Hillary Clinton’s campaign for the White House received a major boost when the FBI said on Sunday that it was standing by its earlier position on her personal emails. The central investigating agency said that it continued to recommend that no criminal charges should be pressed against the Democratic nominee.
Though this development may bring interim relief for stocks, investors are likely to remain largely unmoved. Donald Trump has been gaining steadily in recent polls and these advances may not be completely due to the impact of the FBI’s recent investigation on Clinton’s personal emails.
Trump may yet have a slim chance of entering the White House. Though it is difficult to predict whether this will indeed happen, the best way to prepare for such an outcome would be to add low beta stocks to your portfolio. Beta measures the tendency of a stock's returns to respond to market swings. And this type of stocks would be the best bets to protect yourself from potential losses.
Clinton Maintains Edge, Trump Still in Race
The final lot of national polls released on Sunday handed the advantage to Clinton’s campaign. The latest NBC News/Wall Street Journal gave a point lead to Clinton over Trump. This is a sharp comedown from the 11-point lead held by her last month. The Washington Post/ABC tracking poll has given Clinton a five-point lead. Meanwhile, the Politico/Morning Consult poll also puts the Democratic nominee in front, but gives her only a three-point lead.
The Real Clear Politics Average of national polls shows Clinton leading Trump by 2.2%, a much slimmer margin. Also, in crucial swing states, Trump and Clinton are running nearly neck to neck. In the all-important state of Florida, both candidates stand tied at 45%, per the CBS News Battleground Tracker poll. In Ohio, Trump has the edge with a slim one point lead.
Trump could also woo Iowa over to his side. He is also betting on breaching the traditional Democratic strongholds of Wisconsin, Pennsylvania and Michigan. Most pollsters think that Clinton is still tipped to win. At the same time, she doesn’t have the luxury of losing even one of these swing states.
Problems with President Trump
The market’s warmth for Clinton and the trepidation with which it views Trump has been borne out over the course of the recent trading sessions. Most of this is to do with Trump’s economic plans, collectively known as “America First”. This plan has three primary motifs, cutting taxes, reconfiguring trade agreements, and amending banking and immigration regulations.
While there are issues with his tax plans, his trade agenda is primarily protectionist in nature. His ideas on immigration and other issues have forced Mexico to come up with a contingency plan in case he is eventually elected.
And what of the market itself? A recent economic study indicates an immediate sell-off if Trump wings while a Clinton victory could spark off a modest relief rally. There is also the unforeseen outcome of the lack of a clear winner when results are ultimately announced. Trump has gone as far as to say that he may not accept the results of the election. The palpable unease among investors in understandable.
At this point, political analysts are betting on a Clinton victory and it is likely they will be vindicated. This doesn’t mean that investors should not prepare for the unsavory prospect of a Trump presidency. Even though you could think that is a somewhat pessimistic view, it may be a good idea to shore up your portfolios against any possible downside.
This is why it would be better to pick safer bets at this point. In such a situation, picking value stocks with low beta would be a good option. At the same time, it would be a good idea to pick winning stocks, in case the market moves north, even after a few hiccups.
This is where our VGM score comes in. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM score.
We have narrowed down our search to the following stocks based on a good Zacks Rank and VGM score.
Cross Country, Inc. (CCRN - Free Report) is a provider of healthcare staffing services.
Cross Country has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. The stock has a beta value of 0.57. The company has expected earnings growth of 12.5% for the current year. Its earnings estimate for the current year has improved by 10.4% over the last 30 days.
Quanta Services Inc. (PWR - Free Report) is a leading national provider of specialty contracting services, and one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry.
Quanta Services has a Zacks Rank #1 and a VGM Score of A. The stock has a beta value of 0.60. The company has expected earnings growth of 40.8% for the current year. Its earnings estimate for the current year has improved by 0.4% over the last 30 days.
SJW Corp. (SJW - Free Report) is a public utility in the business of providing water utility services in the U.S.
SJW has a VGM Score of B. The stock has a beta value of 0.21. The company has expected earnings growth of 22.7% for the current year. Its earnings estimate for the current year has improved by 26.1% over the last 30 days. The stock has a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Ruth's Hospitality Group Inc. (RUTH - Free Report) is a leading provider of apparel and related products exclusively for babies and young children.
Ruth's Hospitality has a Zacks Rank #2 (Buy) and a VGM Score of A. The stock has a beta value of 0.62. The company has expected earnings growth of 8.3% for the current year. Its earnings estimate for the current year has improved by 1.9% over the last 30 days.
The Cheesecake Factory Incorporated (CAKE - Free Report) operates upscale, casual, and full-service dining restaurants in the U.S.
Cheesecake Factory has a Zacks Rank #2 and a VGM Score of A. The stock has a beta value of 0.15. The company has expected earnings growth of 19.5% for the current year. Its earnings estimate for the current year has improved by 3.5% over the last 30 days.
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