In a year defined by economic atypicality, the 2022 U.S. midterm elections have been equally unconventional. With votes to be counted and races still undecided, it looks as though Americans are in for two years of a divided government.
Historically, according to Forbes, a divided government is the best scenario for the stock market. As Frank Holmes, CEO and chief investment officer of U.S. Global Investors, pointed out, “Since 1950, the S&P 500 has delivered the highest average returns when the White House was held by a Democrat and Congress by Republicans, according to LPL Research. Returns have also been higher-than-average when Congress was split, regardless of which party occupied the Oval Office.”
Does this mean you should sink everything but the kitchen sink into the stock market? No. But it does mean that you should be looking at certain big-name stocks to rebound, and paying closer attention to social trends more than you normally would. Here are five stocks that are being touted as potential post-midterm winners by industry players.
1. Meta Platforms (META)
Partly due to the midterm results — but mostly due to external influences from a competing social network platform recently purchased by the richest man in the world — Meta could be ripe for an upturn in buyer, advertiser and customer confidence. In his summary of post-midterm stocks to buy in a divided government on InvestorPlace following the elections, Josh Enomoto conceded that META stock is down 66% so far in 2022, but it gained 19% in equity value last week.
While CEO Mark Zuckerberg hasn’t brightened the company outlook with his mass firing of over 11,000 employees the night after the midterm elections wrapped up, Meta may still have a rosier future than an imploded Twitter. Facebook thrives on divisiveness and discussion, and in a divided country, it has the upper hand for now.
2. Walmart (WMT)
There’s a lot to admire about super-consistent performance amid economic challenges, but Walmart continues to innovate and grow in the competitive world of retail rather than just “get by.” As Jaimini Dasai stated on StockNews, Walmart is a great protector stock — it grows its revenues and earnings and attracts in-person and online customers whether inflation is high or comfortable.
Analysts have a price target of $172 on WMT, signifying a 19% upside, per StockNews. Simply put, it’s hard to knock a company that accounts for 3.1% of the total of U.S. consumer spending.
3. Tilray (TLRY)
Cannabis has been a hot political issue during several midterm elections and growth in this sector depends upon how bullish Democrats can be on marijuana reform. Buyers interested in this burgeoning market should have gotten in on the ground floor, but there are still major opportunities to come in the world of cannabis investing.
According to The Street, CNBC’s Jim Cramer has promoted buying shares of Tilray Brands on his “Mad Money” program, and the company isn’t hesitating on making bold acquisitions and advances into Europe while the U.S. government remains at the threshold of legalizing cannabis for adult use. Tilray, like most cannabis brands, has disappointed with its 2022 results, but as InvestorPlace’s Faisal Humayun noted, the cannabis lifestyle brand has a strong balance sheet and legitimate potential to flourish throughout America.
4. Allstate (ALL)
Despite its “strong sell” rating on research site Zacks, Enomoto feels leading insurance provider Allstate is a solid stock hedge pick. Back in February, Bank of America analyst Joshua Shanker forecasted a 16% fiscal 2023 return on equity and a 14.4% growth for Allstate, praising its aggressive auto and home insurance pricing strategy.
Insurance crosses political predilections — everyone needs insurance. Plus, there is a linear relationship between rising interest rates and insurance stocks. The Fed hasn’t indicated it is going to ease off raising rates to cool inflation, so insurance stocks may benefit from continued rate hikes.
5. Expedia (EXPE)
Another popular consumer brand pick by Dasai, the world’s most popular and biggest booking company and its subsidiaries — including Vrbo, Hotels.com, Travelocity, Hotwire.com, Orbitz and Trivago — have seen their stock plummet 50% since February. However, the company’s outlook remains favorable.
Despite looming recession predictions and the cooling of travel demand after a hot summer, Forbes’ contributors expect stifled consumer travel plans to rebound significantly moving forward. On Nov. 3, they valued EXPE shares at $125 per, 31% higher than current market price and predicted the company to outperform consensus estimates in many key Q3 2022 segments, which it did.
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