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Clinton vs. Trump: Best Stocks & ETFs to Bet On

With the presidential election less than 100 days away, investors and strategists are scrambling to figure out which stocks will emerge as winners or losers if Clinton or Trump becomes the 45 th president of the United States. Recent polls show a tight race with the difference between two candidates being within the margin of error in many. Further, can we really trust the polls after the Brexit vote? Remember, most polls and pundits had predicted a win for the "Remain" campaign.

Uncertainty over the outcome of the presidential election and the direction of the economic policy post-election is expected to slowdown economic growth this year as companies are putting investments on hold despite ultra-low borrowing rates. (Read: S&P 500 to Dive Ahead? Short with These 5 ETF )

The general perception is that the Republicans are more business friendly but that may not really be true in the current election cycle. Further, per S&P Global Market Intelligence , since 1945, the S&P 500 index has gained 6.7% annually during a Republican presidency versus a 9.7% gain with a Democratic president.

Defense and Infrastructure May Emerge Stronger in Either Scenario

Both Trump and Clinton have talked about lifting defense spending. Take a look at defense stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) or iShares Aerospace & Defense ETF (ITA).

Infrastructure spending may also get a boost no matter who occupies the White House next year. Hillary has a $275 billion plan to improve US infrastructure over the next five years. Yesterday, Trump said he'll spend more than $500 billion to rebuild infrastructure and will finance the spending with debt.

Wall Street Banks May Lose Irrespective of Who Wins

Both the Democrats and the Republicans have called for revival of the Glass-Steagall law which separated investing banking from commercial banking for Wall Street banks but they differ on the Dodd-Frank Act. While Trump has called for repealing the Act; the Democrats promise to " vigorously implement, enforce, and build on " it. The Act, which was enacted in the aftermath of the financial crisis, imposed stricter regulations on banks.

Big banks like JP Morgan Chase (JPM), Bank of America ( BAC ) and Citigroup (C) are likely to face more headwinds ahead. (Read: ETF Strategies for 2H )

(image source: CNN money)

Healthcare, Pharma & Biotech

Clinton plans to continue and expand Obamacare whereas Trump has vowed to repeal it. A Clinton presidency would thus boost hospital stocks as it is expected to bring a large number of currently uninsured Americans under healthcare coverage. Check out the iShares U.S. Healthcare Providers ETF (IHF) .

At the same time, a Clinton presidency may pressure profit margins of biotech and drug companies. Her tweet on price gouging in the specialty drug market had sent earlier high-flying biotech stocks and ETF s like the iShares NASDAQ Biotech ETF (IBB) tumbling last year.

Oil, Gas and Clean Energy

Clinton favors clean energy and wants to reduce US dependence on fossil fuels. Guggenheim Solar ETF (TAN) and PowerShares WilderHill Clean Energy Portfolio ETF (PBW) may flourish if she wins the election. (Read: 4 Reasons Why a Gold ETF Rally Can Last )

Trump on the other hand has vowed to resuscitate the dying coal industry and he is also likely to more supportive of the Oil industry. Take a look at the SPDR Energy Select Services ETF ( XLE ) and the VanEck Vectors Coal ETF (KOL).

Trade & Tariffs

Trump plans to impose taxes and tariffs on companies that move production overseas and has even threatened to pull the US out of WTO. He has been attacking trade agreements including the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP). Voiding such trade deals could potentially result in high tariffs for US exports by our trading partners.

Trump presidency could spell trouble for companies that rely on imports as well as those that derive a major share of their revenues from abroad; most tech giants like Apple ( AAPL ) fall into that category. Also expect higher currency volatility in that scenario.

Immigration

Trump's position on immigration will hurt companies that rely on low- and as well as high-skill foreign-born workers. Most US technology companies, particularly technology consulting companies, rely heavily on immigrant workers and sourcing STEM talent is going to be a challenge for them. A Clinton presidency would be friendlier for these large companies.

The US agriculture sector also relies on nonimmigrant and guest workers to work on farms and orchards and may be impacted by the change in immigration policies.

Minimum Wages and Taxes

Clinton plans to raise minimum wages and thus her presidency could hit profit margins of industries like retailers, restaurants and hotels that employ a lot of low-wage workers. At the same time, the rise in minimum wages could lift spending by low- and middle class families at discount retailers like Walmart (WMT) and Dollar General (DG).

Bottom-Line

Promises made by the nominees on the campaign trail are not binding. Many statements may just turn out to be campaign rhetoric and may not be followed up by any policy imitative. But given significant differences between policy positions of the two candidates, it is important for investors to stay informed on how one or the other might affect their portfolios and be prepared to make changes if required.

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JPMORGAN CHASE (JPM): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

APPLE INC (AAPL): Free Stock Analysis Report

ISHARS-US AEROS (ITA): ETF Research Reports

LOCKHEED MARTIN (LMT): Free Stock Analysis Report

NORTHROP GRUMMN (NOC): Free Stock Analysis Report

ISHARS-US H C P (IHF): ETF Research Reports

ISHARES NDQ BIO (IBB): ETF Research Reports

WAL-MART STORES (WMT): Free Stock Analysis Report

DOLLAR GENERAL (DG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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