Over the past several weeks, GOP presidential hopeful Mitt Romney's momentum has spiked. Recent polls place him running neck-and-neck with or even edging ahead of President Barack Obama.
Besides strong debate performances, key factors have turned in Romney's favor.
Myriad surveys in a dozen crucial swing states show voter's concerns are increasing regarding the mushrooming fiscal deficit, debt issues and the depressed job market, issues that favor Romney.
Since the election won't be decided for another two weeks there is still time to act if you expect a Romney victory.
Here's what several top Wall Street analysts think a Romney win would mean for stocks.
Stocks to Buy if Romney Wins
A Romney win would be positive for banks, Credit Suisse analysts penned in a note to clients, because regulatory reforms and supervision would be more balanced. "While we do not expect a repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a more "balanced' approach to bank supervision and future bank reforms are likely to be viewed favorably. We think a Republican administration would be a positive for bank stocks," a group of Credit Suisse analysts lead by Mark Flannery wrote.
Among the trio of banks the firm says are "well positioned" if Romney takes the helm in the White House are the giants currently under direct and constant scrutiny of the government. The three include: Bank of America Corp. (NYSE: BAC); Citigroup Inc. (NYSE: C) and JP Morgan Chase & Co. (NYSE: JPM).
Year-to-date, financial stocks have gained some 24%, leading the 10 main S&P industries and further gains would be expected with a Romney victory.
With Romney sitting in the Oval Office, education equities could get a much needed boost.
Since the start of 2012, stocks in this sector have plummeted 45% following the Obama administration's overhaul in federal student aid. The group is poised to fall further if Obama serves a second term as his camp chases another round of initiatives that would widely weigh on earnings, Credit Suisse notes.
Underscoring the pain stocks in this industry have faced was Tuesday's fourth-quarter earnings report from Apollo Group Inc. (Nasdaq: APOL), whose earnings tumbled 60% from a year ago. The for-profit education company, best known for its Phoenix Universities, said it's cutting 800 jobs and will close 25 campuses. Shares have performed just as bad as earnings, down more than 60% for the year.
A Romney victory would help the ailing sector Credit Suisse says. In addition to Apollo, Bridgepoint Education Inc. (NYSE: BPI); DeVry Inc. (NYSE: DV); and Strayer Education Inc. (Nasdaq: STRA) stand to gain.
Managed Health Care Stocks
Although Romney has not detailed in full his health care plan, he has made it clear he will dismantle Obamacare on Day One if elected.
Managed health care stocks and medical device markers (subject to a 2.3% excise tax under Obamacare) are perched for a rally if the GOP candidate is elected.
Avik Roy, senior fellow at New York based think tank Manhattan Institute, and an outspoken critic of Obama's health care plan, shared with Barron's his health care picks if Romney wins.
They include: Abiomed Inc. (Nasdaq: ABMD); Boston Scientific Corp. (NYSE: BSX); Integra Life Sciences Holding Corp. (Nasdaq: IART); Hill-Rom Holdings Inc. (NYSE: HRC); Stryker Corp. (NYSE: SYK); Zimmer Holdings Inc. (NYSE: ZMH); and WellPoint Inc. (NYSE: WLP).
Stocks to Sell if Romney Wins Election 2012
Romney is a prominent proponent of the Keystone Pipeline and staunch critic of Obama's financial support for renewable energy firms.
Two high profile names in the alternative energy sector that received generous grants from the Department of Energy (funded by the 2009 economic stimulus act) and have since filed bankruptcy are solar panel maker Solyndra LLC and electric battery maker A123 Systems, which declared Chapter 11 Tuesday.
A123's demise is a big blow to Obama's lofty goal of getting one million electric or plug-in vehicles on American roads by 2015. In the first nine months of the year, Nissan Motor Co. (PINK ADR: NSANY) sold just 9,674 of their hugely hyped Leaf electric cars, and General Motors Co. (NYSE: GM) has sold just 7,671 rechargeable Volt compacts.
Treasuries and Bonds
A Romney win would most likely mean an end to Ben Bernanke's run as U.S. Federal Reserve Chairman and eventually lead to higher interest rates.
Dominic Konstam, Deutsche Bank's global head of interest rates research in New York, said investors should sell intermediate maturity treasuries and shorter-dated inflation debt to hedge against a Romney win.
He also warns a triumph for Romney could provoke a broad based sell-off in both bonds and stocks as bets are placed that current loose monetary programs may come to an end. That would hurt assets ranging from government debt to mortgages to precious metals, all of which have been goosed under such stimulation.
"The market has been lulled into a false sense of security that nothing is going to change with regards to monetary policy. If Romney wins, the market will assume the worst-that they are less supportive for accommodative polices-and that will take away some of the feel-good factor for stocks and bonds that Bernanke has engineered," Konstam told Bloomberg.
"The markets are hardwired to the ultra-accommodative stance. A Romney wins threatens the credibility of the extended-period language," Konstam added.
That appears to be a worst-case scenario.
In election years when a Republican wins, the S&P 500 Index has averaged a 16% gain while it rises an equal amount when the incumbent remains in office.
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