By Martin Tillier
Regardless of your preference when it comes to the next election, I would encourage you to think like a trader. Denying data because it doesn’t fit your world view is your right in a free country, but it is not a great platform from which to invest. Intrade currently has a 68% chance of an incumbent win, and with President Obama increasing his lead in most national polls and leading in swing states, it may be a good time to add some investments to your portfolio that could benefit from a second Obama administration. Please don’t take this as a prediction or a comment on the desirability of this outcome. Politics is fickle at best and much could change between now and the actual polling day. Positioning oneself for the most likely outcome of a major event is, however, a good habit to get into.
Ideally, these stocks should be companies that, while they have a chance of a boost in the event of an Obama win, will still perform well should Romney pull off the victory. To that end, I have screened out purely speculative plays; those that are recent launches or have never made a profit.
EnerNOC Inc (ENOC)
EnerNOC (ENOC) was founded in 2003 and is best known for their demand response systems, designed to improve energy efficiency and ensure continuous supply. They have a market capitalization of $341 million and forecast EPS of $0.05. EnerNOC does not pay a dividend.
The two year VectorVest chart above shows how far the stock has fallen over the last couple of years. The big drop in 2011 came after the COO resigned, following accusations of improper accounting by a major customer. It seems to have found a bottom though, and, should Obama be re-elected, a favorable regulatory environment is likely. EnerNOC also has a division devoted to emissions tracking and trading support, featuring software that allows customers to monitor, offset and monetize their greenhouse gas emissions. This sector could see significant growth with the passing of new environmental regulations.
Corning Inc (GLW)
Corning (GLW) is a diversified, technology based company, best known for glass products, founded in 1936. It has a market capitalization of around $19.3 billion and forecast EPS of $1.43. GLW has a dividend yield of around 2.3%.
Once again, the two year VectorVest chart shows a stock that is beginning to bounce off of a bad two years. From a trading perspective, this gives a reasonable level to set an initial stop-loss to guard against a break back lower. I have been in markets long enough to know that a good exit point is as important as a good entry point. On a more fundamental note, much of this fall is due to slowing global growth. Corning’s most talked about products are those that are applicable to mobile technology, such as Gorilla Glass. Sales of these products are susceptible to slowing growth, particularly in emerging markets. I don’t honestly think that global growth will be greatly influenced by who wins the US election. Results in Corning’s important fiber-optics division, however, could well be. Obama has promised to invest in infrastructure, particularly technological. Whatever your view of the likelihood or effectiveness of this policy, it is worth noting that Corning would be a direct beneficiary should it come to pass.
NextEra Energy (NEE)
NextEra Energy (NEE), formerly FPL Group, was incorporated in 1984. They have a market capitalization of around $28.2 billion and forecast EPS of $4.98. The stock yields around 3.56%. NEE is a utility company, specializing in wind and solar power, but still with significant production capacity using natural gas, nuclear technology, oil and some coal.
The 2 year chart for NEE is almost the opposite of the other two. It shows a recent drop from highs achieved during a significant, year-long rise. A case can be made that this is just a correction and that the upward trend is still intact, but from a technical perspective, a little more caution would be appropriate here. The previous consolidation level at around $60 would provide a logical stop level. Fundamentally the company is poised to benefit from the likely emphasis of an Obama administration energy policy, as only 13% of NEE’s production is dependent on oil and coal.
All of the above are established companies with a record of profitable operation. If the less likely scenario plays out and Romney surges to victory, they will still be established companies with a profit record. What each company has, however, is an area of business that could benefit significantly from an Obama win. Some readers will no doubt look forward to such a result, while others will be horrified at the prospect. Whichever camp you are in, current data would indicate that the re-election of the President is the most likely outcome in November. Trying to find ways to profit from that scenario is only sensible for any investor.
Martin Tillier has been dragged, kicking and screaming, into the 21st century and can now be followed on Twitter @MartinTillier.