Evercore ISI gives Harris/Walz and Trump/Vance stock picks to trade election

Though the S & P 500 is up more than 20% in 2024, Evercore ISI sees a patch of volatility ahead as the November presidential election approaches — and the firm has stocks to play either outcome. Ahead of the vice-presidential debate on Tuesday evening, Evercore ISI released a list of stocks that would outperform based on whether Democratic nominee Kamala Harris or Republican nominee Donald Trump becomes president. Evercore senior managing director Julian Emanuel thinks that a divided government — that is, when the presidency and both houses of Congress are controlled by different parties — could actually boost stocks in 2025, contrary to popular belief. “Despite the potential for Divided Government to further exacerbate divisions in 2025, for investors, ‘It Is Different This Time,'” he wrote. “While a century of returns shows that United government handily outperforms Divided, the sharp partisan divides in the Country make 2025 a year where stocks are more likely to outperform in the event that government is Divided, as is currently the case.” Broadly, Emanuel thinks that renewable and electric vehicle stocks would outperform if Harris wins, since those names would benefit from clean energy policies. Health insurers that are leveraged to the Affordable Care Act could also rally on the back of a push to boost enrollment. But financial stocks, utilities with exposure to gas and coal, prescription drug companies and Medicare Advantage-leveraged insurance names could decline due to tougher regulation. Evercore ISI thinks that automotive components manufacturer Aptiv could rise in the event of a Harris/Walz win. The company’s stock has plunged nearly 20% this year. But like Evercore ISI, about 73% of analysts covering the name have rated Aptiv as a buy or strong buy, and the average price target suggests upside of roughly 27%, per LSEG. Wells Fargo recently upgraded the company to an overweight rating from equal weight, citing a “much improved valuation.” “After slowing growth & SVA [Smart Vehicle Architecture] concerns, APTV lost most of its growth premium to peers. However, we still see well-above-average growth despite recent moderation,” wrote analyst Colin Langan. Regional bank PNC Financial Services could also benefit from a Democratic president. Evercore ISI called the bank “a flight to quality name,” saying it was in a competitive position despite an uncertain backdrop. Shares of PNC are up 19% in 2024. The average price target implies nearly 2% upside, per LSEG, 15 out of 24 analysts cover the stock are still bullish on the name. In a September report, UBS analyst Brian Meredith pinpointed PNC as one of his top picks in North American financials. “PNC is well positioned to deliver outsized NII [net interest income] growth in 2025 driven by hedging activity, repricing of fixed rate assets, and a recent securities repositioning,” he wrote. On the other hand, the sectors that would outperform in the case of a Trump win include those that would benefit most from deregulation, such as financials and energy, alongside defense stocks. Emanuel added that the losing stocks could include auto and agriculture names, which would be most exposed to intensified trade wars. If Trump wins, Charter Communications is one stock that could benefit from a “potentially benign tax environment” and a pickup in M & A activity, Evercore ISI said. The telecommunications stock is currently down roughly 17% on the year. Nearly 60% of the analysts covering Charter have a hold rating on the name, but see a potential upside of nearly 13% on average, according to LSEG. In September, Citi upgraded Charter to a neutral rating from sell. “Charter is targeting significant improvement in EBITDA during 2H24 with its previously announced efforts to reduce expenses that can also support flattish EBITDA for 2025,” wrote analyst Michael Rollins. Supermarket operator Kroger could also outperform due to its ability to pass through higher prices to consumers, according to Evercore ISI. Shares of Kroger have already rallied 25% this year. Twelve out of 22 analysts covering the name rate it buy or strong buy, according to LSEG. Consensus price targets imply nearly 3% upside from current levels. CFRA upgraded Kroger to a buy rating from hold in September. “Our upgrade reflects improving sales momentum, margin expansion opportunities, and a relatively underwhelming valuation compared to retail peers,” wrote analyst Arun Sundaram.