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5 Stock Winners for an Obama Victory


First Solar, GE, and Thermo Scientific make the list.

I followed some of the discussions on a few blogs related to my last article and my highlight of H&R Block (NYSE:HRB). Fellow investors thought it interesting to discuss which stocks would do better depending on which presidential candidate ultimately wins next month. In those discussions, people thought it was much easier to find individual stocks that would perform well if Romney triumphs, but had more difficulty trying to identify outperforming stocks if Obama is re-elected.

Don't worry -- this article isn't going to delve into politics. But, because I like challenges, I wanted to tackle the issue of finding stocks that might do well should the incumbent get four more years. At first glance, it does seem a little trickier to find these stocks because it's not apparent that pro-business agendas are in the works. However, it is possible to get some direction from existing or potential policies and search for outperforming stocks in specific industries.

Looking at Obama's policies can provide clues to certain industries that would have a favorable tailwind should he be re-elected. Tax services, agribusiness, waste resources, alternative energy, and certain health care groups are a few of those industries that come to mind. Using our proprietary Zacks Research Wizard we took the following steps:
  • Create a liquid, investible set of the stocks whose market cap is above $1.5 billion (if there's not enough liquidity, it'll be hard for you to trade).
  • Select only those stocks with a current Zacks Rank less than or equal to 3. (You want stocks rated at least a "Buy" or "Hold.")
  • Because the Zacks Rank has a large number of "Holds," we also require the company to have an average broker rating better than a 3. (It's good for Street research to also think the stock is a good buy.)
  • Pick those stocks within the agribusiness, alternative energy, diversified, waste, or electronic instruments industries.
  • Finally, select only those stocks with a Price/Earnings ratio less than the S&P 500's median. (Our ideal stocks should be inexpensive relative to the S&P 500.)
Here are five of the stocks that passed the screen this week (10/05/12).

First Solar, Inc. (NASDAQ:FSLR)
First Solar engages in the design, manufacture, and sale of solar modules using a thin-film semiconductor technology in the United States and internationally. Although the sun doesn't shine on a lot of solar companies (believe me, I know as I own a number of them), First Solar is by far the brightest star in the industry. Due to a positive earnings surprise in the June quarter and increased earnings projections, the stock is a Zacks Rank "Buy." This stock also remains a great value based on almost any valuation measure.

General Electric Company (NYSE:GE)
GE operates as a technology and financial services company worldwide. The company's Energy Infrastructure segment offers wind turbines, gas and steam turbines and generators, nuclear rectors, and power conversion technology and services. Wall Street analysts rate this company as a "Buy." GE's stock has almost doubled the S&P 500's return YTD, yet remains a value compared to the S&P 500's P/E.
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No positions in stocks mentioned.
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