U.S. oil stocks are likely to improve if November sees Donald Trump win the presidency for a second time. Names like ExxonMobil stand out, as do top names in Big Pharma as well as the defence sector. Adding a mix of oil stocks to standout growth picks such as Maxar Technologies could mean some swift wealth creation later this fall.
Decoding stock performance in a pro-Trump market
It’s been illuminating to watch which stocks dipped and bounced during the latest political drama south of the border. A Republican win in November is looking like it could be good news for Canadian names such as TD Bank (TSX:TD)(NYSE:TD), Magna International (TSX:MG)(NYSE:MGA), and domestic crude exporters. For instance, Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) was up 2.3% Monday, as Trump’s signs of recovery injected fresh bullishness back into the markets.
Magna does a lot of business in the United States. So does TD Bank. Both names have bounced significantly thanks to Trump’s dramatic recovery. Magna has bounced +6% in the last few days. TD Bank has bounced 3%. Adding these two names to an investment in CNQ could therefore see steep capital gains come November should the American electorate choose to cleave to the political status quo.
Buying TSX stocks for a “Red November”
Looking to line a retirement portfolio, build a trust fund for the kids, or simply amass long-term wealth? Look past the headlines and focus on those financial goals. Recent years have seen outside forces permeating the media in order to affect elections. Political headline blur can therefore be both distracting and misinformative for investors, especially those long-term shareholders with a low-risk strategy.
This is why buying blue-chip names with the kinds of qualities that could carry them through a turbulent Democrat transition equally well is important for a sleep-easy stock portfolio. With a few good years left in it, the Canadian oil patch still makes for a compelling recovery side-bet at least. Banking is perhaps a more solid option, and one that few TSX investors overlook. Auto stocks are another all-weather play, especially ones that factor in the high-growth electric vehicle market.
It’s worth noting that these three stocks are also dividend payers. The second-biggest bank in Canada, TD Bank, pays a rich 5% yield. This makes the Bay Street favourite just right for the passive-income investor looking for a bit of large-cap defensiveness to pack in a TSX dividend stock portfolio. Magna shells out a modest 3.2% yield. Meanwhile, CNQ pays a plump dividend that currently yields just shy of 8%.
Movie buffs will no doubt have heard of The Hunt for Red October. A hunt for solid stocks for a potential “Red November” is now on that could be just as mission critical. Building a stock portfolio with names that will both improve on a Trump victory and outperform if he loses remains key to TSX investors this fall. While oil stocks are likely to fare less well with a Democrat win, names like Magna nevertheless pack international exposure with a green economy spin.
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Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. The Motley Fool recommends Magna Int’l and MAXAR TECHNOLOGIES LTD.