Donald Trump’s Victory Just Changed the Fortunes of These 3 Stocks

While Canadian investors may have questions about what a Donald Trump presidency means for their portfolio, three stocks will undoubtedly benefit and are great buys at current levels: Baytex Energy Corp. (TSX:BTE)(NYSE:BTE), Barrick Gold Corp. (TSX:ABX)(NYSE:ABX), and TransCanada Corporation (TSX:TRP)(NYSE:TRP).

| More on:

Donald Trump shocked many observers by winning the presidency with 288 electoral college votes, and a whole slew of uncertainties have been injected into the market that were not there before the election.

With regards to Canada, Trump has proposed a renegotiation or withdrawal from NAFTA, and with $51 billion of goods crossing the border monthly, the status of NAFTA could cloud the growth outlook for many Canadian businesses. The removal of NAFTA could lead to tariffs on Canadian exports and could also disadvantage crude oil exports to the U.S. in favour of domestic production. Canada exports 99% of its oil to the U.S.

While it is uncertain what will happen with trade, there are several stocks in Canada that are likely to be long-term beneficiaries of a Trump presidency. Here are three names to consider buying today.

Baytex Energy Corp. (TSX:BTE)(NYSE:BTE)

Oil producer Baytex may seem like a strange beneficiary, especially given the risks surrounding trade policy, but a deeper look reveals some major potential benefits for oil stocks, especially over a medium-term (one to three years) time frame. Baytex remains one of the most leveraged names to oil prices in Canada due to its heavy oil exposure and debt levels, and it’s uniquely suited to profit from rising oil prices.

How will a Trump victory benefit oil prices? Several of Trump’s policies actually benefit U.S. oil demand. Trump plans on reducing both corporate and individual taxes. Trump is going to reduce the number of individual tax brackets, drop to highest bracket from 39% to 33%, and lower the corporate tax rate from 35% to 15%. Trump is also lowering taxes on corporations that want to bring cash back from overseas.

These tax policies should be positive for U.S. economic growth as well as oil demand. In addition to this, Trump is planning an infrastructure spending program, which should bode well for growth. While some of Trump’s trade and immigration policies could offset these effects to a degree, the effects of tax cuts and infrastructure should be immediate.

TransCanada Corporation (TSX:TRP)(NYSE:TRP)

TransCanada is an obvious winner from a Trump presidency due to the fact that Trump had stated that he would approve the Keystone pipeline. It is little surprise that TransCanada shares shot up by 2.6% the day after the election. TransCanada stated it is still fully committed to building the pipeline and will be engaging with Trump.

A potential approval of Keystone would automatically increase the intrinsic value of TransCanada shares. TransCanada has a $26.5 billion set of growth projects that are ready to be completed by about 2020, and this set of projects is what is driving the company’s expected 8-10% dividend growth out to 2020.

TransCanada, however, also has $37 billion of mega projects that are unlikely to be approved, and Keystone is the second largest of these projects, valued at $8 billion. TransCanada does not factor Keystone into its growth outlook, and, if it were approved, TransCanada would grow faster and also be worth much more than the market is currently pricing in.

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX)

Finally, gold is expected to be a long-term winner from a Trump presidency. While some of the effects of Trump’s policies may be bad for gold (the pro-growth agenda can boost growth rates, the U.S. dollar, and interest rates, which are all bad for gold prices), there are several positive components.

The main is that Trump’s presidency will be filled with uncertainty, and this degree of uncertainty should be a tailwind for gold, especially before markets have a clear understanding of what policies he will implement. Barrick Gold is a smart way to play this, since it is the world’s largest global producer and tracks the price of gold well; it also has declining debt and risk levels.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Mancini has no position in any stocks mentioned.

More on Dividend Stocks

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »