Mad Money

McCain or Obama? Stocks That Work for Each

The markets barely moved Monday in anticipation of Tuesday’s presidential election. Wall Street refused to move until it knew in which direction the country was headed.

Election Trades

That’s because different stocks will work depending on which candidate, Barack Obama or John McCain, wins the White House. Even a quick look at a couple of key exchange-traded funds shows the influence this election is having the markets. The solar-energy ETF, TAN, rose 15% today on assumptions that most polls were right and Obama will win. Because McCain is expected to lose, the oil ETF, USO, was down about 5.6%. Each senator is a supporter of those respective businesses, and they traded accordingly.

So what stocks do best if Obama wins? Or McCain? Here’s the breakdown from Cramer:

As we said, Obama supports alternative energy, so First Solar could be a winner. The same goes for wind plays Trinity, Broadwind and Owens Corning. If natural gas gets its due as a viable replacement for crude oil, then Chesapeake or XTO Energy is also worth a look.

Now as much as Cramer dislikes ethanol, Obama took the pledge during the Iowa caucuses. That means agriculture stocks like Deere, Terra Nitrogen, and fertilizer companies Potash , Mosaic and Agrium stand to benefit if the junior senator from Illinois is sworn in Jan. 20. Those fertilizer stocks might be best positioned here.

Biotech, too, is a sector beloved by Democrats. Cramer likes Gilead Sciences and Celgene. Merck and its nice dividend yield can be bought on any pullback. Why a pullback? Because big pharma stocks sold off before Bill Clinton took over in 1992. Wall Street assumed the sector would suffer under a left-leaning administration. But in fact, big pharma thrived. The same thing could happen in 2008.

If Obama targets anything medical, Cramer thinks it’ll be the insurers and health maintenance organizations like Wellpoint, Humana, UnitedHealth (stocks that would thrive under McCain, actually). Tenet Healthcare, though, a small, $4 speculative name, would get Obama’s blessing because it’s a hospital operator, and he supports that.

Lastly, for stocks that do well under an Obama presidency, those that a related to troubled homeowners might be worth owning. Think Bank of America, Wells Fargo, Toll Brothers and Ryland.

As for McCain, viewers probably remember the chants of “drill, baby, drill” during the Republican National Convention. So Halliburton, Transocean , CGV, Oceaneering and Smith International, Hornbeck Offshore and FMC Technologies work if the Arizona senator lifts the offshore drilling ban. Big oil is also a winner here, putting stocks like Exxon Mobil, Chevron, Valero and Marathon Oil in play.

McCain’s also a cheerleader for nuclear energy. Cramer recommended Shaw Group and NRG as possible investments here. Though NRG has yet to accept Exelon’s takeover bid, so EXC might be a better choice on the assumption that NRG’s management will have the wisdom to say yes.

Defense contractors, especially those with naval exposure, can work. Cramer likes General Dynamics.

No matter who wins Tuesday, though, KBR and AeroVironment , both of which work with the military, should do well.

So while the markets held their ground today, we should see them start to move come Wednesday. It’s just a matter of where the money goes, and that depends on who gets the honor of being No. 44.

Jim's charitable trust owns Deere, Gilead Sciences and Celgene.

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