I followed some of the discussions on a few blogs related to
my last article
and my highlight of
). Fellow investors thought it interesting to discuss which stocks
would do better depending on which presidential candidate
ultimately wins next month. In those discussions, people thought it
was much easier to find individual stocks that would perform well
if Romney triumphs, but had more difficulty trying to identify
outperforming stocks if Obama is re-elected.
Don't worry, this article isn't going to delve into politics. But,
because I like challenges, I wanted to tackle the issue of finding
stocks that might do well should the incumbent get four more years.
At first glance, it does seem a little trickier to find these
stocks because it's not apparent that pro-business agendas are in
the works. However, it is possible to get some direction from
existing or potential policies and search for outperforming stocks
in specific industries.
Where to Begin
Looking at Obama's policies can provide clues to certain industries
that would have a favorable tail-wind should he be re-elected. Tax
services, agribusiness, waste resources, alternative energy, and
certain health care groups are a few of those industries that come
to mind. But, you need more than just the right industries to find
good stocks. You also need to pepper in criteria that's useful in a
Zacks Research Wizard
is capable of screening by specific industries. It also contains
almost any company data item you could imagine that would lead to
identifying the cream of the crop.
How To Select
Selecting stocks by industry is super easy within the Research
Wizard. Simply open the program, click on company descriptors, then
select industry codes. There you'll have a little over 200
different industries to choose from. You can also screen by
economic sectors if you feel a broader group of stocks will
Once you've selected the industries or sectors you believe are most
likely to outperform, you'll need a way to pick the top stocks in
those categories. The best ways to do that are to use a rating
system or incorporate stock-picking ideas that prove profitable.
is an indicator that leads to outperforming returns. While not as
effective, average broker ratings are also useful. You could also
include ideas like a low Price/Earnings ratio, high earnings growth
rates, and price momentum. Since the Research Wizard contains
several hundred data items, you're really only limited by your
Here's how to find stocks for an Obama victory:
- First, create a liquid, investible set of the stocks whose
market cap is above $1.5 billion
(if there's not enough liquidity, it'll be hard for you to
- Select only those stocks with a current
less than or equal to 3. (You want stocks rated at least a "Buy"
- Because the Zacks Rank has a large number of "Holds," let's
also require the company to have an average broker rating better
than a 3. (It's good for Street research to also think the stock
is a good buy.)
- Next, pick those stocks
within the agribusiness, alternative energy, diversified,
waste, or electronic instruments industries.
(Remember you want to select the "OR" operator within Research
- Finally, select only those
stocks with a Price/Earnings ratio less than the S&P
(Our ideal stocks should be inexpensive relative to the S&P
Here are five of the stocks that passed the screen this week
- First Solar, Inc.
First Solar engages in the design, manufacture, and sale of solar
modules using a thin-film semiconductor technology in the United
States and internationally. Although the sun doesn't shine on a lot
of solar companies (believe me, I know as I own a number of them),
First Solar is by far the brightest star in the industry. Due to a
positive earnings surprise in the June quarter and increased
earnings projections, the stock is a Zacks Rank "Buy." This stock
also remains a great value based on almost any valuation measure.
- General Electric Company
GE operates as a technology and financial services company
worldwide. The company's Energy Infrastructure segment offers wind
turbines, gas and steam turbines and generators, nuclear rectors,
and power conversion technology and services. Wall Street analysts
rate this company as a "Buy." GE's stock has almost doubled the
S&P 500's return YTD, yet remains a value compared to the
S&P 500's P/E.
- Thermo Fisher Scientific Inc.
Thermo Fisher provides analytical instruments, equipment, reagents
and consumables, and software for research, manufacture, analysis,
discovery, and diagnostic services. A lot of this firm's revenue is
received from the National Institutes of Health, an agency of the
U.S Department of Health & Human Services. Thermo has an
average broker rating of a "Strong Buy" and is also rated a "Buy"
on the Zacks Rank. This company has a strong history of earnings
surprises and future earnings estimates are increasing. Its P/E
ratio is also below the S&P 500's median.
- Bunge Limited
Bunge Limited's Agribusiness segment is involved in purchasing,
storing, transporting, processing, and selling agricultural
commodities and commodity products, such as oilseeds and grains
including soybeans, canola, sunflower, wheat and corn. The
company's Sugar and Bioenergy segment produces and sells sugar and
ethanol. Bunge is rated as a "Buy" on both the Zacks Rank and
average broker rating. In addition, most of its valuation measures
are below the S&P 500's.
- Republic Services, Inc.
Republic provides non-hazardous solid waste collection, transfer,
and disposal services for commercial, industrial, municipal, and
residential customers. The company is also involved in materials
recovery and other recycling operations that sort recyclable paper,
aluminum, glass, and other materials. Being a bit down and out,
Republic is the dark horse of this bunch. But, a couple of analysts
have given the stock a "Buy" rating, so it's not entirely down for
the count and it looks highly attractive as a Value stock. What
makes it more intriguing is recent insider buying activity.
Guide Your Portfolio to Success
Want to find more stocks poised to do well with Obama's policies?
Or perhaps you'd like to see stocks that are likely to do well
under Romney policies?
No problem. The
Zacks Research Wizard
has plenty of flexibility to screen on any industry, sector, or a
multitude of other stock specific data items.
Starting today, you are invited to do this free of charge. You'll
have 14 days to create, tweak, and backtest your strategies. At the
same time, you can see the latest picks from pre-loaded winning
strategies that average gains of up to +67.4% per year.
Whatever your political viewpoint, set your portfolio up for
Learn more about your
free trial >>
Let's make some money!
Kip Robbins is a Quantitative Analyst with Zacks.com. He
analyzes screens and strategies for Zacks customers and for use in
Zacks Research Wizard
which empowers individual investors to use market-beating screens,
build their own, and backtest their results.
BUNGE LTD (BG): Free Stock Analysis Report
FIRST SOLAR INC (FSLR): Free Stock Analysis
GENL ELECTRIC (GE): Free Stock Analysis Report
REPUBLIC SVCS (RSG): Free Stock Analysis Report
THERMO FISHER (TMO): Free Stock Analysis Report
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