Pre-Election Power Plays: Top 3 Stocks to Grab Before the Votes Are Counted
In the high-stakes world of stocks and speculation, the rumbling thunder of impending elections often serves as both a harbinger of uncertainty and a canvas for lucrative opportunities. Picture this: a financial arena where three companies stand as modern gladiators, poised to seize glory amidst the political tempest. Of course, we are talking about the top pre-election stock picks.
As the countdown to ballots ticking echoes louder, these corporate giants are harnessing their strategic prowess, growth trajectories and savvy maneuvers, becoming not just stocks but pieces on the chessboard of political economics. It’s a pre-election symphony of power plays and calculated gambits where market dynamics intertwine with electoral outcomes.
The article explores the tapestry of three titans, each carving its path amidst ideological tides, offering astute investors a compass to navigate the pre-election market volatility.
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Pre-Election Stock Picks: Lockheed Martin (LMT)
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To begin with, the F-35 program is a cornerstone of Lockheed Martin’s (NYSE:LMT) growth strategy. This is evident in the delivery of 30 aircraft in Q3 and a year-to-date total of 80 jets (Q3 2023). Also, boosting global interest in the F-35 from countries like Denmark, the Czech Republic, South Korea and Australia signifies revenue diversification. Furthermore, Lockheed Martin’s successful securing of contracts with international partners indicates its prolonged global edge.
At the topline, Lockheed Martin delivered a 2% year-over-year increase in sales, reaching $16.9 billion. This growth indicates consistent market demand and their ability to maintain revenue streams. Additionally, the company’s backlog remains historically high at $156 million. This positive sign suggests a strong order pipeline and potential future revenue growth.
At the bottom line, the EPS of $6.73 exceeded the prior year, showcasing revenue growth and profitability. Moreover, its free cash flow stood at a robust $2.5 billion, representing strong liquidity. For shareholders, Lockheed Martin has consistently increased dividends, with a recent 5% growth marking the 21st consecutive year of dividend increases. Additionally, its focus on shareholders is evident in the $6 billion increase in share repurchase authorization, totaling $13 billion.
For 2024, a Republican victory might benefit defense contractors and traditional energy sectors due to potential policies favoring defense spending. Also, the expectations of reduced regulations (as observed in Trump times) could benefit the defense industry sensitive to regulatory changes.
However, Democrats may not prioritize defense spending like Republicans; the company’s recurring domestic revenue and international agreements could endure the potential adverse effects. Hence, a Democratic approach might strengthen international partnerships (NATO) and increase the likelihood of foreign defense contracts.
Nucor (NUE)
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Nucor’s (NYSE:NUE) strategic investments in expanding its core operations contribute to its growth potential. The construction of new facilities, like the sheet mill in West Virginia, the state-of-the-art plate mill in Brandenburg, Kentucky, and the rebar micro mill in Lexington, North Carolina, suggests a focus on expanding capacity, enhancing product lines and leveraging higher-margin value-added products.
Additionally, the company’s focus on diversifying its capabilities in steel mills and steel product segments presents opportunities for cross-selling various products. Expanding and enhancing product lines enable Nucor to cater to a broader customer base and capture market share.
The progress of the company’s sustainability initiatives is evident through its National Sustainability Campaign, “Made for Good,” and multiple sustainability-focused investments. These initiatives include circular recycling-based processes, reduced emissions partnerships and sustainable steel development for industries like offshore wind energy.
Furthermore, Nucor’s alignment with federal legislation promoting three primary growth drivers, rebuilding, repowering, and reshoring, of the United States economy positions it favorably. The company’s scale and diversified capabilities equip it to capitalize on these megatrends.
Looking towards the elections, if Republicans prevail, their pro-business policies, like reduced regulations and tax cuts, could positively impact Nucor. Also, increased infrastructure spending under Republican leadership might benefit Nucor due to higher demand for steel in construction projects. Trump-labeled policies supporting domestic manufacturing could favor Nucor’s steel production, especially if there are measures to boost industrial output.
Finally, with a Democratic outcome, the efforts toward infrastructure and green initiatives might also benefit Nucor. Increased focus on clean energy might create more demand for sustainable steel. However, adverse changes in trade policies (shifts in tariffs or trade agreements) could affect Nucor’s international operations and steel exports, and potential changes in labor policies might enhance Nucor’s operational costs.
Valero (VLO)
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Specifically, the investment in the DGD Sustainable Aviation Fuel (SaaS) project at Port Arthur signifies Valero’s (NYSE:VLO) emerging fundamentals. Valero is positioning itself as a frontrunner in transitioning towards cleaner energy sources by venturing into renewable energy. This strategic move aligns with the global trend to reduce carbon emissions and industries’ proactive stance in addressing environmental concerns.
Furthermore, completing the SaaS project by 2025 holds significant promise for Valero. Becoming one of the largest manufacturers of sustainable aviation fuel represents the capability to seize evolving market demands. Sustainable aviation fuel represents a burgeoning market with considerable growth potential, especially in light of increasing regulations in the aviation industry to reduce its carbon footprint.
Fundamentally, Valero’s operational performance is highlighted by its 95% throughput capacity utilization in Q3 2023. Achieving such high utilization rates across its refineries reflects the company’s robust maintenance practices, skilled workforce and effective asset management strategies.
Looking at the upcoming elections, under a Republican administration, Valero might benefit from policies that generally favor traditional energy sectors. A business-friendly environment could positively impact Valero’s operations in oil refining and related activities. Also, expectations of less stringent environmental regulations might reduce compliance costs and boost profitability.
Finally, Democratic policies often emphasize renewable energy and biofuels. Projecting on it, Valero’s renewable fuel segment might witness both opportunities and challenges. Therefore, government support for renewables could bolster its margins. If you are looking for pre-election stock picks, start here.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.
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