Caterpillar, Tesla are top picks for ‘red wave’: Oppenheimer

Caterpillar (NYSE:CAT), Tesla (NASDAQ:TSLA) and Republic Services (NYSE:RSG) are the best stocks to own after Republicans swept the White House and both houses of Congress, analysts at financial-services firm Oppenheimer said in a November 6 report.

The picks come as Donald Trump’s victory in the U.S. presidential election is expected to result in significant changes to economic policy. Those changes include bigger incentives to manufacture goods domestically.

Caterpillar (CAT) is one of the world’s biggest manufacturers of construction equipment and earth-moving machinery, while Tesla (TSLA) is a pioneer in electric vehicles. Republic Services (RSG) is a waste-management company with significant operations in recycling and methane production for energy.

Oppenheimer’s picks are based on the “likelihood of narrowing government support for EVs, benefits from lower corporate taxes and reshoring,” Colin Rusch, analyst at the firm, said in the report. “We expect sharp repositioning across the coverage universe as investors digest the news.”

While there hasn’t been a clear correlation between election results and the subsequent relative performance of clean energy stocks, Oppenheimer “expect stocks’ behavior over the medium-term will more likely be a function of secular trends impacting global demand and difficulty in rolling back tax policy supporting manufacturing jobs where capital investments have already been made.”

Tesla (TSLA) jumped 14% by 9:37 a.m. ET Wednesday, while Caterpillar (CAT) advanced 7.2% and Republic Services (RSG) edged by 1.3%.