Imagine Donald Trump as the next President of the United States, implementing his controversial pre-election manifestoes. Given the lofty promises he’s been making, we can presume that he will create quite a stir in the stock world. Investors might be interested in a foresight on the stocks that will come into focus and on those that would lose value.
Let’s visualize the scenario post elections, which might just come true!
Build the United States-Mexico Border – Donald Trump’s most controversial jab was to build a massive and impenetrable ‘Wall’ along the 2,000 miles long U.S. border with Mexico.
Trump expects his proposed precast plank ‘Wall’ -- the height of which can be anywhere between 30-55 feet -- to effectively put a check on illegal immigration. He pegs the cost of the ‘Wall’ at approximately $8 billion, which will however be paid by Mexico.
Notably, almost 670 miles of this border has already been fenced as per the Secure Fence Act of 2006. Almost $2.4 billion was spent in erecting the fence while another $15–$25 billion will be put in to secure the remaining stretch.
Experts surveyed by CNN believe pre-casted concrete panels will be the best choice for building the ‘Wall’. The panels would take at least 339 million cubic feet of concrete and 5 billion pounds of steel and will cost at least $10 billion. This estimate does not include cost of construction.
Notwithstanding the viability of the ‘Wall’, we believe the proposed project will offer massive growth opportunity for concrete and steel companies. However, the vastness of the project compels us to focus on the publicly traded big companies only.
Dublin, Ireland-based CRH Plc (CRH - Free Report) , which carries a Zacks Rank #2 (Buy), will be the front-runner in the supply of concrete, mainly because of its enormous capacity. The company has more than 280 ready-mix plants in North America.
Notably, Cemex (CX - Free Report) , another Zacks Rank #2 company, being a Mexico-based company will not be allowed to enter the bid, although it has 667 ready-mix plants in North America.
35% Tax on Products Built Outside US – Trump will surely want Apple (AAPL - Free Report) to shift its manufacturing plants to the U.S., however, it is to be seen whether the company will take up the offer. Probably not (although it brought Macintosh production back in the U.S. in 2013), as the iPhone manufacturer hardly has a reason to relocate its manufacturing base in the U.S.
Most of Apple’s manufacturing is done in Shenzhen, China, where the company’s contract manufacturing partner Foxconn is based. The outsourcing maximizes Apple’s profits, primarily due to cheap labor, which is significantly lower when compared to the minimum standards in the U.S.
Thus, we may assume that Apple, which currently has a Zacks Rank #3 (Hold), will not budge. Hence, the company will pay 35% tax, which will raise the price of iPhone 6S from the current $650 to almost $878 per piece.
Similarly, U.S. automobile manufacturers Ford Motors (F - Free Report) and General Motors (GM - Free Report) will pay the 35% tax on automobiles built in their proposed facilities in Mexico. Recently, air-conditioner manufacturer Carrier (a division of United Technologies) announced plans to shift its manufacturing base from Indianapolis to Monterrey in Mexico.
While Ford has a Zacks Rank #2, General Motors carries a Zacks Rank #3.
No Gun Control – Trump will also not infringe on the gun control rights of the citizen of America. He will ‘unsign’ President Barack Obama's plans to tighten gun control through executive action. The revised policy will definitely support gun-makers like Smith & Wesson Holding , which sports a Zacks Rank #1 (Strong Buy).
Repeal Obamacare; Implement ‘Trumpocare’ – With the support of the Republicans, Trump will repeal Affordable Care Act (also known as Obamacare) entirely. However, the repeal will affect 11 million Americans as well as Hospital companies like HCA Holdings (HCA - Free Report) , a Zacks Rank #1 (Strong Buy) stock. Lack of insurance will increase charity spending and bad-debt of hospital companies.
Meanwhile, ‘Trumpocare’ will be offered to these 11 million Americans. Trump will allow individuals to buy health insurance across state lines and the new plan will help people fully deduct health insurance premium payments from their tax returns as well as contribute in Health Savings Accounts (HSAs). Most importantly, Americans will be allowed to access imported, safe and dependable drugs from overseas.
If the current trends in the GOP primary race continue, Trump will surely win the elections on Nov 8, 2016. Although most of his proposals have been touted bizarre by experts and observers, these stocks will catapult into limelight if he wins the elections.
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