After a moment’s hesitation the stock market started to rally after the election of Donald Trump. Many stocks have peaked but it is not too late to buy into the Trump rally. Why is that? Forbes suggests a dozen stocks that could double under Trump.
Goldman Sachs recently recommended over 80 stocks that are poised to jump during President Trump’s administration.
That’s a lot of stocks. Not all of them are dividend payers, and many of them have already jumped dramatically in the last few weeks, bringing them at or near their 52-week highs.
You might think this means it’s too late to buy into the Trump rally, but it isn’t.
Out of the Goldman Sachs 80 the writer in Forbes picks a dozen. The list is heavy in low priced dividend stocks and is entirely comprised of companies with long track records of good cash flow and reliable returns. Here is Forbes’ list.
- Aflac (AFL)
- Costco Wholesale (COST)
- D.R. Horton (DHI)
- Exxon Mobil (XOM)
- Lowe’s Companies (LOW)
- Marathon Petroleum Corp. (MPC)
- Paychex (PAYX)
- PNC Financial Services Group (PNC)
- Target (TGT)
- T. Rowe Price (TROW)
- US Bancorp (USB)
- Valero Energy (VLO)
The author notes that this is a list of stocks that won’t keep you up at night worrying and is likely to grow with the economy. What are other factors to consider in regard to where we are in the Trump rally?
When US consumers are confident that things are getting better they start buying. Their purchases drive the economy and make things better, a self-fulfilling prophecy. Business Insider reports that consumer confidence is at its highest level in 12 years.
Consumer confidence has surged in the wake of the US election, as improved outlooks for growth and jobs have bolstered the index.
“Consumers expressed a higher level of confidence January than any other time in the last dozen years,” said Richard Curtin, the survey’s chief economist. “The post-election surge in confidence was driven by a more optimistic outlook for the economy and job growth during the year ahead as well as more favorable economic prospects over the next five years.”
The authors of the report caution that the current surge in consumer confidence will need to be rewarded by an actual improvement in jobs and income but for the time being consumers, especially those who voted for Trump are driving sales. And people are watching the Fed in expectation of higher interest rates.
According to Curtin, consumers are actually borrowing more in anticipation of interest rate hikes from the Federal Reserve. Increasing inflation expectations have led the Fed to raise their expectations for the number of interest rate hikes in 2017.
“Consumers have become more convinced that the stronger economy would finally prompt the Fed to increase interest rates at a quicker pace, which caused one-in-five consumers to favor borrowing-in-advance of anticipated increases in mortgage rates, the highest level in more than twenty years,” said Curtin in the release.
More people are borrowing in advance of anticipated higher interest rates and driving the economy. For now it is not too late to buy into the Trump rally!