Election Year Bonanza, Stocks to Cash In For the 2024 Election Year

Election Year Bonanza: Stocks Poised to Cash In (While the Politicians Cash Out)

Hello Stock Traders,

As the 2024 election year heats up with its usual dose of fiery rhetoric and mudslinging, it’s tempting to believe the stock market will follow suit. But fear not, savvy investors! History paints a different picture.

Research by Morningstar suggests that election years don’t necessarily spell doom for equities, and even during politically divided Congresses, the S&P 500 has often shown resilience, sometimes even delivering favorable returns. Now, let’s explore some potentially lucrative election year stock choices while the politicians play their games.

1. Kraft Heinz (KHC): Not necessarily an election day darling, but this Warren Buffett-approved food giant offers excellent value with a discounted forward earnings multiple and an attractive 4.36% dividend yield. Regardless of who’s in office, people gotta eat, right?

2. Sempra (SRE): Love them or hate them, millions rely on this California utility giant. Even amidst election drama, people won’t stop flipping on the lights. While its forward dividend yield may not be sky-high, Sempra’s natural monopoly status and entrenched position make it a reliable option.

3. Johnson & Johnson (JNJ): While healthcare is always a hot-button issue, a streamlined JNJ focused on pharmaceuticals and medical technologies could stand to benefit from the political focus on an aging population. Its decent 3.06% dividend yield and impressive payout history add to its appeal.

4. Vulcan Materials (VMC): Remember all those campaign promises about “building”? Well, someone’s gotta do it, and Vulcan Materials is that someone. With bipartisan support and unanimous analyst enthusiasm, this infrastructure play could be a solid choice, regardless of who wins the election.

5. Lockheed Martin (LMT): This defense giant might seem like a Republican play, but with Democrats also increasingly leaning towards a strong military, LMT could find favor across the aisle. Its discounted valuation compared to industry peers makes it an even more interesting prospect.

6. Chevron (CVX): If a Republican victory seems likely, consider this integrated oil and gas giant. Conservatives often champion the hydrocarbon sector, and CVX’s solid revenue growth and attractive 4.04% dividend yield make it a tempting option.

7. First Solar (FSLR): Feeling adventurous? If you’re betting on a Democratic sweep and increased focus on sustainability, then this solar-panel manufacturer could be your dark horse. With Gen Z’s vocal support for environmental causes, FSLR might just bask in the blue wave’s glow.

A Word of Caution: While history gives us some clues, predicting the market remains an inexact science. Remember, political winds can be fickle, and unforeseen events can always disrupt the best-laid investment plans. Do your own research, diversify your portfolio, and don’t let election fever cloud your judgment. After all, even in the midst of political bickering, there are still smart investment opportunities waiting to be discovered.

And a Touch of Levity: So, raise a glass (or a solar panel?) to the 2024 election, and keep in mind that while the politicians debate who wears the biggest hat, you can quietly build your own financial empire. Just remember, dear reader, that in the game of stocks, unlike politics, there’s no shame in playing both sides.

–James

Up next: The market’s holiday cheer takes a pause, but with bargain hunters waiting in the wings, a dip might become a hidden gift.

Market Mood Swings: Bargain Hunters Ready to Pounce After Profit-Taking Spree

Just when the stock market’s winning streak was looking like a holiday gift, Wednesday brought a dose of reality. After nine days of climbing, equities hit the brakes, leaving some investors scratching their heads. Was it profit-taking fueled by a Fed pivot hangover? Or a case of overexuberance finally being corrected?

The reasons, as always, are a bit muddy. Some analysts finger the Fed’s ever-changing interest rate dance, with whispers of future cuts stirring the pot. Others point to the escalating tension in the Middle East, with the Israel-Gaza conflict spilling over into the Red Sea and pushing the Houthi attacks back into the spotlight. Whatever the trigger, market sentiment took a breather, giving rise to a fresh opportunity: bargain hunting.

“Most folks saw this correction coming,” says Ed Yardeni, a seasoned strategist with an unwavering confidence in the market’s resilience. “We agree, and for that reason, our year-end target of 4,600 remains firmly in place.”

He attributes the dip to a confluence of factors, starting with the bullish overconfidence reflected in recent BBR and AAII surveys. With bearish sentiments hovering around 20%, it seems market optimism had reached a fever pitch.

Further reinforcing the correction’s inevitability, Yardeni highlights the sharply declining put-call ratio. This indicator, signaling investor sentiment by comparing bearish (put) vs. bullish (call) options activity, dipped to a concerningly low 0.61 on Wednesday. It seems everyone was piling onto the long side, a recipe for an eventual pullback.

Adding to the market’s jitters is the tepid response of oil prices to the Middle East turmoil. Despite the heightened tensions, crude remained strangely subdued. Yardeni sees two culprits: a faltering global economy thanks to China and Europe’s woes, and record-breaking U.S. oil production (a whopping 13.3 million barrels per day!). Interestingly, he also notes a potential silver lining in the dip: more Americans working from home, leading to lower gasoline consumption.

However, the Middle East remains a wildcard. Brent crude’s 8.8% jump since December 12 is a potent warning. “The potential for the Israel-Gaza conflict to disrupt the global economy shouldn’t be underestimated,” Yardeni cautions. He draws parallels to the 2021 Suez Canal blockage, highlighting how seemingly isolated events can ripple through global trade for months.

The Houthi attacks and rising insurance costs for shipping everything from oil to grains are forcing vessels on costly detours around Africa. These delays and extra expenses threaten to reignite inflation anxieties just as they were starting to cool. “Stay tuned,” Yardeni advises, “this story is far from over.”

Looking ahead to 2024, Yardeni remains bullish, predicting an S&P 500 climb to 5,400 – a significantly higher mark than any other strategist on Wall Street. While Wednesday’s dip may have dampened spirits, for Yardeni it simply reinforces the opportunity presented by a market taking a breather. There might be some interesting deals waiting to be discovered in the post-holiday dust.

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