The hoopla over Donald Trump’s coming to power may be starting to subside, but investor anxiety is on the rise over the incoming president’s still-unclear goals and policies. And judging from his unpredictability and predilection for surprises and often-blistering Twitter messages, it’s understandable why investors are on edge -- despite Mr. Trump’s assurances that the nation under his stewardship will be greater than ever before.
So while the stock market rose on his Inauguration Day, investors are apt to be watchful and will likely heed some analysts’ warnings that the market could remain volatile, at least in President Trump’s early weeks in the White House.
Analysts note that the immediate instinct of most investors is to protect their gains and fortify their portfolios against whatever surprises may come from the new president.
Such a posture is understandable given that by now investors are familiar with how Mr. Trump tweets unexpected messages to CEOs about how they’re running their companies, often quite emphatically critical about their performance.
So one practical way to protect portfolios is by making holdings “Trump-proof.” That is, the portfolio should have sufficient stocks of companies that aren’t likely to attract the president’s ire or provoke him to upbraid the companies for, say, not creating enough jobs in the U.S., for moving factories out of the U.S. or overpricing their products (particularly drugs but even jet fighters and Air Force One).
The trick is to hold shares of companies that President Trump would have no problem with and aren’t likely to be crushed by any adverse surprises from the new President -- although there are no guarantees given his trademark unpredictability.
But these Trump-proof stocks should also possess fundamentally sound attributes that have contributed to their solid performance by producing hefty earnings and revenues, and promising attractive investment returns.
Here are seven such Trump-proof stocks that should help your portfolio endure any challenges the new president might unleash.
FedEx (FDX). Everyone and every business knowns about FedEx because they all use it for shipping important large or small packages. Its stock reflects the company’s strong performance in terms of producing profits and revenues. It has leaped from $119 a share in January 2016 to a recent high of $201, before easing to $186 in early January 2017. Analysts see the stock rising in 12 months to $240.
Netflix (NFLX). Its name is fast becoming a generic term for streaming movies and TV programs to more than 80 million subscribers around the globe. Analyst Tuna Amobi of CFRA Research, who recommends the stock as a “buy,” just raised his 12-month share price target by $20 to $155, based on markedly better-than-expected subscriber additions in both the U.S. and internationally. Management guidance “suggests continued international traction in 2017 with increasing profitability, aided by higher global pricing and subscription growth,” said Amobi.
Walt Disney (DIS). Goldman Sachs has upgraded this global entertainment and media conglomerate to a “buy” from “neutral,” saying it’s now “operating at its best ever.” The stock currently trades around $107, but Goldman analyst Drew Borst raised his price target to $134 from $109, partly because of what he sees as continued production of blockbuster films, including two more Star War movies and four Marvel films scheduled for this year. Disney’s theme parks have always been big hits with children worldwide, and he noted that major new park attractions are schedule to open in 2017 and 2018 in Florida, Shanghai and California. And given Mr. Trump’s promise to cut taxes, Borst believes Disney would potentially benefit the most among its peers from corporate tax reform. If the U.S. tax rate were lowered to 25 percent, he figures Disney’s 2018 earnings per share could rise by 9 percent.
JPMorgan Chase (JPM). This global banking giant’s Chairman and CEO Jamie Dimon had been mentioned immediately after Mr. Trump’s victory as a potential Treasury secretary. It wasn’t surprising that Dimon preferred to stay with JPMorgan since it’s one of the most successful U.S. banks, with assets of more than $2 trillion. Analyst Christine Seifert of CFRA Research, who rates the stock as a “four-star buy,” raised her price target for the stock, currently trading at about $83, by $6 a share to $98, based on the bank’s continued strong profitability. Its stock performance reflects the bank’s steady leadership, climbing from $53 a share in February to a 52-week high of $88. In the fourth quarter of 2016, JPMorgan posted earnings of $1.71 a share versus the year ago’s $1.32 and analysts’ forecast of $1.42.
Caterpillar (CAT). Here’s a leading bet for the expected massive spending on infrastructure projects Mr. Trump has promised. Cat’s construction machines are used in nearly every country in the world, and 62 percent of its revenues come from outside North America, mostly in infrastructure and construction of buildings. Its stock has also been a big winner, climbing from $57 a share last January to a high of $95 this month. With the expected boom in infrastructure activity under the new Trump administration, analysts expect the stock to hit $120 this year.
Facebook (FB). It’s unlikely that President Trump will have any problems with the way Facebook has become the universal brand in the busy world of social media. The company is also cash-rich and debt-free. As of September, Facebook had cash and short-term investments of $26 billion. So it wasn’t surprising that it finally bought back some of its own shares, about $6 billion worth. “We think this [buyback] announcement makes sense, given Facebook’s balance sheet strength and recent price pull back,” said Scott Kessler, chief technology analyst at CFRA Research. Kessler rates the stock, now trading at $127 a share, as a “buy,” with a price target of $155.
Twitter (TWTR). While Twitter may not have the financial underpinnings of the previous six stocks, it is one President Trump should have no qualms about. It’s a global platform for public self-expression and conversation in real time, and it has turned the word “tweet” into a generic term for direct messages. But its stock has become a pariah on Wall Street despite the universal popularity of its platform. It has been stuck at $16 a share. Still, some analysts remain bulls on the stock because President Trump’s affinity for the platform may ensure that Twitter will remain relevant for a few more years to come -- and may eventually be bought out. CFRA’s Scott Kessler, who rates Twitter as a “hold,” has a 12-month price target of $21 a share. Here’s a thought: One of Mr. Trump’s business associates could purchase Twitter and revive it financially to the point that President Trump could buy the company himself.