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Kensho Stats

These are the best Dow stocks to own under an ideal Trump economy

Republican presidential candidate Donald Trump addresses an audience at the 117th National Convention of the Veterans of Foreign Wars of the United States at the Charlotte Convention Center on July 26, 2016, in Charlotte, North Carolina.
Sara D. Davis | Getty Images
Republican presidential candidate Donald Trump addresses an audience at the 117th National Convention of the Veterans of Foreign Wars of the United States at the Charlotte Convention Center on July 26, 2016, in Charlotte, North Carolina.

The Dow Jones industrial average rallied to a record in the wake of the election on the hope that deregulation, tax cuts and deficit spending by the Donald Trump-led government will lead to stronger economic growth, faster inflation and higher rates.

CNBC PRO back-tested this macroeconomic scenario to find the Dow members that performed the best under these conditions.

Using hedge fund analytics tool Kensho, we searched for all the periods of time since 1980 when GDP growth was 2 percent or stronger, CPI increases were 2 percent or faster and the 10-year Treasury yield was 3 percent or higher. There were 15 time periods covering a total of more than 4,000 trading days that met all three of those conditions.

Here were the three best-performing Dow stocks, on average, during those 15 periods.



The big caveat here is beware Trump's policies on trade and China. Any restrictive trade policies implemented by the new president could outweigh the economic benefits for these big exporters. But if we get a toned-down Trump on trade, these stocks should win, if history is any guide.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.