's Stocks for an Obama Victory

November 7, 2012 9:01 AM EST
With the election now over and President Obama re-elected for another four years, investors will be positioning in stocks that are expected to benefit and those that will be hurt.

Below is a guide to Obama stocks:

Health Insurers: - NEGATIVE
Health insurance stocks are expected to be hurt by an Obama victory as Obamacare will go thorough. Commenting on the sector this morning, analysts at Goldman Sachs said, -"For the sector overall, we think sustained outperformance is unlikely over the next 12-18 months, despite attractive valuations. While near-term fundamentals appear to be improving, we think uncertainty over the impact of health reform implementation will remain a persistent overhang unless and until investors can gain confidence in the reform outlook for 2014-2016." They downgraded Humana (NYSE: HUM) to Sell due to risk to Medicare Advantage (MA). Others in the sector include: Aetna (NYSE: AET), Cigna Corp. (NYSE: CI), Health Net, Inc. (NYSE: HNT), UnitedHealth Group (NYSE: UNH), WellPoint Inc. (NYSE: WLP), Universal American Corp (NYSE: UAM), AMERIGROUP (NYSE: AGP), Magellan Health Services Inc. (NASDAQ: MGLN) (MGLN was upgraded at Goldman).

Hospitals- POSITIVE
Hospital stocks will benefit from an Obama win. "Following the election, we believe that while deficit reducing measures loom over the industry, investor sentiment will ultimately improve as the longer-term benefits afforded by the Affordable Care Act remain intact," analysts at Goldman Sachs said today. They upgraded HCA Holdings, Inc. (NYSE: HCA) to Buy. Others in the sector include: Tenet Healthcare Corp. (NYSE: THC), HEALTHSOUTH Corp. (NYSE: HLS), Community Health Systems, Inc. (NYSE: CYH), Health Management Associates Inc. (NYSE: HMA), Universal Health (NYSE: UHS).

Medicaid Managed Care - POSITIVE
"The Medicaid managed care names stand to benefit greatly from the expansion of Medicaid coverage under the ACA," analysts at Oppenheimer said. Stocks: Centene Corp. (NYSE: CNC), Coventry Health Care Inc. (NYSE: CVH), Molina Healthcare, Inc. (NYSE: MOH), WellCare Health Plans, Inc. (NYSE: WCG).

Emergency Services - POSITIVE
Analysts at Oppenheimer comments, "Under the ACA, the hospitals and emergency service names should see a big reduction in the number of uninsured patients, which should greatly boost their revenues with no incremental costs." Stocks: Air Methods Corp. (Nasdaq: AIRM).

Diagnostic - POSITIVE
Obamacare could benefit the diagnostic group as more insured gain access to testing. Stocks: Thermo Fisher Scientific (NYSE: TMO), Quest Diagnostics Inc. (NYSE: DGX), Laboratory Corp. of America (NYSE: LH), Life Technologies Corporation (NASDAQ: LIFE)

Medical Devices - NEGATIVE
Under Obamacare a 2.3% revenue tax will go into effect. Medical device stocks include: Medtronic, Inc. (NYSE: MDT), Abbott Laboratories (NYSE: ABT), Johnson & Johnson (NYSE: JNJ), Intuitive Surgical (Nasdaq: ISRG), St. Jude Medical Inc. (NYSE: STJ), Stryker Corporation (NYSE: SYK).

Defense - NEGATIVE
Analysts at Deutsche Bank comment: "Yesterday's rally in defense names seemed to be a combination of a Romney trade but also pegged to hope that Speaker Boehner’s comments regarding a bridge solution in the lame duck that could avoid confronting sequestration at least in the near-term. Depending on where the commentary progresses in the days/weeks ahead, we’re expecting a little give-back in defense." L-3 Communications (NYSE: LL), General Dynamics (NYSE: GD), Lockheed Martin (NYSE: LMT), The Boeing Company (NYSE: BA), Northrop Grumman (NYSE: NOC), Raytheon Co. (NYSE: RTN), Textron (NYSE: TXT)

Coal stocks have rallied significantly since the first debate when Romney said, "I like coal." Theses stocks can now give back the gains on an Obama victory. Stocks include: Arch Coal Inc. (NYSE: ACI), Peabody Energy Corp. (NYSE: BTU), Alpha Natural Resources, Inc. (NYSE: ANR), Walter Energy, Inc. (NYSE: WLT).

For-Profit Education - NEGATIVE
Education stocks have been brutalized under the Obama administration following the massive overhaul of federal student financial aid. Commenting Height Analysts said, "The re-election of President Obama (with at least 303 Electoral College votes) and the continued Democratic control of the Senate (with at least 53 seats) is largely in-line with consensus expectations (including ours) and we believe the outcome should maintain the status quo of regulatory issues confronting the education sector. While most headlines from Capitol Hill will be noise given that Congress will remain deadlocked (except for the possible passage of a relatively benign Veterans bill), the split control of the House and Senate chambers means that the annual budget process will be a key opportunity for both sides to advance for-profit related legislation." Stocks include: Apollo Group Inc. (NASDAQ: APOL), DeVry, Inc. (NYSE: DV), Strayer Education Inc. (NASDAQ: STRA), ITT Educational Services Inc. (NYSE: ESI), Corinthian Colleges Inc. (NASDAQ: COCO), Career Education Corp. (NASDAQ: CECO).

Large Banks - NEGATIVE
More regulation under Obama could impact profits in the sector. JPMorgan (NYSE: JPM), Goldman Sachs Group (NYSE: GS), Citigroup, Inc. (NYSE: C), Bank of America (NYSE: BAC).

Mortgage Insurers - POSITIVE
An Obama win would be a positive for mortgage insurers like Radian Group Inc. (NYSE: RDN) and MGIC Investment Corp. (NYSE: MTG).

An Obama win would be a positive for solar stocks like First Solar, Inc. (NASDAQ: FSLR), SunPower Corporation (NASDAQ: SPWR), Suntech Power Holdings Co. Ltd. (NYSE: STP).

Ethanol - POSITIVE
An Obama win would be a positive for ethanol stocks like Archer Daniels Midland (NYSE: ADM), The Andersons, Inc. (NASDAQ: ANDE), and Green Plains Renewable Energy, Inc. (NASDAQ: GPRE).

Firearms - POSITIVE
Benchmark reiterated their Buy ratings on gun makers Smith & Wesson Holding (NASDAQ: SWHC) ($13 PT) and Sturm, Ruger (NYSE: RGR) ($60 PT) following an Obama victory saying it may drive further "political" firearm sales. They also expect long-term organic growth to continue.

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