For the past three decades, two stocks have outperformed the S&P 500 every November election, regardless of the outcome, according to a study by CNBC Pro. Electrical and industrial giant Eaton Corp. and Sweden’s second-largest bank Handelsbanken are two stocks that outperform U.S. benchmarks every election year in November. CNBC Pro screened stocks currently in the MSCI World Index that have risen more than the S&P 500 or fallen less than the S&P 500 in November of every election year since 1988. Republicans and five Democrats were elected to the White House. Eaton, the electrical products and services company, expects to benefit from long-term trends including the transition to electric vehicles, artificial intelligence as utilities lay more cable to data centers and the shift to renewable energy. “ETN remains one of the most attractive large electrification companies in the industrial space,” Mizuho Securities analyst Brett Linzey said in an Oct. 31 note to clients, referring to Eaton’s ticker. “Power activity has kicked into high gear as the large project pipeline remains strong, and its success conversion rate is even higher given ETN’s proficiency and domain expertise.” Mizuho expects Eaton shares to rise by about 15% to $385. Svenska Handelsbanken Analysts are mixed on the stock: 80% of analysts, including those at Arctic Securities, have a sell or hold rating on the stock, according to FactSet. However, Arctic Bank’s Roy Tilley slightly raised the bank’s price target – giving the stock just 1.1% upside – after saying “it’s clearly not just in the UK but in Sweden has all taken some kind of hedging measures,” and its interest income looks set to remain relatively protected even if the central bank cuts interest rates in Sweden. Historical performance is different every time and is never a guarantee of future performance, and stocks often move for unique reasons. For example, this year the Federal Reserve is expected to announce an interest rate decision on Thursday, which may also affect stock market trends. Henry Allen, macro strategist at Deutsche Bank, noted that stock market gains in 2020 were supported by Pfizer’s Covid-19 vaccine news in the week after the election. Meanwhile, in 2012, when President Obama is running for re-election, the United States is expected to make deep spending cuts, while Greece faces a European sovereign debt crisis. The strategist also highlighted that in 2008, as the global financial crisis took center stage, “markets plummeted.” “So the election is not the only variable and this week will also focus on Thursday’s Fed decision,” Allen said in a Nov. 2 note to clients.
No matter who wins, both stocks beat the S&P 500 in November’s election | Real Time Headlines
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