PCLN, MYL, and AKAM have historically outperformed after a Democrat wins the presidential race
Election Day in the U.S. is tomorrow, and anticipation is running high ahead of the big event. Stocks sold off last week as Democratic candidate Hillary Clinton's lead over Republican nominee Donald Trump narrowed. However,
the stock market is rallying today after FBI Director James Comey said a recently discovered batch of Clinton emails presented no new evidence of neglect on the part of the former secretary of state.
As stocks breath a collective sigh of relief, 20 names in particular are hoping for a Clinton win at the polls. Specifically, Schaeffer's Senior Quantitative Analyst Rocky White ran the numbers on S&P 500 Index (SPX) stocks that have historically outperformed after a Democrat wins the presidential race, looking back to 1992. Making the list are travel stock
Priceline Group Inc (NASDAQ:PCLN), EpiPen parent
Mylan NV (NASDAQ:MYL), and cloud name
Akamai Technologies, Inc. (NASDAQ:AKAM).
In two previous signals,
PCLN has averaged a rest-of-year return of 19% in the two years subsequent to a Democratic presidential win. On the other hand, in the two years following a Republican win, the stock has averaged a loss of almost 25%. This translates into a difference of roughly 44% (Democrat return minus Republican return) -- the highest on the list.
Looking at the charts, PCLN has already put in an impressive performance in 2016, up 13.5% year-to-date to trade at $1,446.63 and fresh off an Oct. 5 record high of $1,501.79. Options traders have been loading up on long puts in the lead up to Priceline Group Inc's quarterly earnings report -- due after tonight's close. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), PCLN stock's 10-day put/call volume ratio of 1.20 ranks just 2 percentage points from a 52-week peak.
In a twist of fate,
MYL -- which has been
come under Clinton's direct fire for price-gouging -- is one of the best performers in the wake of a Democratic win. In five previous occurrences, the stock has averaged a gain of 20%, and has been positive 100% of the time. For the sake of comparison, MYL stock has averaged a loss of 7.1% after a Republican nabs the top spot.
Shares of MYL could certainly use a boost on the charts. Since topping out near the $50 level in early August, the stock has lost almost 28% at $36.37 -- amid increased scrutiny over the rising cost of its EpiPen -- and hit a three-year low of $33.60 last Thursday. Mylan NV will unveil its earnings report Wednesday morning, and options traders have shown a preference for long calls over puts. At the ISE, CBOE, and PHLX, MYL's 10-day call/put volume ratio of 1.14 ranks in the 75th annual percentile.
In the two prior times a Democrat has taken office,
AKAM has gone on to average a rest-of-year return of 6.7%, versus a 33.1% loss following a Republican win. More recently, AKAM stock has tacked on nearly 27% in 2016 -- up 1.1% at $66.52 today -- thanks in part to an Oct. 26 post-earning bull gap. Plus, the shares closed out October in annual-high territory.
Nevertheless, sentiment is tilted toward the skeptical side. While Akamai Technologies, Inc.'s 10-day ISE/CBOE/PHLX put/call volume ratio of 1.98 ranks higher than 87% of all comparable readings taken in the past year, nearly 7% of the stock's float is sold short -- or 6.6 times AKAM's average daily pace of trading. A possible Clinton win could prompt some of the weaker bearish hands loose, potentially creating fresh tailwinds for AKAM stock.
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