20 Stocks That Could Take Off On a Trump Victory

Range Resources Corp. (NYSE:RRC), Macy's Inc (NYSE:M), D.R. Horton, Inc. (NYSE:DHI), the IYR, and the XLF are among the stocks and ETFs that could rally if Trump wins the presidential election, if history is any indicator

Nov 7, 2016 at 3:03 PM
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With Election Day on the horizon, U.S. stocks are higher amid renewed expectations for another Clinton in the White House. However, should Republican presidential candidate Donald Trump defy the polls and beat Hillary Clinton tomorrow, oil-and-gas concern Range Resources Corp. (NYSE:RRC), retailer Macy's Inc (NYSE:M), and homebuilder D.R. Horton, Inc. (NYSE:DHI) are among the 20 stocks that could rally, if history is any indicator. What's more, the iShares Dow Jones US Real Estate ETF (IYR) and the Financial Select Sector SPDR ETF (XLF) could celebrate once again.

Specifically, Schaeffer's Senior Quantitative Analyst Rocky White ran the numbers on S&P 500 Index (SPX) stocks that have historically outperformed after a Republican wins the presidential race, looking back to 1992 and measuring returns through year-end. The list is sorted by the difference in average returns (average Republican return minus the average Democrat return). (These 20 stocks, meanwhile, have historically outperformed after a Democrat wins the White House.)

Best GOP stocks Nov 7

Oil stocks account for six out of the 20 names that have historically outperformed after a GOP win, perhaps on a "drill, baby, drill" attitude. RRC has been positive after a Republican win 100% of the time, averaging a gain of more than 65.07% through the end of the year. That's a huge difference -- the biggest on the list, in fact -- to RRC's post-Democrat average return of just 0.34%, with RRC moving higher just half the time after a liberal takes office.

At last check, Range Resources Corp. (NYSE:RRC) shares are up 4.9% at $33.60, as crude oil prices defy a stronger dollar. However, the shares have been caught in a channel of lower highs and lows since mid-June, and are now testing the $33.50 area -- about a 50% Fibonacci retracement of the stock's first-half rally. What's more, before today, RRC sported a 14-day Relative Strength Index (RSI) of 27 -- in oversold territory, suggesting today's bounce may have been in the cards.

Retailer M is runner-up on the list, with a 64-percentage-point difference in year-end returns after Republicans and Democrats take the Oval Office. While M has finished out the year higher 60% of the time regardless of the party in charge, the stock's average return of 66.67% after a conservative win far surpasses its average gain of 3.13% after a Democrat win.

Macy's Inc (NYSE:M) is slated to report earnings before the open on Thursday, Nov. 10. The shares were last seen 1.9% higher at $37.54, and have added more than 25% since touching a four-year low of $29.94 in May. M is now attempting to reclaim its 200-day moving average -- a trendline toppled just twice since late August, on a daily closing basis.

DHI is also among the stocks that could rally on a GOP win, if history is any guide. The homebuilder has ended the year higher 100% of the time after a Republican presidential win, averaging a gain of 28.72%. For comparison, DHI has averaged a gain of just 5.12% after the last four Democrat wins, ending higher three out of four times.

D.R. Horton, Inc. (NYSE:DHI) will step into the earnings confessional before the opening bell tomorrow. The equity has been in a channel of higher highs and lows since mid- 2013, and since touching a post-financial-crisis high of $34.56 in mid-July, has pulled back about 15%. At last check, DHI has added 2.2% to trade at $29.38.

But DHI isn't the only stock under the "real estate" umbrella that could benefit on a Trump surprise. Below are the exchanged-traded funds (ETFs) that have performed best when a Republican won (relative to a Democrat), and vice versa, courtesy of White. 

Best ETFs GOP Nov 7

The IYR has finished the year higher 100% of the time after a GOP victory, and averages the best gain on the list, at 6.72%. That's compared to an average loss of 1.74% after the last two Democrat wins, with the iShares Dow Jones US Real Estate ETF (IYR) ending the year lower 50% of the time.

Only the Financial Select Sector SPDR ETF (XLF) has a bigger skew, at 10 percentage points. Specifically, the XLF has gained 4.47%, on average, after a Republican win, ending higher 100% of the time. On the flip side, the XLF has averaged a year-end loss of 5.74% after a Democrat takes office, ending higher just half the time. However, it should be noted that President Obama was elected in the throes of the financial crisis of 2008, which took quite a toll on housing and bank stocks, especially.

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