket that would outperform under Democratic control. “Interestingly, both the betting odds and the relative performance of our baskets are pricing in a near 50-50 chance for both candidates,” Clifton wrote. “We use the portfolios as investment overlays for our clients as they try to navigate the short- and long-term implications of the 2024 election.” Here are some of the stocks included in Strategas’ 2024 Republican sweep basket: One sector that could outperform under GOP control of both the Senate and House of Representatives is energy. “At 13.3mnb/d, US crude production is near an all-time high. While we believe Trump would reduce regulatory uncertainty, it could also boost production further, hitting commodity prices. For that reason, we favor midstream companies along with coal and LNG exporters — the latter of which is recently reported to be in Biden ‘s crosshairs,” Clifton wrote. Specifically, one name on his list is energy infrastructure firm Kinder Morgan . Earlier this month, Kinder Morgan stock slid after the company posted fourth-quarter revenue that came below analysts’ expectations. Shares are down 4% month to date. Another stock that could benefit under Republican leadership is aerospace and defense contractor L3Harris Technologies . JPMorgan recently upgraded the stock to an overweight rating, citing an attractive valuation and cash flow, as well as increased focus on returning shareholder value. The bank’s $240 price target implies that shares of L3Harris could rally more than 16% from Tuesday’s close. “Defense is less Republican v Democrat than it used to be, but we believe a Trump presidency would focus on naval and submarine build-up as US-China tensions remain in focus,” Clifton said. Other names in his basket of stocks tied to a Republican win include wireless carrier Verizon Communications , credit reporting agency Equifax and manufacturer Axon Enterprise . On the other hand, here are some of the stocks that could outperform under a Democratic sweep this year: Electric vehicle company Tesla could receive a boost from a Democratic win, according to Clifton. “The EV tax credit is at risk from a GOP Congress, and even a Trump presidency could hit EVs by repealing California’s Clean Air Act waiver. Democrats give greater certainty, including for foreign automakers investing in the U.S.,” the analyst wrote. Shares of Tesla are fractionally higher Wednesday as analysts await the company’s fourth-quarter results, expected after Wednesday’s market close. LSEG, formerly known as Refinitiv, estimates Tesla’s earnings at 74 cents per share on $25.62 billion in revenue. Tesla stock is down 16% so far this year, after doubling its price in 2023. Another category of potential beneficiaries includes semiconductor-adjacent stocks, such as Apple . “While [President Joe] Biden has imposed semiconductor export controls, we believe these companies are better positioned under Biden than Trump. US-China trade tensions are likely to continue regardless, but we see greater escalation under Trump,” Clifton said. Shares of Apple slid to start the year over concerns around waning sales demand in China but have since recovered to pop more than 1% in 2024. Apple shares gained 48% in 2023. Morgan Stanley expects strong iPhone sales could contribute to a fiscal first-quarter earnings beat. However, analyst Erik Woodring also cautioned that the company could issue disappointing forward guidance. Other names that could outperform under Democratic leadership include renewable energy company NextEra Energy , automation provider Rockwell Automation and beverage company Constellation Brands . — CNBC’s Michael Bloom contributed to this report.
