- The market is performing well this year, which is historically true for election years.
- However, elections bring clarity about the direction of government policy for the next four years.
- These three stocks are solid momentum plays no matter the election outcome.
Every four years, investors consider how the outcome of the presidential election will impact their lives and their investments. Broadly speaking, the market tends to do well during election years. And this is particularly true in the two months after the election has been decided. The reason for this is that elections remove uncertainty. Investors can and have made money regardless of the party in power.
However, getting clarity on what the next four years may bring will direct investor sentiment. The outcome of this election could have significant repercussions for tax policy, energy policy, and the overall economy. For example, in late 2020 and early 2021, renewable energy stocks surged on the premise that money would flow into these companies.
That's why it’s time to look for stocks that are likely to do well, no matter which candidate is victorious. Here are three picks for stocks that are carrying momentum into the election.
By looking at momentum stocks, you’re not buying the dip but chasing the stock higher. However, in the case of these three stocks, there’s good reason for you to do just that. Each stock has a catalyst that is likely to continue that momentum after the election.
1. Costco - This One Key Metric Is Why It Remains a Buy
Costco Wholesale (NASDAQ:COST) is trading at around $895 as of this writing. That’s only slightly down from a 52-week high, which has been a point of resistance multiple times in the last few months. COST stock is up approximately 58% in the last 12 months, a bright spot among retail stocks and easily outpacing the S&P 500.
But some investors wonder if the stock is ready for a breather. If it is, investors should get ready to load up. The reason for the bullish sentiment comes down to one key metric: customer retention.
On September 1, Costco increased its membership fee for the first time in seven years. In the past, increases in fees have had little effect on customer retention. But these are different times. That said, in the company’s earnings report on September 26, the company reported no meaningful changes in the U.S. renewal rate, which is over 92%.
Analysts continue to raise their price targets for COST stock since the earnings report with Telsey Advisory Group reiterating an Overweight rating and $1,000 price target on October 10.
2. Cameco - An Agnostic Play on the Energy Sector
When news breaks that Microsoft (NASDAQ:MSFT) is partnering to reopen the Three Mile Island nuclear power plant, you know that momentum in nuclear energy stocks is not just a passing fad. And if you’re looking for ways to play that trend, Cameco Corp (NYSE:CCJ) is a good place to start. Cameco is the world’s largest publicly traded uranium company. Uranium is the key component of nuclear energy.
For investors who aren’t closely following the sector, it’s important to understand the reason why the demand for nuclear energy is so strong. That is, it’s one of the only forms of truly clean energy. However, at the moment, the demand for nuclear power far exceeds the amount of uranium needed.
For example, data centers will continue to need 24/7 electricity at an almost incomprehensible rate. And that does not include the power needed for electric cars and other sustainable energy solutions.
CCJ stock is up 39% in the last 12 months, but it’s taken an up-and-down path to get there. However, it’s up 26% in the 30 days ending October 15, 2024, and even with the stock near its 52-week high, analysts still believe there’s about 30% more upside ahead.
3. Amazon - This Magnificent 7 Stock Is Firing on All Cylinders
Among technology stocks, you can make a strong case for names like NVIDIA (NASDAQ:NVDA) or Palantir Technologies (NYSE:PLTR). But another tech stock that looks like a solid momentum play is Amazon.com (NASDAQ:AMZN). AMZN stock has been up 43% in the last 12 months, and analysts are still forecasting a 19% higher upside.
Many know Amazon as an e-commerce leader. However, its growth is largely driven by its cloud services business, Amazon Web Services (AWS).
As generative AI accelerates the pace at which businesses move to the cloud, AWS is becoming a preferred destination.
However, if the last five years have shown anything, it’s that Amazon is continually finding new ways to grow its business. Its latest growth driver is advertising.
In its most recent quarter, revenue from advertising services increased by 20% year-over-year, which slightly outpaced the growth in revenue from AWS.