On January 20, 2017, Donald Trump will take the Oath of Office and be sworn in as America’s 45th president. Using TipRank’s research tools, we explore how top analysts see five stocks across five different sectors performing under Trump’s new administration:
Defense- Lockheed Martin Corporation
Lockheed Martin Corporation (NYSE:LMT), a global aerospace and security company, has just been awarded a $450 million U.S. Navy contract modification from the Pentagon regarding the development and delivery of the company’s controversial F-35 fighter jets to South Korea. At a notable price tag escalating over $1 trillion, the LMT F-35 program has earned a reputation as the most expensive military weapons system in history.
The contract modification arises amid swirling concerns that the President-elect could scrap the program. Only recently, Trump took to one of his favorite mediums, the social media platform Twitter Inc (NYSE:TWTR), to announce that he was investigating other options. Subsequently, Lockheed CEO Marillyn Hewson took to Twitter to publicize her personal commitment to “drive the cost down aggressively.”
Vertical Research five-star analyst Robert Stallard remains sidelined on back of Trump’s apprehension, reiterating a Hold rating on Lockheed, noting, “The pull back in the shares have made them more attractive in our view, but at this point we would prefer to go for defense stocks that are not in Trump’s line of fire, such as General Dynamics Corporation (NYSE:GD), Raytheon Company (NYSE:RTN) and BAE Systems PLC (ADR) (OTCMKTS:BAESY).”
Stallard has a 100% success rate on all 14 of his recommendations on LMT and yields 10.8% in average profits on the stock, according to financial accountability engine TipRanks.
Infrastructure- MasTec, Inc.
Presently, there is an overall bullish outlook on MasTec, Inc. (NYSE:MTZ), a Florida-based infrastructure engineering and construction company, as demonstrated by the TipRanks graphic below.Trump’s website indicates,“The National Association of Manufacturers estimates a ‘ten-year funding gap’ of approximately $1 trillion. The Trump Infrastructure Plan is aimed at achieving a target of investment to fill this gap.” Furthermore, the President-elect plans to cut regulatory red tape, which delays projects for “years and years… with virtually no end in sight.”
This positive attitude towards infrastructure is good news for MasTec, which Canaccord Genuity’s Robert Burleson finds encouraging, as the forthcoming administration should accelerate opportunities and support multiples. As such, the analyst reiterates a Buy rating on MasTec with a price target of $42, translating to a just under 10% upside from the current share price.
Burleson is ranked #261 out of 4,291 analysts, according to TipRanks’ calculations. He has a 57% success rate and an average return of 7.7% on his recommendations.
Financial- SLM Corp
With the Trump victory, the landscape for the financial sector changed overnight, says top financial analyst FBR Capital’s Paul Miller. Since the election, the S&P 500 Financials Index is up over 17%, while the broader S&P 500 Index has lagged and is only up 5.5%.
“We take this to be a sign of tactical asset allocation among funds, which reflects some combination of regulatory relief, corporate tax relief, and a potential acceleration in GDP growth/higher interest rates” Miller wrote on 23 December.
Paul Miller has a great TipRanks score, upholding a 70% success rate and a high standing of #80 out of 4,290 analysts. Miller realizes 17.1% in his annual returns. When recommending SLM, Miller yields 6.5% in average profits on the stock
SLM Corp (NASDAQ:SLM), or as its more famously known, Sallie Mae, is one company that has benefited. Shares in Sallie Mae, a leader in the nearly $1.4 trillion student loan market, surged 50% post-election. We can see that the analyst consensus rating on TipRanks is Strong Buy, based on analyst ratings made in the last three months.
One analyst, Barclays Mark Devries, summed up the new de-risked environment, explaining, “Prior to the election, SLM was already a robust growth story, but had some warranted legislative risks. Now those risks, at a minimum, are off the table.”
Healthcare- Centene Corp
Post-election President-elect Trump softened his stance on an immediate repeal of Obamacare. “Either Obamacare will be amended, or repealed and replaced,” Trump told the Wall Street Journal after his election in November. “I told [President Barack Obama] I will look at his suggestions, and out of respect I will do that.”
Indeed TipRanks number 1 healthcare analyst- Oppenheimer’s Michael Wiederhorn– is still confident about the outlook for healthcare stocks including Centene Corp (NYSE:CNC), a multi-line healthcare enterprise that provides services to government healthcare programs.
“Centene assembled a strong bi-partisan panel, which highlighted that while repeal is likely to happen, there could be a long transition period (possibly 2020 or 2021), during which time Republicans could actually stabilize the markets. Furthermore, most Republican plans do not differ dramatically from Obamacare, so ultimately some form of coverage is likely to remain,” Wiederhorn wrote last month.
He reiterated his Buy rating for the healthcare company with a $89 price target- 57.49% upside from the current share price. The analyst consensus rating on TipRanks is Moderate Buy.
Energy- Pattern Energy Group Inc
There is an assumption that Trump’s fossil-fuel focused energy policy leaves little room for renewable energy.
However, following former Texas governor Rick Perry’s appointment as Energy Secretary, Oppenheimer analyst Colin Rusch believes otherwise, anticipating prospective clear skies ahead for Pattern Energy Group Inc (NASDAQ:PEGI). The analyst contends, “We would not be surprised to see a relatively supportive environment for wind developers like PEGI given the extensive history of wind development in Texas.”
Four-star rated Rusch continues, “We see increased wind capacity potentially benefiting natural gas companies due to increased flex power assets running to balance wind-based electricity production.”
The average analyst price consensus on TipRanks is $29 (52.71% upside from the current share price).
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