2 Stocks to Buy as Election Reality Kicks In

As we enter one of the most tumultuous weeks of 2024, the familiar drumbeat of election-year predictions has reached a fever pitch.

From Florida, where hurricanes have already made this a stormy year, the view of the national landscape reveals a stark contrast between perception and reality.

While internet pundits promise everything from democratic salvation to impending doom, the actual economic indicators tell a more nuanced story.

Here's the truth – and two stocks set to profit from it.

Despite dire predictions that commercial real estate would collapse and banks would fail en masse in March 2023, the economy has shown remarkable resilience. The stock market, often a reliable barometer of economic health, continues its upward trajectory that began a year ago.

When concerns about economic slowdown emerged, Federal Reserve Chairman Jerome Powell’s pivot on interest rate policy renewed market confidence, leading to sustained gains.

The current economic landscape, while not stellar, remains stable. Manufacturing shows some weakness, but the outlook for 2025 appears promising as industries return to American shores. This reshoring trend, spanning semiconductors, pharmaceuticals, and defense-related industries, is likely to continue regardless of election outcomes.

Consumer spending maintains modest growth above inflation rates, though shopping patterns reveal a shift toward value options and store brands across all market segments.

The housing market faces challenges but remains steady. With approximately 60% of mortgaged homes carrying rates below 4%, the current 7% rates have created a standoff between potential buyers and sellers. While this rate might seem reasonable in a historical context, it represents a significant adjustment from recent years.

Commercial real estate, contrary to catastrophic predictions, shows signs of stabilization. Data centers and infrastructure demonstrate particular strength, while office spaces see renewed interest as businesses adapt to post-pandemic realities.

Market Performance and Political Division

Historical market data reveals some surprising patterns regarding political configurations and market performance. Contrary to popular belief, single-party control – whether Democratic or Republican – has generally yielded poor market results. The optimal scenario has historically been a divided government, particularly with a Democratic president and a split or Republican-controlled Congress.

The presidencies of Bill Clinton and Barack Obama saw exceptional market returns, though these gains likely had less to do with specific policies than with broader technological and economic developments. The success during Obama’s tenure, for instance, stemmed largely from aggressive Federal Reserve intervention following the 2008 financial crisis, actions that would have occurred regardless of who occupied the White House.

Banking on Growth

As we navigate this election season, bank stocks emerge as a particularly promising sector. Despite last year’s pessimism about bank stability, the industry stands on solid ground. Several institutions stand out for their growth potential and value proposition:

First Citizens Bank shares of North Carolina (FCNCA) exemplifies this opportunity, trading at just 11 times earnings despite astronomical growth rates and successful strategic acquisitions across thirty states. Eastern Bank Shares, with its rich history dating to 1818, demonstrates the resilience of well-managed institutions. Their recent acquisition of Bank of Cambridge and strong trust advisory business highlight their growth trajectory while maintaining conservative risk management.

This bank presents a compelling opportunity for investors seeking stability and growth potential within the U.S. regional banking landscape. Known for its disciplined approach to expansion and prudent financial management, First Citizens has maintained a robust capital structure and steady loan growth even during challenging economic periods.

The acquisition of CIT Group, finalized in 2022, has been a transformative step, expanding the bank’s commercial lending capabilities and broadening its asset base. This further enhances the bank’s ability to diversify revenue streams and strengthen its market position.

First Citizens has demonstrated excellent loan portfolio quality, with a conservative underwriting approach that has helped mitigate risk. This conservative approach, combined with strong liquidity and capital positions, positions First Citizens well to navigate interest rate fluctuations and any potential downturn in credit markets. Additionally, its strategic focus on middle-market clients, which larger institutions often underserve, offers a niche advantage supporting higher-margin lending opportunities.

Home BancShares (HOMB) is a well-positioned regional bank with a strong track record of disciplined growth, solid asset quality, and consistent profitability. Known for its conservative lending practices and efficient cost management, HOMB has shown resilience and steady growth, even in uncertain economic environments. Its strategic acquisitions and commercial real estate lending focus offer a stable revenue base while creating new growth avenues, particularly in its core Southeastern markets.

With strong capital ratios, effective risk management, and a commitment to shareholder value through dividends and share buybacks, Home BancShares represents a solid investment choice for those seeking steady, long-term gains in the regional banking sector.

Looking Ahead

As we approach what will undoubtedly be a noisy election period, the fundamental strength of these banking institutions suggests opportunity rather than risk. Whether market volatility creates buying opportunities or prices continue their upward trend, well-managed, growth-oriented banks trading at reasonable valuations offer compelling investment prospects regardless of electoral outcomes. The key lies not in predicting political winners, but in identifying financial institutions positioned to thrive in any regulatory environment.

There’s a new feature at Benzinga that allows you to get stock picks and new trades straight from our top experts. Click here to upgrade your account and enjoy a new stream of profitable trades and investments.

Image via Unsplash