The American people have spoken. On January 20, 2025, Donald Trump, the 45th American president, will also become the 47th president.
Trump has also spoken. After it became clear he would win, Trump said in his victory speech: “I will govern with a simple motto: Promises made, promises kept. We are going to keep our promises.”
Start your morning smarter! Wake up with Breakfast news in your inbox every market day. Register for free »
One of Trump’s key promises during the 2024 campaign was to impose blanket tariffs on all imports, with particularly high tariffs on products imported from China. While some think he might soften this stance, Trump emphasized in his speech last week that “nothing will stop [him]”of fulfilling his campaign promises.
Tariffs could hurt many American businesses, but will help some instead. I predict that three stocks in particular will gain if newly-elected President Trump gets his way on tariffs.
Based in Florida CSX (NASDAQ: CSX) is one of the largest rail transport companies in the US. It operates approximately 20,000 miles of track in 26 states east of the Mississippi River and two Canadian provinces.
CSX shares rose last week after Trump’s victory. Investors already seem to be anticipating that the company is poised to directly benefit from the president-elect’s proposed tariffs. I think this expectation is justified.
Granted, CSX noted in its annual 10-K filing that higher tariffs “could result in reduced import and export volumes.” Approximately 40% of the company’s intermodal sales are international. So why might CSX be a winner as a result of Trump’s tariffs?
For starters, many importers will almost certainly “pre-load” shipments (that is, expedite incoming shipments from other countries to the US). This should boost CSX’s business in the near term, even before Trump takes office.
Furthermore, intermodal represented only about 14% of CSX’s total revenue in the first three quarters of 2024. International intermodal revenue is in the ballpark of 5.5% of total revenue. During Trump’s first term, CSX passed on the higher costs associated with tariffs to its customers. It will likely do this again with a broader pricing program.
Importantly, the majority of the company’s revenue comes from domestic shipments. CSX’s domestic operations would likely increase as companies make efforts to source products from the U.S. instead of international manufacturers.
JB Hunt Transport Services (NASDAQ: JBHT) is a major transportation and logistics company based in Arkansas. It has significant intermodal activity with the largest transportation fleet in North America. JB Hunt’s other businesses include specialty contract services focused on private fleet conversions, integrated capacity solutions brokering third-party carriers, and the largest last-mile network in the US.
Shares of JB Hunt rose last week after the presidential race was called in Trump’s favor last week. It wasn’t the only one. Several other truck stocks posted nice gains on the news.
In general, what’s good for American railroads like CSX is also good for JB Hunt. Half of JB Hunt’s third-quarter revenue came from its intermodal business, which moves containers to and from rail cars via 18-wheel trucks.
If implemented, Trump’s tariffs should boost domestic rail shipping, boosting JB Hunt’s intermodal revenues. The company’s other segments could also benefit from increased shipping volume in the US
Steel dynamics (NASDAQ:STLD) is one of the largest steel producers and metal recyclers in the US. The company manufactures steel products, sells recycled metals and manufactures steel beams and decking products.
Both Trump, during his first term, and President Biden imposed tariffs on steel imported from China. These rates have helped Steel Dynamics to some extent. However, the company’s financial performance in the third quarter was weaker than in the second quarter, partly due to lower steel prices resulting from increased import volume from countries other than China.
Steel Dynamics and several other organizations are awaiting decisions from the U.S. Department of Commerce and the U.S. International Trade Commission on whether to impose anti-dumping duties on imports of corrosion-resistant flat-rolled steel from Australia, Brazil, Canada, Mexico, the Netherlands, South Africa, Taiwan, Turkey, the United Arab Emirates and Vietnam. Regardless of the outcome of these cases, Trump’s tariffs could provide Steel Dynamics with even greater protection.
While Steel Dynamics is poised to benefit from these rates, I think the stock would perform well over the long term even without them. The company consistently delivers strong free cash flow and earnings, and is gaining market share in a highly competitive industry.
Have you ever felt like you missed the boat on buying the most successful stocks? Then you would like to hear this.
On rare occasions, our expert team of analysts provides a “Double Down” Stocks recommendation for companies they think are about to pop. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
-
Amazon: If you had invested $1,000 when we doubled in 2010, you would have $23,446!*
-
Apple: If you had invested $1,000 when we doubled in 2008, you would have $42,982!*
-
Netflix: If you had invested $1,000 when we doubled in 2004, you would have $428,758!*
We’re currently issuing ‘Double Down’ warnings for three incredible companies, and another opportunity like this may not happen anytime soon.
See 3 “Double Down” Stocks »
*Stock Advisor returns November 4, 2024
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Prediction: 3 Stocks Will Gain If President-Elect Trump Gets His Way on Tariffs Originally published by The Motley Fool
