One of the biggest stories on Wall Street in 2020 will be the U.S. presidential election in November. The first Democratic caucus in Iowa takes place Feb. 3.
According to PredictIt, Bernie Sanders is currently the frontrunner in the race with a 40% chance of securing the nomination followed closely by Joe Biden at 36%.
For the general election, PredictIt has the odds President Donald Trump will hold onto the White House at almost exactly 50/50. Elections can be very unpredictable, but certain stocks are better-positioned than others to succeed in an election year.
Here are eight stocks to buy this election year, according to Bank of America.
Facebook, Inc. (NASDAQ: FB)
For better or worse, Facebook played a controversial role in the 2016 presidential election. The company says it has made significant changes to its policies and enforcement methods since the last election.
Facebook is one of the two largest online advertisers, and it made the controversial call not to ban or fact-check political ads in 2020. Analyst Justin Post says the election is one of many bullish catalysts for Facebook in 2020, including Marketplace ads, Instagram shopping and a shift to over-the-top advertising.
Bank of America has a Buy rating and $260 price target for FB stock.
See Also: 8 Cloud Stocks To Own In 2020
Twitter Inc (NYSE: TWTR)
Twitter made the call to ban political advertising completely in 2020, but that decision doesn’t mean Twitter won’t benefit from the election. Election debates and discussions on the platform could boost overall engagement on the platform, and most Americans know Twitter is President Trump’s favorite way to communicate with supporters. Post says Twitter’s engagement trends and product updates provide a positive backdrop this election year.
Like Facebook, Post says Twitter should continue to benefit from a global shift in advertising dollars away from linear TV in favor of online alternatives.
Bank of America has a Buy rating and $39 price target for TWTR stock.
Like Facebook, Alphabet subsidiary Google has chosen not to ban political advertising this year, so investors can expect the election revenue to flow freely throughout the year. Alphabet and other big tech companies will likely draw criticism from both sides of the political isle on antitrust grounds.
However, a potential break-up of Google could actually unlock the value of some of its higher-growth businesses. For example, Post recently valued Alphabet’s driverless vehicle subsidiary Waymo at $57 billion. Post says Alphabet’s 2020 catalysts include a ramp of Google shopping capabilities, growth in OTT ad spend on YouTube and growth in high-margin Google Cloud revenue.
Bank of America has a Buy rating and $1,620 price target for GOOGL stock.
Following a major asset sale to Walt Disney Co (NYSE: DIS) the so-called “New Fox” is a much leaner and focused company comprised solely of the former 21st Century Fox’s TV assets, including Fox News and Fox Business.
It’s no secret Fox is one of Trump’s favorite news sources and platforms to address the nation. Fox News was also the top-rated cable news network of 2019, beating its closest competition (MSNBC) by more than 42%. Millions of Americans will tune in to Fox News for their election updates, and investors will benefit from political ad dollars as well.
Bank of America has a Buy rating and $48 price target for FOX stock.
Canopy Growth Corp (NYSE: CGC)
In the past, cannabis has been a politically divisive issue, but it's getting less so every year. A November Pew Research poll found that a majority of both Democratic (78%) and Republican (55%) Americans believe cannabis should be federally legal in the U.S. Republicans have historically opposed cannabis legalization, but Trump actually said he would “probably” support the STATES Act back in 2018.
It’s conceivable both Trump and the Democratic nominee could attempt to use legalization as an issue to swing undecided voters, and neither candidate is likely to come down too hard on such a popular issue. Canopy is well-capitalized and well-positioned for U.S. legalization given its conditional buyout of Acreage Holdings Inc (OTC: ACRGF).
Bank of America has a Buy rating and $29.59 price target for CGC stock.
Intuit Inc. (NASDAQ: INTU)
One issue likely to get a lot of attention in 2020 from both parties is taxes. The Democratic nominee will most certainly have some form of tax plan to replace Trump’s 2018 corporate tax cuts, while the Trump administration is already working on its own potential second-term tax overhaul.
Regardless of the outcome, any changes to the tax system will mean taxpayers and businesses will need to adjust to a new system and will likely need assistance from tax and accounting software, such as Intuit’s QuickBooks and TurboTax products.
Bank of America has a Buy rating and $303 price target for INTU stock.
CarMax, Inc (NYSE: KMX)
Used vehicle retailer CarMax is one of Bank of America’s top 11 stock picks for 2020. Analyst John Murphy says CarMax’s omnichannel initiative should be up and running by the end of fiscal 2020, and online sales should be a key growth driver for the stock. CarMax’s user data also differentiates it from its used car retail peers and could serve as an opportunity for collaboration with external vehicle fleets in the future, Murphy says.
While CarMax may not be directly impacted by the election, Murphy says the stock could outperform this year as a high-value, small-cap stock. Small-cap stocks have historically outperformed in election years.
Bank of America has a Buy rating and $150 price target for KMX stock.
Dentsply Sirona Inc (NASDAQ: XRAY)
Health care stocks may be volatile in 2020 due to uncertainty surrounding what will likely be a central issue of the campaign for both candidates. But while investors will be uncertain about issues such as health insurance and drug pricing, Bank of America says dental supply company Dentsply will remain relatively insulated from the political backdrop and election results compared to pharmaceutical companies and managed care stocks.
Dentsply is also another smaller company that could benefit from a rotation from large caps to small caps, and it’s a value stock that investors could see as a defensive source of health care sector exposure in an unpredictable election year.
Bank of America has a Buy rating and $66 price target for XRAY stock.