We now realize we will look back at Election Day 2016 and say the world has changed. You may hate or like the election results, but one thing is certain: Just getting it over with turned out to be a big deal, and if there can be a follow-up to all the business campaign promises Donald Trump made, many of these moves will be totally justified.
What's really dawning on people right now is exactly how frozen our nation was by this election and how unthawed it seems to be now.
In fact, it seems that as we got closer and closer, business seemed to fall off a cliff, leading up to the denouement where, as Richard Galanti, the fabulous Costco (COST) chief financial officer, said on his conference call: "I think it was worse than a snowstorm in terms of nobody wanting to go out and buy stuff, and that's what I read about other retailers as well." No wonder his stock's rallying all day. The floodgates have been opened.
What we are really learning, though, is it wasn't just with retailers, it was pretty much every nook and cranny of business. Think about the amazing thing Gary Kelly, the terrific CEO of Southwest Air (LUV) , said just last night, that business has just gotten better and better since that day.
Or how about what Manny Chirico said when he was on Mad Money. Manny had just reported blowout earnings for PVH (PVH) , the apparel company of which he's CEO, but he was cautious about the holiday season. However, when I pressed him, what did he say? How about that the weeks after the election were gangbusters across the board, and Manny's got merchandise in every major department store in this nation. The retailers have been rallying pretty much nonstop since then.
It extends to homebuilders, which now find their stocks on fire. How can they not when Toll Brothers (TOL) just told us its backlog is up double digits and there are positive demand trends pretty much everywhere. These are come-one, come-all situations where if Toll rallies, you see big moves in the whole group. I see Lennar (LEN) , Pulte (PHM) and Horton (DHI) breaking out. Most important, our fave, KB Home (KBH) , which has the best California land -- that most scarce commodity -- is just ripping. We have been advocating that another homebuilder should scoop up KB Home for about a 30% gain now, and I don't think it's over.
Remember, housing punches above it weight. When you see home sales rocking, think Lowe's (LOW) , think Home Depot (HD) , think paint, rugs, furniture, tools. The ripple effects are astounding.
I think we will find it extends to a host of travel and leisure issues, too. Notice that Disney (DIS) is now up 10 bucks since the election? Some of that could be the numerous trial balloons we have seen about spinning off ESPN or selling it, or making an acquisition that makes Disney less dependent on its current offerings. But I bet a lot of it will turn out to be a surge in bookings. (Disney is part of TheStreet's Trifecta Stocks portfolio.)
Yes, it is that big a deal. You think those flights by Southwest are just going to Houston? Think again.
It's even tech. I keep coming back to that strange cut in forecast by the always-reliable Workday (WDAY) where it cited, among other things, the election as a major reason for companies holding off buying complex cloud-based software. Now I have to wonder if there hasn't been a recovery or some pickup in orders since then and that Workday might be worth some speculation.
Hey, that shouldn't be all that revelatory. Remember the other day when Western Digital (WDC) pre-announced much-better-than-expected earnings and said lots of devices were doing well, even personal computers. Could this be boding well for Best Buy (BBY) , especially given that Costco said televisions were strong?
Hey, dare I say that maybe even sales for the Apple (AAPL) iPhone may have picked up? Big-ticket items bought when people feel better about themselves? Why not? (Costco and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
Now we all know about the obvious Trump stocks. Bank of America (BAC) , a.k.a. the First National Bank of Trump, keeps rallying like a house on fire, the best pure bank play out there.
Goldman Sachs (GS) has truly turned into golden slacks for those who fit in; the best Dow stock is now up 34% for the year and has soared from $175 to $241 since the election. Why not? It's a quintessential brokerage house where higher rates make them more money, more deal activity and stock and bond activity make them more money and, more important, deregulation can make them fortunes. Goldman Sachs, where I proudly worked, hasn't been able to offer as many services to help clients and certainly hasn't been able to take as much risk as it used to for itself. It would have been really hammered under a President Clinton-Senate Banking Chief Elizabeth Warren. I was expecting show trials by now.
Instead, it's a celebration with a Treasury Department headed by a sharp former Goldman partner, Steve Mnuchin, and the possibility that the bank's awesome No. 2, Gary Cohn, may be going into the government. The lineage here is extraordinary. Mnuchin is the son of the legendary Mnuch, Bob Mnuchin, also known as the Coach who ran the Goldman trading desk. That's been the most hampered division under Dodd-Frank. It must be like Prometheus Unbound over there.
Then there's oil and gas. Holy cow, as we said last night, this administration doesn't just want to look the other way with oil and gas, it wants to promote it, perhaps by more generous tax breaks with an eye, no doubt, toward destroying OPEC by unleashing our technology to extract and not letting protesters block pipelines, which are a heck of lot safer ways to move oil than trains or trucks, the current alternatives.
Finally, though, there's the oddities we keep discovering from changes made in this election. How about the sell to buy recommendation for Scotts Miracle-Gro (SMG) , out of Bank of America/Merrill (BAM) today? Why? Because "this is not your dad's grass company." The brokerage house took its price target from $80 to $105 because Scotts is a leader in hydroponics, a medium commonly used, they tell us, to grow cannabis. Yep, the legal base for growing marijuana increased by 125% since the election, driven, BAM says, "by California's recreational approval." Sure, plain old business makes up 90% of their sales, but they're thinking hydroponics could jump 50%, because "this grass has room to grow." I love this quote: "Scarcity strengthens the case for SMG with few public equities at similar levels of sales and market cap offering exposure to the theme of marijuana legislation."
Yep, every day we keep finding out new winners stemming from either the end of the nasty slugfest between the candidates, specific issues that were changed by the election -- like marijuana growth -- and the gale-force winds powering the Trump stocks.
No, nothing will be straight up. We see some profit-taking in some of the more obvious winners, sans banks. We know the drug stocks are still getting drubbed. We know the president-elect could pick up the phone and call a bunch of those pharma execs, or not bother with them and launch some vicious tweets.
But the most important thing to remember is that in many ways, not just politically, we've got a BE and an AE going, before election and after election, because it isn't just a change in the White house, and every day it amazes us exactly how different the business world is vs. one month ago.
