Using 2016 Trump rally as a playbook for what to buy now

Wondering what stocks might do well the rest of this year as America awaits Donald Trump take office for a second time in January? A look at what happened the first time around offers some clues. CNBC found the best performing S & P 500 stocks between Nov. 7, 2016 — the day before that year’s presidential election — and the end of that calendar year. There are policy-related reasons for why many of these companies might see outsized gains in the run-up to Trump re-entering the White House next Jan. 20. Several earlier winners were part of sectors from banks to industrials to energy that were viewed as beneficiaries of Trump’s position favoring deregulation. Others were high-beta growth stocks that can ride a broad market rally and benefit from corporate tax rates. Take banks as one example. Bank of America analyst Ebrahim Poonawala said financials should advance into year-end again this time around, given the outlook for less government oversight and fewer anti-trust challenges. “We view the outcome of the U.S. elections … as positive for bank stocks,” Poonawala told clients. Energy, meanwhile, can be more complicated. Bernstein analyst Bob Brackett said there’s already been “extreme winners and losers,” with steel and oil and gas companies benefiting and renewable energy plays hurt. Citigroup’s Andrew Kaplowitz struck a similar cord in a Wednesday note to clients. “Themes we view as likely to be viewed as beneficiaries of a Trump Presidency we think include energy-related exposure and re-shoring,” Kaplowitz wrote, referring to companies that stand to gain as manufacturing and production returns to the U.S. from overseas. “Conversely, perceived beneficiaries of a more ‘green-friendly’ administration could come under relative [near-term] pressure … although we think favorable [long-term] underpinnings for these stocks should remain intact over time.” Here’s the full list, along with how each stock performed the day after 2024’s election for a taste of what could be on the horizon. Bear in mind, however, that Wednesday’s moves came amid a major market rally that sdrove up the Dow Industrials by more than 1,500 points. Targa Resources is one of those names from the old energy camp that surged in 2016. It has been a good year for the stock thus far in 2024 too, with shares up 116%, not including its dividend. While history reflects the potential for an end-of-year advance, Wall Street isn’t so sure about the next 12 months. Though most analysts polled by LSEG have buy ratings, the typical price target implies Targa shares will pull back by more than 4% over the next year. Keycorp is one bank that made the screen, but Citigroup analyst Keith Horowitz wants investors to be careful. He noted that the Cleveland-based financial outperformed on Wednesday, but now its valuation is “relatively full.” As a result, he later downgraded shares to neutral from buy. The stock is now up 33% in 2024, excluding its fat 4.1% dividend, putting it on track to snap a two-year slump. Most analysts surveyed by LSEG hold buy ratings, but they expect KeyCorp shares to slide by more than 5% after their rally this year. But 2016 offers a more positive historical guide. Between Nov. 7 and the end of that year, KeyCorp shares ran up more than 25%. CarMax is a cyclical stock that should benefit from both deregulation and the rising tide for high-beta stocks. Shares in the used car dealer climbed 25% between the day before the 2016 election and the start of the following year’s trading. Despite a pop of around 4% on Wednesday, CarMax is still down a fraction in 2024, far below the market’s return. The majority of analysts rate it a buy, with the consensus price target suggesting shares can add about 6% over the coming year, according to LSEG.