Following the recent US election results, the S&P 500 enjoyed a mini-rally, rising almost 5%. And the index’s performance has continued to be strong indicating investors and businesses are confident.
Yet despite higher share prices, there are still plenty of US stocks that could continue to thrive under a Trump presidency. Here are three to consider.
Electric vehicle boom
Trump hasn’t been the greatest advocate for electric vehicles (EVs). Yet his proposed policies could be a major boon to automotive manufacturers like Tesla (NASDAQ: TSLA). If he imposes tariffs on Chinese EVs, the level of international competition from cheaper varieties will effectively be wiped out.
Apart from stifling completion, Trump’s ambitions to deregulate industries could lower the regulatory barriers for Tesla relating to autonomous driving. And with CEO Elon Musk heading the newly formed Department of Government Efficiency, his advisory role could steer Trump towards more Tesla-friendly policies.
Of course, nothing’s guaranteed. Even if Chinese competitors are kept out of the US market, they will still be competing in regions like Europe. And even at home, competition from American businesses such as General Motors still presents some fierce rivalry that Tesla will have to overcome.
Investing in American farming
Another S&P 500 business that’s set to benefit from tariffs is Tractor Supply (NASDAQ:TSCO). As a reminder, the firm operates a national network of 2,000 stores that sell farming supplies, animal feed, equipment and clothing.
With the cost of imports going up, extra cash is likely to wind up in the pockets of farmers and ranchers across the US. Trump has also highlighted numerous times during his campaign plans to support rural communities, which further benefits the agricultural industry and, in turn, Tractor Supply.
Farming doesn’t sound like the most controversial topic. Yet Tractor Supply managed to find itself at the centre of controversy earlier this year. Management decided to eliminate DEI (diversity, equity and inclusion) roles as well as revoke its carbon emission targets. As such, the firm sparked some fairly scathing reactions from the National Black Farmers Association, escalating to calls for the CEO to step down.
The change in policy certainly aligns it closer to the Trump administration. However, the reputational impact is still a bit uncertain. And the company may have alienated customers who may now switch to competitors – a risk to watch carefully.
Benefits for Buffett
Berkshire Hathaway‘s (NYSE:BRK.B) already enjoying the tailwinds of a rallying stock market. However, the investment firm could see even better performance in the years ahead. Trump’s plans to increase investment in US infrastructure create favourable market conditions for its BNSF Railway business – a massive freight railway network operator.
Similarly, Berkshire’s investment in Chevron also aligns nicely with plans to boost domestic energy production. Lower regulations and new drilling permits create fresh energy opportunities. And as its share price goes up, so do the returns for Berkshire Hathaway, controlled by billionaire investor Warren Buffett.
Collectively, Trump’s pro-infrastructure and pro-oil stance both align nicely with Berkshire Hathway’s portfolio of businesses. Of course, it’s still prone to fluctuations in the stock market. And another financial downturn potentially caused by short-term inflation from rising tariffs could lead to volatility. So investors will have to bear this risk in mind before deciding whether or not to invest in this S&P 500 enterprise.
