(By Rich Bieglmeier) With the presidential election just a few days away, thankfully, iStock took up the task of reading Mitt Romney's and President Obama's "plans" for America. Our intention is to find the sectors and stocks that could benefit depending on which man is elected to reside at 1600 Pennsylvania Avenue.
We will start with Mitt Romney and will update President Obama on Monday. Mr. Romney has a 60 page proposal titled Believe in America - Mitt Romney's Plan for Jobs and Economic Growth. No matter who you plan on voting for, iStock encourages you to read both candidates' plans. Although we'll be writing about Mr. Obama's proposals on Monday, here is his plan: The New Economic Patriotism - A Plan for Jobs & Middle-Class Security – be informed!.
If Chief Justice John Roberts administers the Presidential Oath to Mr. Romney, investors might consider adjusting their portfolios to favor the following.
Perhaps, the most intriguing proposal from Mr. Romney – in our view - is that he would "seek to eliminate taxation on capital gains, dividends, and interest for any taxpayer with an adjusted gross income of under $200,000."
The biggest beneficiaries should be discount brokers, followed by investment firms that offer packaged investments such as exchange-traded-funds (ETF).
Some names worth considering include E*TRADE Financial Corp. (ETFC), The Charles Schwab Corp. (SCHW), TD Ameritrade Holding Corp. (AMTD) and for ETFs, Barclays PLC (BCS) and State Street Corp. (STT).
"As president, Mitt Romney will also act immediately to alter those of our tax laws that encourage American multinational companies to park their profits permanently overseas." In a nutshell, when an American company sells its products outside our borders, the country where the product is sold charges a tax. If the tax rate is lower than the U.S.A's corporate tax rate, then the company must pay the difference if they try to "repatriate" the money into the U.S.
According to the U.S. Chamber of commerce, "J.P. Morgan (JPM) estimates that at least $1.4 trillion in undistributed foreign earnings are locked abroad; Moody's warns that U.S. tech companies could hold 79 percent of their cash overseas in the next three years."
There is plenty of debate over whether it would create jobs or help the economy, but from an investor's point of view, past "repatriation holidays" led to a hike in dividends and share buybacks, although both were supposedly prohibited. Another possible benefit would be an increase in merger and acquisition activity.
iStock would suggest multinational companies with a history of raising their dividends. S&P puts a list together of what it terms Dividend Aristocrats. These are companies that have a history of raising their dividends for at least 25 years, many of which are multinational companies you will recognize. The Dividend Aristocrats link above should load an excel sheet with the complete list. Multinationals should also reap benefits from Mr. Romney's plans to increase free-trade agreements.
As president, the ex-Massachusetts Governor plans on easing some restrictions within the Credit Card Accountability, Responsibility, and Disclosure Act of 2009. The candidate says, "federal restrictions on credit card companies that have already led to higher interest rates, higher annual fees, and lower credit limits, especially for middle-class borrowers."
It doesn't take a genius to conclude that Visa Inc. (V), American Express Co. (AXP), Discover Financial Services (DFS), and Mastercard Inc. (MA) could be winning trades with President Romney.
Online educators could get some credit, too. One of the Republican's proposals is to create Personal Reemployment Accounts for unemployed individuals, and there are plenty of those folks. "Each eligible participant would have control over an account that contained funds to be put toward retraining," and "individuals would control their own funds (provided by the federal government to the states) and could use their accounts to pursue any one of a range of options."
Some names to think about include ITT Educational Services Inc. (ESI), Apollo Group Inc. (APOL), Corinthian Colleges Inc. (COCO), DeVry Inc. (DV), Lincoln Educational Services Corp. (LINC), and Universal Technical Institute Inc. (UTI) to name a few.
Finally, increasing domestic energy production is a big part of Mitt Romney's agenda. He says he will "inventory our nation's resources, explore and develop our oil reserves, extract shale gas," and "focus on refining technologies that burn coal cleanly."
Coal stocks such as James River Coal Co. (JRCC) and Alpha Natural Resources Inc. (ANR) have already responded positively. That's because they are considered clean coal stocks. iStock suspects they will continue to make gains should voters pick Romney.
Other clean coal names to consider are American Electric Power Co. Inc. (AEP) and General Electric Co. (GE).
Another part of the energy plan is to update geological surveys, build additional pipelines, increase fracking, and open federal lands for drilling permits. Enterprise Products Partners L.P. (EPD), Kinder Morgan Inc. (KMI), Williams Companies Inc. (WMB), Noble Corp. (NE), CARBO Ceramics Inc. (CRR), Core Laboratories NV (CLB) and many, many others come to mind.
iStock hopes our interpretation of Mitt Romney's plan helps you better understand where winners might be found should he be elected on November 6th
. Come back Monday for iStock's search for winning sectors and stocks if President Obama is re-elected.