The stock market has been buzzing with speculative activity following the recent assassination attempt on Donald Trump during a campaign rally in Butler, Pennsylvania. The incident, which left Trump with a minor injury to his right ear, sent shockwaves through both the political and financial landscapes. Following the scare, Trump - currently appearing at the Republican National Convention - landed endorsements from big names on Wall Street, including Tesla (TSLA) CEO Elon Musk and billionaire hedge fund manager Bill Ackman.
In response to the weekend news, Trump Media & Technology Group (DJT) experienced a meteoric rise to start the week on Monday, surging by a remarkable 31.37% on the day. However, DJT remains a highly volatile "meme stock," driven more by social media enthusiasm than solid business fundamentals.
For investors looking to make trades around the upcoming U.S. election - without the heightened risk associated with volatile DJT stock - it's worth considering some of the other names that surged amid the broader “Trump trade" to identify compelling opportunities. Among that group, three stocks in particular stand out as consensus "strong buys" with significant room for growth. And unlike DJT, which trades largely on speculation, these companies operate in sectors and industries that could benefit under a potential second Trump presidency and potential policy shifts.
#1. Vista Outdoor
Vista Outdoor Inc. (VSTO) is a major player in the outdoor and sporting goods industry, with a portfolio of over 40 brands like Federal Ammunition, CamelBak, and Bell. Given Trump's pro-gun stance and tough-on-crime policies, Vista is well-positioned to benefit from a potential Trump administration. The company's diverse range of products, from shooting sports to outdoor recreation, makes it an attractive "Trump trade" for investors eyeing policy shifts.
In 2024, VSTO has shown impressive momentum, with a year-to-date gain of 25.8%, outpacing the S&P 500 Index's ($SPX) 16% return. The stock was up more than 3% intraday on Monday before settling close to unchanged, as investors weighed the initial “Trump trade” surge against recent M&A developments.
Specifically, the company recently rejected a $3.2 billion takeover offer from MNC Capital, opting instead for a $2.1 billion deal with Czechoslovak Group to sell its Kinetic Group division - which includes Vista's firearm and ammunition brands. This strategic move would allows Vista to retain its Revelyst division, home to popular brands like CamelBak and Bell, which would become its own publicly traded company.
A special shareholder meeting to approve the decision is set for July 23, so - as Monday's intraday price action suggests - this Trump trade could be a fleeting one. VSTO's next earnings release is slated for July 24, and analysts project earnings to climb from $3.99 per share to $4.52 per share, a healthy 13.28% increase.
Wall Street is bullish on Vista Outdoor's prospects, with analysts overwhelmingly rating the stock a "strong buy" and a mean price target at $41.20, implying a potential upside of 10.6% from the current price. Out of five analysts, four suggest a “strong buy,” with only one advocating a “hold” position.
#2. GEO Group
The GEO Group, Inc. (GEO) is a major player in the private corrections and detention industry, managing facilities across the U.S. and internationally. As one of the largest publicly traded prison operators, GEO stands to benefit from a potential Trump administration thanks to the candidate's tough stance on immigration and crime, which could increase demand for private detention facilities.
GEO's stock has been on an impressive run this year. The shares are up 52.6% in 2024, and have notched a remarkable 138% increase from their 52-week low of $6.94, set last August. This past Monday alone, the stock surged more than 9% as investors priced in the weekend news flow.
This surge has pushed GEO's market cap to around $2.35 billion. With a forward P/E ratio of 16.8 and a price-to-sales ratio of 0.90, GEO appears reasonably valued, offering an attractive entry point for investors.
GEO's first-quarter 2024 earnings report was mixed. Revenue of $605.7 million topped Wall Street's forecast, even as it fell from $608.2 million in the year-ago quarter. Adjusted EBITDA fell year over year to $117.6 million, while EPS of $0.14 fell short of the average estimate for $0.19. Operating expenses climbed during the period, jumping to $441.7 million, and GEO also raised its capex forecast for the full year.
Speaking on the earnings call, when asked whether a hypothetical change in administration might create a more favorable environment for private prison operators like GEO, Executive Chair George Zoley said, "Well, using past experience as a guide, under the previous administration, there was a reversal of the prohibition in using the private sectors for BOP contracting. So, we would think that's a distinct possibility that the BOP facilities would once again be contracted to private sector entities like ourselves."
Wall Street is bullish on GEO's prospects, with all three analysts covering the stock rating it a "Strong Buy." The mean price target stands at $19.25, suggesting a potential upside of 15.5% from the current price.
#3. MicroStrategy
MicroStrategy Incorporated (MSTR) has transformed from a traditional business intelligence software company into what it calls the "world's first Bitcoin development company." Under Michael Saylor's leadership, MSTR has become the most significant corporate holder of Bitcoin, making it unique in the crypto space.
As a "Trump trade," MSTR could benefit from potential crypto-friendly policies and regulatory clarity that a possible Trump administration might bring, given the candidate's positive comments about cryptocurrencies and blockchain technology.
MSTR's stock performance has been spectacular. The shares are up 144% YTD, and 245% over the past 52 weeks. MSTR opened the week by rallying 15% on Monday, suggesting it's a high-conviction Trump trade.
This meteoric rise has pushed MSTR's market cap to $28.2 billion - and with the share price well into the four figures, MicroStrategy announced a 10-for-1 stock split on July 11. The split, to be executed through a stock dividend, is scheduled for Aug. 7, with post-split trading set to begin the next day. Adding to its growing prominence, MSTR is set to join the MSCI World Index, potentially attracting more institutional investors and index funds.
Financially, MSTR's Q1 2024 results were mixed. The company reported a net loss of $53.1 million, or $3.09 per share, with revenue of $115.2 million down 5.5% year-over-year. On an adjusted basis, MicroStrategy lost $8.26 per share. However, their subscription services revenue delivered a 22% year-over-year increase, highlighting the ongoing shift in their business model.
The real story lies in its aggressive accumulation strategy, which continues to drive its stock performance. Between April 27 and June 19, the company acquired an additional 11,931 Bitcoin (BTCUSD) for approximately $786 million, bringing its total holdings to 226,331 BTC.
Investors will be eagerly anticipating the next earnings report on Aug. 1 to see how MSTR's Bitcoin strategy and software business are faring in the current market conditions. All six analysts covering the stock rate it a "Strong Buy," with a mean price target of $2,017.67, implying a potential upside of nearly 30% from the current price.
The Bottom Line on These 3 Trump Trades
While DJT grabs headlines, Vista Outdoor, GEO Group, and MicroStrategy might be more compelling stories for investors looking to play the Trump card without the risk of a potential meme-stock rug pull. These three stocks offer solid fundamentals, growth potential, and Trump-friendly business models, and analysts are giving them a big thumbs-up. For investors on the hunt for election-fueled trades, these three are worth adding to your watchlist.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
