Wells Fargo reportedly predicts that the best retail-stock bets during the volatile election season are in home improvement and auto parts.
Analyst Zachary Fadem said Democratic nominee Joe Biden, now leading in the polls, has pledged to return corporate taxes to their level before the 2017 tax cuts, at around 28%.
“While that might be a concern for investors, he said retailers have advantages that could help offset the pain,” Barron’s explained.
If limits on state and local tax deductions are also removed, he said, many consumers may spend more. Potential new tax credits could also prompt more shopping, Barron's said.
Fadem listed AutoZone (AZO), O’Reilly Automotive (ORLY), Home Depot (HD), and Lowe’s (LOW) as the best investment bets.
“Regardless of election outcome, we think tailwinds for home improvement (Home Depot, Lowe’s, Floor & Décor (FND)) likely continue,” he wrote, given that home remodeling is at a record high.
Tariffs imposed by the Trump administration are a “key variable,” the analyst said. Any relief on that front would likely benefit RH, Floor & Décor, At Home (HOME), and Best Buy the most, he said.
However, not everyone is as optimistic about the market's future.
Investment guru Jeff Gundlach reportedly has predicted that stocks will crash within the next year and a half as the dollar also tumbles in value.
"I do think that within 18 months it's going to crack pretty hard,” the billionaire investor known as the "Bond King" also said in a recent RealVision interview.
“When the next big meltdown happens, I think the U.S. is going to be the worst-performing market," the DoubleLine Capital CEO said.
Gundlach said he was "very, very negative long term on the U.S. dollar" because of the ballooning budget deficit and the prospect of higher inflation, and that he sees betting against it as "the big trade for the years ahead," Business Insider quoted him as saying.
"I'm actually long the dollar now, even though I don't believe in it at all. It's a good investment for the next five years," he said.
Gundlach also said tech stocks like Apple (AAPL) and Amazon (AMZN) were the only U.S. equities worth owning.
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