JPMorgan says Trump's win is 'pro-growth' for the market; buy infrastructure stocks

Republican presidential candidate Donald Trump smiles as he walks onto the stage before he spoke at a rally at the Atkinson Country Club in Atkinson, NH on on Nov. 04, 2016.
John Tlumacki | The Boston Globe | Getty Images

JPMorgan told investors the market will rally into early next year due to optimism about the Republican economic agenda.

"We interpret the U.S. election outcome with a Republican sweep as pro-growth for equities," strategist Dubravko Lakos-Bujas wrote in a note to clients Thursday.

"Expectations of decreased regulation, favorable tax reform, increased fiscal spending and less congressional gridlock should drive stronger revenue growth and higher net income margins. Further, the removal of election uncertainty and some form of cash repatriation should result in increased investment activity."

Lakos-Bujas cited how a reduction in the corporate tax rate to 15 percent or 20 percent versus the current effective rate of about 25 percent could add $10 to $15 in earnings per share to the . As a result, he predicts the benchmark will rally to 2,300 "by early next year," representing 6 percent upside from Wednesday's close.

"Trump administration reinforces the reflation trade that started post-Brexit. We expect reflation to support rotation from Low Vol stocks, the largest beneficiaries of falling yields in this cycle, into value and growth stocks," he wrote.

The strategist said infrastructure spending is "high on Trump's agenda." Consequently, the largest beneficiaries will be domestic construction materials, metals, mining and transportation stocks.

Here are six U.S. infrastructure stocks JPMorgan recommends:

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