The U.S. election is just days away. In fact, more than a third of eligible U.S. voters have already cast their ballot via mail. So, we could know who will win this critical battle this week. While the polls suggest Donald Trump could lose office, intuition tells me his chances are better than most people expect.
If Trump emerges victorious, it could have a significant impact on several Canadian stocks. Here are my top three stock picks for a Trump victory.
Trump’s defence budget
Montreal-based defence contractor CAE (TSX:CAE)(NYSE:CAE) has done well under a Trump administration. The American conservatives have a clear stance on defence spending: more is never enough. Every Republican president has boosted the defence budget, and Trump is no different.
A bigger defence budget in a country that already spends more than most other developed nations is great for CAE. Over the course of Trump’s first term in office, CAE’s stock price more than doubled. This year, the stock is down because of struggles in the airline sector. However, that could make it the perfect opportunity to add this robust stock to your portfolio.
Trump’s fiscal policies
In the past, the U.S. president has claimed that he would like to see a “weaker dollar” and “negative interest rates.” Unsurprisingly, the real estate mogul loves cheap capital in the economy. This flow of cheap capital is great for the capital managers, namely Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM).
A Trump victory could put more pressure on the U.S. Federal Reserve to keep rates lower for longer. That means private equity firms like Brookfield can borrow at an unprecedented rate and brazenly acquire marked-down assets across the world. More business acquisitions and real estate deals will expand the company’s book value and unlock wealth for shareholders.
Like most other stocks, Brookfield is beaten down at the moment. Private equity has had a rough year. However, the U.S. election could be the perfect catalyst for this company. If you’re looking for a contrarian bet, add Brookfield to your watch list before the election results are declared.
Trump’s pro-energy stance
The U.S. is the biggest guzzler of Canadian oil. That’s why the fortunes of producers and suppliers like Enbridge (TSX:ENB)(NYSE:ENB) hinge on the upcoming election.
A Trump victory could bolster Enbridge’s chances of winning approvals for its pipelines. The next four years could be plenty of time for the company to lay new pipes, replace old ones, or win new contracts. Enbridge’s business model cements earnings for several years, if not decades, once the infrastructure is completed.
Of all the companies on this list, Enbridge is perhaps the most undervalued and misunderstood. The company is worth half of what it was before the oil price crashed in 2015. This year’s turmoil has compressed the stock price further. However, there is light at the end of the tunnel. Savvy investors can take advantage of this mis-valuation before election night.
