SA Asks: Which consumer stocks could rise or fall on a Harris win?
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Ahead of next week’s election, speculation has been rising about how a Trump or Harris win could impact stocks in specific sectors.
Yesterday, we asked our analysts which consumer stocks could rise or fall on a Trump victory.
For today’s SA Asks question, we asked our analysts which consumer stocks could rise or fall on a Harris win.
Seeking Alpha analysts Justin Purohit, Rob Isbitts of Sungarden Investment Publishing, and Manika Premsingh, Investing Group Leader for Green Growth Giants, gave us their thoughts on the topic.
Justin Purohit: Potential tax law changes under a Harris administration could drive increased demand for tax services, benefiting companies like H&R Block (NYSE:HRB). Perhaps, counterintuitively, gun and ammunition manufacturers, such as Smith & Wesson (NASDAQ:SWBI), might also experience a boost in sales due to concerns over potential firearm restrictions. Additionally, retailers with strong ties to China, like Nike (NYSE:NKE) and Lululemon (NASDAQ:LULU), could see advantages from Harris’s more lenient stance on tariffs.
Rob Isbitts: At the end of the day, it’s about one thing: what the market rewards. And based on the market’s seeming preference, at the margin, for the GOP, the risk of a selloff in the 3 to 6 months following a Harris win could prompt investors to return to products that are more recession/inflation resistant. That would include staples like Proctor & Gamble (NYSE:PG), Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP), among others.
Manika Premsingh: The Harris manifesto is focused on improving the lot of the middle class as the US comes out of a cost-of-living crisis. On the one hand, this means tax cuts and lower price increases for basic necessities like groceries, which in effect can lead to higher real incomes and encourage consumer demand. On the other hand, the plan also intends to ensure that price increases are kept in check by encouraging competition and preventing monopolistic price hikes.
Stocks of big consumer companies like Procter & Gamble (PG) and Mondelez (NASDAQ:MDLZ) may well be affected by her win, considering that they have seen rising operating margins in recent years, despite high inflation, compared to their pre-pandemic levels. On the other hand, stocks like Unilever (NYSE:UL) and Colgate-Palmolive (NYSE:CL), which haven’t seen similar margin increases, could remain unaffected or even be positively impacted by increased demand.