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Democratic Sweep May Turn the Tide in Favor of Cyclical Stocks: 5 Picks
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Key Takeaways
A Democrat-controlled Congress could redirect investor interest toward cyclical stocks from AI-led technology.
ADM, FCX, UNH, CASY and CR offer double-digit YTD returns and short-term upside potential.
Growth initiatives, improving earnings estimates and favorable industry trends support these five stocks.
Democrats have taken control of the U.S. Congress in the midterm poll sweeping both the Senate and House of Representatives. Following the resounding victory, U.S. stock markets skyrocketed.
Wall Street has been witnessing an astonishing bull run in the past four years predominantly supported by the enormous adoption of artificial intelligence (AI) technology. Massive growth of AI data centers and extra-ordinary spending of nearly a trillion dollars by major U.S. AI hyperscalers lifted prices of several AI-led stocks by more than 1000% in this period.
In the past two years, the Republican government led by President Donald Trump provided full support to massive AI data center build-out. However, a Democrat-led Congress may implement strict rules and regulations, revoke tax incentives and other governmental support for AI hyperscalers.
As a result, market participants may shift their preference toward cyclical sectors like industrials, financials, materials, retail and consumer-centric stocks from the current hot-cakes AI-driven technology and related stocks.
Here, we recommend five such stocks with a favorable Zacks Rank. These are: Archer-Daniels-Midland Co. (ADM - Free Report) , Freeport-McMoRan Inc. (FCX - Free Report) , UnitedHealth Group Inc. (UNH - Free Report) , Casey's General Stores Inc. (CASY - Free Report) and Crane Co. (CR - Free Report) .
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland Co.
Archer-Daniels-Midland has been benefiting from improving execution and strategic initiatives. ADM continues to advance its Optimize, Drive and Grow pillars, focusing on reliability, cost savings, throughput and organic growth.
The Nutrition segment is benefiting from Flavors growth, progress at Decatur East, Animal Nutrition improvements and demand for natural ingredients. ADM is also expanding opportunities through biosolutions, precision fermentation and decarbonization while improving asset utilization through debottlenecking.
Archer-Daniels-Midland has an expected revenue and earnings growth rate of 6.6% and 62.1%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 1.8% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 18.6% from the last closing price of $70.84. The brokerage target price is currently in the range of $75-$95. This indicates a maximum upside of 34.1% and no downside.
Freeport-McMoRan Inc.
Freeport-McMoRan continues to leverage its portfolio of high-quality copper assets, emphasizing disciplined execution and organic growth initiatives to strengthen its production profile. FCX is conducting exploration activities near existing mines to expand reserves.
FCX is expected to gain from progress in its expansion projects that will boost production capacity. Freeport is executing several smelter projects in Indonesia. FCX is also well-positioned to benefit from automotive electrification, which is positive for copper, as electric vehicles are copper-intensive.
Freeport-McMoRan has an expected revenue and earnings growth rate of 15.6% and 71.8%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 6.3% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 25.8% from the last closing price of $62.60. The brokerage target price is currently in the range of $48-$90. This indicates a maximum upside of 43.8% and a downside of 23.3%.
UnitedHealth Group Inc.
UnitedHealth Group’s diversified operations and disciplined pricing support its growth prospects. Optum remains a key earnings driver, aided by integrated care, AI-enabled solutions and pharmacy services. Commercial fee-based membership gains and a healthy sales pipeline provide further opportunities.
Higher Medicare Advantage payment rates and improved medical cost management support UNH’s earnings outlook. Cash generation also allows continued investment and shareholder returns. Healthcare demand also supports UNH’s core business.
UnitedHealth Group has an expected revenue and earnings growth rate of 0.4% and 26.1%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 4% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 16.2% from the last closing price of $409.38. The brokerage target price is currently in the range of $380-$531. This indicates a maximum upside of 29.7% and a downside of 7.2%.
Casey's General Stores Inc.
Casey's General Stores continues to benefit from solid inside sales momentum, supported by prepared foods, beverages and grocery categories. We expect CASY’s inside same-store sales to increase 3.3% in fiscal 2027, while favorable sales mix and cost management support margin expansion.
Fuel remains a key earnings driver, benefiting from CASY’s strong margins and an expanded store network. CEFCO conversions are increasing prepared-food sales and creating further growth opportunities as CASY expands its store base. Cash generation supports investment and shareholder returns.
Casey's General Stores has an expected revenue and earnings growth rate of 22% and 12.8%, respectively, for the current year (ending April 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 16.9% over the last 60 days.
The short-term average price target of brokerage firms represents an increase of 17.8% from the last closing price of $674.84. The brokerage target price is currently in the range of $687-$995. This indicates a maximum upside of 47.7% and no downside.
Crane Co.
Crane is engaged in the manufacture and sale of engineered industrial products in the United States, Canada, the United Kingdom, Continental Europe, and internationally. CR operates in two segments, Aerospace & Advanced Technologies and Process Flow Technologies. CR is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets.
Crane has an expected revenue and earnings growth rate of 26.1% and 19.8%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 3.6% over the last seven days.
The short-term average price target of brokerage firms represents an increase of 19% from the last closing price of $206.38. The brokerage target price is currently in the range of $234-$260. This indicates a maximum upside of 26% and no downside.
View the Zacks #1 Rank List
Image: Bigstock
Democratic Sweep May Turn the Tide in Favor of Cyclical Stocks: 5 Picks
Key Takeaways
Democrats have taken control of the U.S. Congress in the midterm poll sweeping both the Senate and House of Representatives. Following the resounding victory, U.S. stock markets skyrocketed.
Wall Street has been witnessing an astonishing bull run in the past four years predominantly supported by the enormous adoption of artificial intelligence (AI) technology. Massive growth of AI data centers and extra-ordinary spending of nearly a trillion dollars by major U.S. AI hyperscalers lifted prices of several AI-led stocks by more than 1000% in this period.
In the past two years, the Republican government led by President Donald Trump provided full support to massive AI data center build-out. However, a Democrat-led Congress may implement strict rules and regulations, revoke tax incentives and other governmental support for AI hyperscalers.
As a result, market participants may shift their preference toward cyclical sectors like industrials, financials, materials, retail and consumer-centric stocks from the current hot-cakes AI-driven technology and related stocks.
Here, we recommend five such stocks with a favorable Zacks Rank. These are: Archer-Daniels-Midland Co. (ADM - Free Report) , Freeport-McMoRan Inc. (FCX - Free Report) , UnitedHealth Group Inc. (UNH - Free Report) , Casey's General Stores Inc. (CASY - Free Report) and Crane Co. (CR - Free Report) .
These stocks have provided double-digit returns year to date and have double-digit upside potential in the short term. Each of our picks currently carries a Zacks Rank # 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The chart below shows the price performance of our five picks year to date.
Image Source: Zacks Investment Research
Archer-Daniels-Midland Co.
Archer-Daniels-Midland has been benefiting from improving execution and strategic initiatives. ADM continues to advance its Optimize, Drive and Grow pillars, focusing on reliability, cost savings, throughput and organic growth.
The Nutrition segment is benefiting from Flavors growth, progress at Decatur East, Animal Nutrition improvements and demand for natural ingredients. ADM is also expanding opportunities through biosolutions, precision fermentation and decarbonization while improving asset utilization through debottlenecking.
Archer-Daniels-Midland has an expected revenue and earnings growth rate of 6.6% and 62.1%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 1.8% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 18.6% from the last closing price of $70.84. The brokerage target price is currently in the range of $75-$95. This indicates a maximum upside of 34.1% and no downside.
Freeport-McMoRan Inc.
Freeport-McMoRan continues to leverage its portfolio of high-quality copper assets, emphasizing disciplined execution and organic growth initiatives to strengthen its production profile. FCX is conducting exploration activities near existing mines to expand reserves.
FCX is expected to gain from progress in its expansion projects that will boost production capacity. Freeport is executing several smelter projects in Indonesia. FCX is also well-positioned to benefit from automotive electrification, which is positive for copper, as electric vehicles are copper-intensive.
Freeport-McMoRan has an expected revenue and earnings growth rate of 15.6% and 71.8%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 6.3% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 25.8% from the last closing price of $62.60. The brokerage target price is currently in the range of $48-$90. This indicates a maximum upside of 43.8% and a downside of 23.3%.
UnitedHealth Group Inc.
UnitedHealth Group’s diversified operations and disciplined pricing support its growth prospects. Optum remains a key earnings driver, aided by integrated care, AI-enabled solutions and pharmacy services. Commercial fee-based membership gains and a healthy sales pipeline provide further opportunities.
Higher Medicare Advantage payment rates and improved medical cost management support UNH’s earnings outlook. Cash generation also allows continued investment and shareholder returns. Healthcare demand also supports UNH’s core business.
UnitedHealth Group has an expected revenue and earnings growth rate of 0.4% and 26.1%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 4% over the last 30 days.
The short-term average price target of brokerage firms represents an increase of 16.2% from the last closing price of $409.38. The brokerage target price is currently in the range of $380-$531. This indicates a maximum upside of 29.7% and a downside of 7.2%.
Casey's General Stores Inc.
Casey's General Stores continues to benefit from solid inside sales momentum, supported by prepared foods, beverages and grocery categories. We expect CASY’s inside same-store sales to increase 3.3% in fiscal 2027, while favorable sales mix and cost management support margin expansion.
Fuel remains a key earnings driver, benefiting from CASY’s strong margins and an expanded store network. CEFCO conversions are increasing prepared-food sales and creating further growth opportunities as CASY expands its store base. Cash generation supports investment and shareholder returns.
Casey's General Stores has an expected revenue and earnings growth rate of 22% and 12.8%, respectively, for the current year (ending April 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 16.9% over the last 60 days.
The short-term average price target of brokerage firms represents an increase of 17.8% from the last closing price of $674.84. The brokerage target price is currently in the range of $687-$995. This indicates a maximum upside of 47.7% and no downside.
Crane Co.
Crane is engaged in the manufacture and sale of engineered industrial products in the United States, Canada, the United Kingdom, Continental Europe, and internationally. CR operates in two segments, Aerospace & Advanced Technologies and Process Flow Technologies. CR is a leading manufacturer of highly engineered components for challenging, mission-critical applications focused on the aerospace, defense, space and process industry end markets.
Crane has an expected revenue and earnings growth rate of 26.1% and 19.8%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 3.6% over the last seven days.
The short-term average price target of brokerage firms represents an increase of 19% from the last closing price of $206.38. The brokerage target price is currently in the range of $234-$260. This indicates a maximum upside of 26% and no downside.