8 Investments That May Soar During Trump's Term

By Tim Lemke on 5 December 2016 1 comment

What will the presidency of Donald J. Trump mean for your finances? No one knows just yet, but it's possible to make some educated guesses based on some of his public statements.

President-Elect Trump has advocated for lower taxes and higher spending on infrastructure and defense. He's also pushed for policies that could lead to higher interest rates and inflation.

It's worth noting that all investment returns are based on a variety of factors separate from who lives in the White House. But here are some investments that might do well under a Trump presidency.

1. Defense Contractors

At various times, President-Elect Trump has spoken about the need to bolster the U.S. Military and has talked about acting more aggressively against terrorism. So it's not a bad bet to look at major defense contractors including Lockheed Martin [NYSE: LMT], Northrop Grumman [NYSE: NOC], and Raytheon [NYSE: RTN]. If you're not comfortable picking individual stocks, take a look at mutual funds like the Fidelity Select Defense& Aerospace fund [NYSE: FSDAX] or ETFs like the iShares Aerospace& Defense ETF [NYSE: ITA].

2. Oil Stocks

Trump has voiced support for allowing oil companies to drill on more land, including offshore areas that were declared off limits under President Obama. Such a change would, in theory, give companies like Exxon [NYSE: XOM] and Chevron [NYSE: CVX] access to more supply. There is one big caveat here, which is that oil prices have already dropped due to a glut of supply versus demand, so it's unclear what impact any changes might immediately have.

3. Heavy Equipment Manufacturers

The President-Elect has said he will "Make America Great Again" through massive investment in infrastructure. This means big construction and repairs of roads, bridges, buildings, and airports. And that work can't be carried out without big machines. Look to a stock like Caterpillar [NYSE: CAT], which saw shares rise 7% immediately after Trump's election. Asian companies including Doosan (the maker of Bobcat), Hitachi, and Komatsu could also see good results from an infrastructure spending binge.

4. Steel Companies

The steel industry would also get a boost from more infrastructure spending, and Trump has also promised to crack down on the illegal "dumping" of Chinese steel into the U.S. market. If indeed he's serious about support for American steel, that could be a boon for companies like Nucor [NYSE: NUE] and U.S. Steel, [NYSE: X].

5. Cement Companies

Another sector that could see good profits from more infrastructure spending. And if Trump somehow manages to build that wall along the Mexican border, it has to be made out of something. Most of the largest cement manufacturers are overseas, but look at France-based Lafarge, Germany-based Heidelberg, Mexico-based Cemex, and a host of Chinese manufacturers.

6. Private Prisons

The Obama administration this year announced that the Justice Department would phase out its use of private prisons. But there's no guarantee Trump won't halt that process. And if he follows through on his efforts to deport millions of illegal immigrants, the country may need jail capacity to hold them as they go through a judicial process. Companies including Geo Group [NYSE: GEO] and CoreCivic [NYSE: CXW] could cash in. Also look to companies that provide health care and phone services to prisons.

7. Banks

President-Elect Trump has said he will roll back many regulations that were put in place after the financial crisis in 2009. Some supporters have argued that repeal of the Dodd-Frank legislation will free banks up to lend more. Shares of JPMorgan, Goldman Sachs, and Bank of America have shot up since the election. Investors in big banks also may be excited by proposals for lower taxes and more infrastructure savings.

8. Commodities

Many observers predict that Trump's economic policies could lead to inflation. And when prices go up, it's usually a good thing for things like precious metals, oil, and agriculture products. It's possible to invest in commodities directly, or invest in mutual funds and exchange-traded funds that track all commodities or commodity sectors as a group.

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Guest's picture
Nancy

I don't want to invest in human misery, perpetual war, and
planet-killing oil. I hope the other companies do well though.