Since Donald Trump won the U.S. presidential election in November, some stocks have gone on incredible rallies. In a few cases, it has been a coincidence, but for other stocks, the new president could create a better outlook for them.

Shares of AppLovin (NASDAQ: APP), SoundHound AI (NASDAQ: SOUN), and Geo Group (NYSE: GEO) have all more than doubled since the election. What’s behind their impressive performances of late, and are these stocks good buys today?

AppLovin

As of Monday’s close, shares of tech company AppLovin were up an incredible 121% since Trump’s win. But what sparked the stock’s rally happened the day after, as AppLovin released its third-quarter results on Nov. 6. Investors were thrilled with the company’s strong numbers and its growth potential.

The company, which helps businesses monetize mobile games, reported 39% revenue growth for the period ending Sept. 30, 2024, with sales hitting US$1.2 billion. Investors are excited about a new opportunity in e-commerce, as AppLovin has launched a pilot project involving e-commerce ads, which may unlock a lot more revenue growth.

The stock’s rally coinciding with Trump’s victory may prove to be a coincidence. But if he can improve the economy and help lower interest rates, that can be a positive catalyst for growth stocks such as AppLovin.

However, with the tech stock trading at more than 110 times its trailing earnings, it won’t be easy for it to rise a whole lot higher, and it could be due for a correction unless its bottom line significantly improves in upcoming quarters. Investors who are holding the stock may want to consider cashing out right now because although AppLovin has enjoyed a strong rally in recent months, it could be running out of steam given its astronomical valuation.

SoundHound AI

Another tech stock that has been rallying of late is voice-enabled artificial intelligence (AI) company SoundHound AI. Since Trump’s victory, shares have soared by more than 165%.

Like AppLovin, this is another stock that could benefit from lower interest rates because it will help the unprofitable business raise cash more easily, to help fund its growth.

Shares of SoundHound AI aren’t necessarily up due to Trump; its shares took off in early December as the company announced that its AI Smart Ordering product was live at Torchy’s Tacos locations across the United States. Days later, the company would also announce a deal involving quick-service restaurant chain Church’s Texas Chicken.

The company’s business has been growing rapidly, but whether SoundHound AI can rally higher may depend on whether it can get close to breaking even; its net loss over the trailing 12 months has totaled US$111 million — far higher than its revenue of US$67 million over that time frame.

The past few months have been great for SoundHound AI, but without stronger earnings numbers, it may be difficult for the stock to continue rising because it trades at an extremely high price-to-sales multiple of 65. This is another stock that investors may be better off taking a wait-and-see approach with.

Geo Group

Shares of Geo Group have risen 105% since the election. The company, which provides correctional, detention, and related services, could stand to directly benefit from the president’s tough policies on crime — and specifically border control since it works closely with the government.

Before the election, this wasn’t a terribly exciting stock to invest in. It has posted a profit of just US$36 million in the past four quarters on revenue totaling US$2.4 billion. And in recent years, there’s been minimal revenue growth. Investors are likely betting on hopes that the president’s policies could generate a whole lot more business for Geo Group.

Due to the bullishness around the election, the stock has taken off and now trades at more than 110 times its trailing earnings. It may directly benefit from Trump’s policies, but investors should be careful about assuming the stock is going to continue rising as it, too, has a high valuation.

However, with Geo Group, all it could take is an announcement involving a big deal with the government to send the stock soaring even higher. It may be the most likely of the three stocks listed here to rise in value, but it still may not be suitable for most investors given its high price tag.

The post 3 Stocks That Have Doubled Since Trump’s Election Win. Can They Still Go Higher? appeared first on The Motley Fool Canada.

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Fool contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Trump Media & Technology Group (NASDAQ: DJT) stock could become a hot buy after Donald Trump’s election win last week. As the former president heads back to the Oval Office next year, there could be a lot more excitement around Trump Media stock and anything related to the Trump brand.

If there’s also more traffic on Trump Media’s social media platform Truth Social and its recently launched streaming service Truth+, investors could see improved results for the company. Is the stage set for this volatile stock to get back to the highs it reached earlier this year?

Trading volumes in Trump Media have been picking up

Earlier this year, Trump Media stock was rising in value as hopes appeared to be growing that Trump might win the election, and it was falling when that excitement seemed to be waning. Now that he won, a wave of bullishness could be ignited, leading to a more prolonged rally. Interest does appear to be picking up, as the trading volume of Trump Media stock increased significantly in recent days.

DJT Volume data by YCharts.

The big question is whether the social media stock will trade like a cryptocurrency and become a gauge of Trump’s overall popularity (and perhaps approval as president), or if its valuation will ultimately depend on how strong and successful the underlying business is. If it’s the former, the possibility exists that the stock will hit its high of $79.38, but if it’s the latter, that may be a less likely scenario.

Trump Media is still a risky investment

On Election Day, Trump Media posted its most recent quarterly results. The company, which owns Truth Social, reported net sales of just over $1 million for the period ending Sept. 30, which was a 6% decline year over year. That’s not what you would expect for a growing business.

Its operating loss swelled to $23.7 million from just $3 million in the same period a year earlier. The company’s general and administrative expenses jumped from $1.5 million in the prior-year period to $17.7 million this quarter, as Trump Media experienced an increase in legal, software, accounting, and finance fees.

The timing of the underwhelming results may have been convenient, as Trump Media’s earnings weren’t the biggest Trump-related news on the day. But the numbers are important to consider, nonetheless, as they underscore the risk that comes with investing in the business. If Trump Media’s expenses are increasing significantly and it’s not able to generate meaningful growth, it could be difficult to see the stock rise in value, based on its fundamentals, or be optimistic about its future growth prospects.

Should you buy Trump Media stock?

Trump Media may seem like a stock that should benefit from Trump’s election win, but that’s by no means a sure thing. In the days following the election, the stock dropped in value by a few dollars per share.

How it performs from here can be difficult to predict. It’s been trading more like a cryptocurrency and speculative buy than a typical stock this year. It’s difficult to justify the stock’s market cap of $6.6 billion based on its financial performance and growth prospects.

Trump Media stock may get back to its highs, but if it does, it likely won’t be because the business has been generating strong results — it’ll be due to speculation. That’s why I wouldn’t suggest buying the stock, as it’s a highly risky investment with an uncertain future.

The post Is Trump Media Stock Heading Back to All-Time Highs? appeared first on The Motley Fool Canada.

More reading

• Why Now Is the Time to Invest in Canada’s Infrastructure Boom
• The Only Stock I’d Hold in a TFSA for Life
• A 7% Dividend Stock Ideal for Passive Income Seekers
• The TSX Stock I’d Most Want to Hold Forever – Especially Inside a TFSA
• 3 Canadian ETFs Soaring Upwards to Buy Now for a TFSA

Fool contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.