Trump Beneficaries

What assets to buy under a Trump Presidency

We are day one into the Trump presidency. New executive orders are being fired off. Rapid changes are beginning to happen. There is a freeze on new federal government hires. Anyone working from home in the federal government needs to go back to the office immediately. Politics aside, there will be industries that benefit under a Trump administration and other industries that falter.

In this article I will be highlighting industries I think will benefit under a Trump administration and industries that will not do well. The time to make money is now. The next four years will be an age for capitalism and generating significant wealth.

Let’s dig in and figure it out.

This is not a comprehensive list. Just a list that I threw together over the past hour. If anyone has any other companies or industries that they think will do well or poorly under a Trump administration feel free to drop them in the comments below.

Steel Industry

The steel industry should be a beneficiary under a Trump administration. Trump has been adamant on taxing other countries through tariffs. If additional tariffs are implemented, the steel industry will be price competitive against the cheap Chinese mills and can start taking price. In addition, Trump mentioned at his inauguration speech that he plans to rebuild the U.S. Military. The U.S. Military is a consumer of U.S. steel. There should be incremental demand from the U.S. Military that will help price. The steel industry has extreme fixed costs. If there is a price increase in steel and an increase in demand, the industry could become a cash cow. I am watching Cleveland Cliffs CLF 0.00%↑ and U.S. Steel X 0.00%↑ to potentially play the steel industry.

Traditional Broadcasters

Traditional television and radio broadcasters will be a beneficiary under a Trump administration. Trump picked Brenden Carr to head the FCC who has been extremely vocal about lifting station caps and rolling out a second spectrum auction. A station cap lift will allow TV and radio companies to own more stations in the same market, giving them financial leverage and effectively allowing them to compete better with tech giants who already control 100% of the market share. This will also spur an M&A spree and likely lift multiples for these assets. In addition, if Carr is successful in implementing a second spectrum auction, this will free up additional spectrum for telecoms to purchase and allow for a large cash windfall for television broadcasters to sell their spectrum. This could be a billion dollar opportunity. Stocks that I am watching are Entravision EVC 0.00%↑, Nexstar NXST 0.00%↑, EW. Scripps SSP 0.00%↑, TEGNA TGNA 0.00%↑ and Gray Television GTN 0.00%↑.

Real Estate in The Rust Belt

Real estate located in the Midwest rust belt looks attractive. You can purchase single family homes for $50 per square foot or under. The replacement cost of a house is now over $250 per square foot, effectively allowing an investor to buy under replacement cost — the epitome of deep value investing. Not only are these houses selling for under replacement costs, but the return of domestic manufacturing should be a net positive for these areas. As manufacturing jobs start pouring back into these once great hubs of America, the population will increase and valuations will creep up. Some of these cities have gotten absolutely hammered and are sitting at basement level valuations. I live in Michigan so I am watching Detroit and Flint. I may consider buying single family houses or raw lots of land in these markets to take advantage of a city that has seen the worst and could be on the up and coming.

Discount and Dollar Stores

Dollar stores have done poorly over the past year. Some are trading at multi-year lows. The reason is because the core consumer, the working class making $30,000 per year, has been struggling with cost inflation. If Trump is successful in lowering inflation and taking down the price of gas, this consumer will have more dollars to spend. I am watching Dollar General DG 0.00%↑ and Dollar Tree DLTR 0.00%↑. Dollar Tree is particularly interesting because their Family Dollar concept is under going a strategic review.

For Profit Prisons

For profit prisons should do well under a Trump administration. The for profit prison industry makes a significant amount of money from processing, transporting and housing illegal migrants. One of Trump’s number one policies is to remove all illegal migrants from U.S. soil as quickly as possible. To do this the Trump administration will likely have to outsource some of this work to GEO Group GEO 0.00%↑ and CoreCivic CXW 0.00%↑. These for profit prisons should also benefit if the Trump administration is “tougher” on crime. As more beds get filled with prisoners, fixed costs will stay fixed and incremental margins will flow.

Oil Market

I think the oil market will do poorly under a Trump administration. Trump is making it one of his goals to get the price of gasoline down. To do this you increase production and create more supply of oil. Any E&P company that generates production could do poorly as the price of oil comes down. On the flip side, service companies will benefit. I am currently not watching any oil or gas company at the moment and have sold out of the investments I was in.

Physical Metals

Under the Trump administration I think physical metals like gold and silver will benefit. Trump talks a lot of game about reducing the spending deficit. I highly doubt this will actually happen and spending will continue in enormous sums. I also think interest rates will come down to deal with the interest payable on the federal debt. If spending continues and interest rates come down, I think physical metals like gold and silver will do well. They are natural inflation hedges and hold their value over time. I am long physical gold and silver and avoid the ETFs.

Bitcoin

I think bitcoin could hit $1 million per coin under the Trump administration. Trump has been a supporter of bitcoin during his election and the launch of the Trump Memecoin was a clear sign that he will be pro crypto. I also have a theory that Trump and his family loaded up on bitcoin prior to the election. He likely bought bitcoin across multiple cold storage accounts so it is not in his name. If he did this, it is in his best financial interest to increase the value of bitcoin. If I was Trump I would do this buy purchasing some bitcoin for the strategic reserve. If the U.S. purchases bitcoin for the strategic reserve, other countries will soon follow and bitcoin will go up in value. In addition, removing the tax on crypto, would be a net positive to the price. All in all, I think the marginal cost to mine a bitcoin is around $80,000-$85,000 per coin and buying it now at $100,000 per coin seems like decent value. I own a small amount of bitcoin and might consider buying more.

Conclusion

These are just a few industries that I think could benefit under a Trump administration. If any my subscribers have any thoughts let me know in the comments below.