Investing.com -- Institutional brokerage firm Strategas has identified Industrials as the sector most likely to benefit if Vice President Kamala Harris wins the upcoming election.
"Industrials are setting up almost perfectly for Harris in a way we rarely see,” the firm’s strategists said in a Wednesday note.
“In most cases, sectors split between beneficiaries based on the presidential candidates’ priorities. Not here. We struggle to find Industrials stocks that will benefit from Trump relative to Harris and nearly every component of the sector leans towards Harris,” they added.
The key reason is the alignment of Harris’ policies with the needs of industrials, particularly in four areas: Infrastructure/IRA, defense, trade, and employment stocks.
Strategas also highlights that Harris’ stance on defense is unusual for a Democratic candidate. Defense stocks, which have traditionally aligned with Republican candidates, now see more potential gains from Harris than Trump.
The firm stresses that this marks the first time “in which defense stocks will get a bigger earnings benefit from Democrats than Republicans.” The shift is largely driven by the potential continuation of support for Ukraine and other national security measures that would favor increased defense spending.
Infrastructure and renewable energy stocks, already buoyed by Biden’s policies, are another area of significant leverage for Harris.
Strategas points out that while some infrastructure components, such as the bipartisan CHIPS Act and general infrastructure investments, are safe under either administration, the Inflation Reduction Act (IRA) has stronger support under a Harris-led government.
In terms of trade policy, Harris' win would likely result in a slower pace of deglobalization compared to a Trump administration, which is expected to increase tariffs and relocate supply chains away from China.
While deglobalization can be expected under either candidate, Harris’ policies would likely slow the trend, benefiting companies like FedEx (NYSE:FDX), which acts as a proxy for global trade.
“If Harris is accelerating and can hold that lead through the election,” Industrials will emerge as the primary beneficiary, with stocks such as FedEx, Quanta Services (NYSE:PWR), Stanley Black & Decker (NYSE:SWK), and Rtx Corp (NYSE:RTX) among others, set to gain.