Forecast: Three Stocks Likely to Triumph if President-Elect Trump Successfully Implements His Tariff Policies
The American populace has expressed their will. On January 20, 2025, Donald Trump, serving as the 45th US president, will also assume the role of the 47th president.
In his triumphant speech, Trump made it clear that his governing philosophy would be: "Promises made, promises kept. We're going to keep our promises."
During his 2024 campaign, Trump pledged to implement a comprehensive set of tariffs on all imported goods, particularly on products hailing from China. Some experts have speculated that Trump may soften his stance, but during his recent address, he reaffirmed his commitment to carrying out his campaign pledges, stating, "Nothing will deter me from delivering on my campaign promises."
Tariffs could significantly impact various US businesses, but certain companies will likely thrive from this policy shift. I foresee three such stocks excelling with Trump at the helm.
1. CSX
CSX, a prominent rail transportation company based in Florida, ranks among the largest in the US. With operations across approximately 20,000 miles of rail in 26 states east of the Mississippi River and two Canadian provinces, CSX is well-positioned to capitalize on Trump's proposed tariffs.
Investors have shown enthusiasm for CSX, with its stock soaring upon Trump's victory announcement. Given the anticipated positive impact of Trump's policies on CSX, this bullish sentiment appears warranted.
Despite the risk of reduced import and export volumes due to increased tariffs – around 40% of CSX's revenue is derived from international operations – I believe the company has a chance to shine under Trump's leadership.
Firstly, importers will likely accelerate inbound shipments, benefiting CSX temporarily. Secondly, intermodal sales accounted for only around 14% of CSX's total revenue during the first three quarters of 2024, with international intermodal revenue contributing approximately 5.5%. During Trump's first term, CSX was successful in passing on the higher costs associated with tariffs to its customers. The company likely will do so again with broader tariffs.
Lastly, the majority of CSX's revenue is derived from domestic shipments. Domestic business is likely to surge as US companies seek local resources instead of international manufacturers.
2. J.B. Hunt Transport Services
Headquartered in Arkansas, J.B. Hunt Transport Services is a significant player in the trucking and logistics sector. With substantial intermodal operations and the most extensive drayage fleet in North America, J.B. Hunt's diverse offerings position it positively to profit from Trump's tariffs.
Upon the affirmation of Trump's victory, J.B. Hunt shares skyrocketed, with other related stocks also seeing substantial gains. Generally speaking, strengthened US railroad operations – such as CSX – will benefit companies like J.B. Hunt.
Half of J.B. Hunt's revenue in Q3 stemmed from its intermodal business, which involves transporting containers between railcars and 18-wheeler trucks. If implemented, Trump's tariffs should boost domestic shipping via rail, thereby increasing J.B. Hunt's intermodal revenue. Additionally, J.B. Hunt's other segments might also benefit from increased US shipment volume.
3. Steel Dynamics
Based in Indiana, Steel Dynamics is a prominent US steel producer and metal recycler. Producing steel products and selling recycled metals, the company also fabricates steel joists and deck products.
During Trump's first term, both he and President Biden implemented tariffs on imported Chinese steel. While this benefited Steel Dynamics to some extent, the company's Q3 performance suffered due to decreased steel prices resulting from increased imports from countries other than China.
Currently, Steel Dynamics and other organizations are awaiting decisions from the US Department of Commerce and International Trade Committee regarding imposing antidumping duties on imports of corrosion-resistant flat-rolled steel from various countries. Regardless of the outcome, Trump's tariffs would provide Steel Dynamics with even greater protection.
Although Steel Dynamics could see further growth due to these tariffs, I believe the stock's potential is promising regardless of the policy changes. Boasting solid free cash flow and profits, as well as gaining market share in a competitive market, Steel Dynamics appears set for long-term success.
In his campaign proposals, Trump mentioned a plan to enforce tariffs on imported goods, particularly from China. Investors are closely watching this policy shift, as companies like Steel Dynamics, a prominent US steel producer, could potentially benefit from increased protection due to these tariffs.
With potential tariff-related profits in mind, many investors are considering additional investments in the finance sector, specifically in companies involved in money management and investing. For instance, a wealth management firm might benefit as high-net-worth individuals look for advice on how to best navigate these financial changes.
