Stocks to Watch Under the Trump Presidency
American society is in for a change of pace as the administration of President Donald J. Trump continues to pick up steam. And as we all know, the political side can often translate into massive impacts on the economic side. It’s hardly as if Trump hasn’t used his itchy Twitter finger to lob tweet bombs at companies that have fallen out of favor, often decimating stock prices (at least in the immediate aftermath). Consider it a new form of market-targeted bombing. But which companies are set to benefit from a Trump presidency? More to the point, which are the best Donald Trump stocks to watch?
There’s a lot to consider when looking at the top technology stocks in 2017. Trump being in the mix only adds another layer to an already dynamic and, at times, volatile sector.
Consider that while Silicon Valley and Trump rarely see eye to eye on issues—many of the tech luminaries have arrayed against him, while California is poised for a full-on resistance movement—tech companies actually benefited greatly in the days following Trump’s election.
All four of the FANG stocks—Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Netflix, Inc. (NASDAQ:NFLX), and Alphabet Inc (NASDAQ:GOOG)—have experienced pretty solid gains since Trump came into power. (Source: “top technology stocks in 2017,” CNN, January 16, 2017.)
The four companies have climbed by roughly 18%, 13%, 16%, and seven percent respectively, since the beginning of the year. Which just goes to show that you shouldn’t always believe the hype, especially around this president. After all, I don’t think there’s a been a day free of hype since Donald Trump burst on to the political scene way back in 2015 (feels like a different era, no?).
Tech stocks under Trump are unlikely to be severely damaged by the new administration in the near- and long-term. As evidenced by the impressive growth rates so far in the beginning of the year, the shares’ values are instead more likely to be affected by general market trends (like big pushes in the S&P 500 and Dow Jones Industrial Index) versus Trump policies.
But there are a number of big name tickers that, contrary to popular belief, are likely to surge as tech stocks under Trump. So what are the Trump stocks?
Donald Trump Stocks to Watch
With all the background information now properly disposed with, below is my list of stocks to watch under Trump presidency.
|Top Trump Stocks||Ticker|
|1. Apple Inc.||AAPL|
|2. AT&T Inc. and Time Warner Inc||T and TWX|
|3. Tesla Inc||TSLA|
1. Apple Inc. (NASDAQ:AAPL)
While I’ve included Apple—one of the most well-known and profitable companies on the planet—on this list, it’s ultimately just a representative for a whole bevy of companies that stand to make huge gains in the event of a tax repatriation proposal espoused by Trump.
If the Trump policy is able to shift from a campaign promise to a governmental reality, then the U.S. could see up to $1.0 trillion or more come rushing back to the homeland from overseas stashes to be used in dividends, share buybacks, and acquisitions. Such a move could spark a huge burst in market activity and ultimately juice several share price values, AAPL stock not the least among them. (Source: “top technology stocks in 2017,” Fortune, January 23, 2017.)
With U.S. companies having to shell out one of the higher corporate tax rates at around 35%, many multinationals have resorted to stashing profits overseas in an effort to avoid taxes. Apple, for instance, is famous for taking advantage of Ireland’s rate of 12.5% by transferring some of its valuable intellectual property assets to the small European nation. (Source: “Ireland’s GDP figures: Why 26% economic growth is a problem,” The Irish Times, July 15, 2016.)
By moving some of the copyrights and patents on the designs and technology behind its products, the company was able to save big.
In fact, the company is embroiled in a lawsuit stemming from the European Union’s European Commission that resulted in a $14.5-billion ruling against the company to be paid to Ireland, again all centered on issues involving corporate tax policy. (Source: “How Apple Calculates and Pays Its Taxes,” Bloomberg, September 1, 2016.)
Which just goes to show that in the world of corporate tax, this is big money we’re playing with. The Trump policy proposal to have a one-time holiday where companies could repatriate funds to the U.S. at a flat rate of 10% would not only be huge for the American economy, but also free up these companies to do a lot with that money on American soil.
While not all the overseas assets held by these companies are in liquid form, estimates still believe that as much as $1.0 trillion could find its way back in the event of a 10% tax rate. And this makes Apple, among others, a top Trump stock.
Apple is one of the companies likely to benefit most from such an event. The tech giant has taken on nearly $75.0 billion in long-term debt since 2013, way up from nearly zero. Saddling itself with that amount of debt in such a short time span could be dangerous for the company moving forward. With this tax deal, however, Apple would be able to invest and make moves on the market without acquiring crippling amounts debt.
And that’s just one of the top technology stocks likely to see a boost if the Trump policy comes to fruition. In fact, a number of very prominent tickers might be calling themselves Trump stocks in the event of a tax deal.
Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO), Oracle Corporation (NYSE:ORCL), and Intel Corporation (NASDAQ:INTC), along with Apple, account for over half of the untaxed foreign earnings. And the companies are in need of that cash; they’ve been paying out between 84% and 94% of their cash flow in dividends and buybacks over their past three fiscal years.
Which makes many of those aforementioned tech stocks in for a surge in the Trump stock market if Trump manages to orchestrate this tax deal.
2. AT&T Inc. (NYSE:T) and Time Warner Inc (NYSE:TWX)
With the AT&T purchase likely to be approved by the Federal Communications Commission, Time Warner hit a near 16-year high of $98.00 per share, making the two stocks potential big winners in Trump land. (Source: “Wall Street treads water ahead of Trump’s Tuesday speech,” Reuters, February 27, 2017.)
Whereas under Barack Obama’s administration, there was concern that the merger would be blocked (or at least face some opposition), Trump’s team is looking far more friendly towards the deal.
TWX stock has climbed two percent since the beginning of 2017, while T stock has fallen about 1.6% in that same time. But a speedy merger could be the catalyst that sends the two stocks surging.
3. Tesla Inc (NASDAQ:TSLA)
Access can be a valuable asset for a company, and Elon Musk definitely has access to Trump at the moment.
With a position on Trump’s Business Advisory Council as well as long-time friend Peter Thiel deeply involved in the Trump administration, Tesla has a couple of political factors that may prove to be a huge boon in coming years; especially when you consider how subsidies can push the needle for Tesla car sales.
While Tesla stock has taken a battering in the past five days, dropping nearly 10%, the company as a whole has been trending upward since Trump assumed office, rising about 15% since the year began.
Couple these close ties with Trump policies that align well with Tesla—the “America First” economy, for instance, when Tesla employs thousands of workers mainly in the U.S.—and you have what might be one the strongest, albeit most surprising Trump stocks.
Trump’s Stock Market
It’s a new world out there. Stocks to watch under Trump presidency are not necessarily ones that you would associate as being part of the current Commander-in-Chief’s favored companies. At the same time, politics and economics can make strange bedfellows—look no further than Trump Telsa.
Which is to say that, as has always been the case with this president, expect the unexpected. Or at least, be prepared for the unexpected. Apple and the great number of tech giants set to benefit off of a tax holiday are not likely to agree with a great many Trump policies. But they don’t have to. They’ll still be the beneficiaries of a tax reduction rate, and they’ll still be able to invest tons of money back in the U.S. economy.
On the other side, you have AT&T and Time Warner, who will be much more amenable to the new FCC personnel who are probably going to shepherd through one of the most monumental deals in telecommunications history.
With Tesla, you could not have picked a company more predisposed to be adversarial towards Trump. A green tech revolution-facing company that derives some profit from government aid would hardly fit the description as one of the “Donald Trump stocks to watch.”
And yet here we are, a crazy world where not only is Tesla benefiting from a Trump administration so far (or at least not being hurt by him), but the company is indeed poised to make some big gains if the Tesla Trump friendship holds.
As has been the case since day one of Trump’s administration, don’t subscribe to the easy answers when it comes to the economy. Whether it’s been a department store drawing the president’s ire due to a spat with his daughter, or the large boycotts of companies seen to be overtly supporting him, there’s a lot to unpack in the post-Obama world.
These are the top tech stocks to watch under Trump presidency because they have a great potential to blossom as a result of his policies. Sure, Trump’s volatile. And that will extend into the market at times. But when there’s heightened unpredictability on the market, there’s also opportunity.