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These stocks could benefit from Trump's Mueller win

Key Points
  • Special counsel Robert Mueller's 22-month-long probe found no evidence of Trump collusion with Russia in the 2016 presidential campaign, lifting the cloud that had been hanging over his presidency since his inauguration.
  • In a post-Mueller world, sectors including Infrastructure, health care and defense could get a lift from Trump-led legislative efforts, analysts say.
  • But any progress could be turned to gridlock if the partisan bickering continues in the wake of Mueller.
US President Donald Trump disembarks from Air Force One upon arrival at Lima Allen County Airport in Lima, Ohio, March 20, 2019, as he travels to visit a military manufacturing facility and attend a fundraiser.
Saul Loeb | AFP | Getty Images

Certain stocks and sectors could see a boost now that the special counsel investigation is over, allowing an unfettered President Donald Trump to turn his focus back to policymaking, both against and, in some cases, with the Democrats, analysts said.

Robert Mueller's 22-month-long probe found no evidence of Trump collusion with Russia in the 2016 presidential campaign, lifting the cloud that had been hanging over his presidency since his inauguration.

Infrastructure

One of Trump's long-held goals that has been pushed aside is his trillion-dollar infrastructure plan. Although the plan is somewhat supported on both sides of the political aisle, the parties diverge on how to fund the pricey investment.

However, infrastructure is still on Trump's mind. The president said just last week that he and House Speaker Nancy Pelosi are still talking about an elusive infrastructure deal.

Strategas has an infrastructure basket consisting of about 20 companies in traditional highway infrastructure that could benefit from any deal. The portfolio was created in 2008 to play President Barack Obama's stimulus in 2009, and the constituents have gained with the passage of highway bills over the years, according to Strategas.

The member stocks include pipeline services company Aegion Corp., general contractor Granite Construction, engineering company KBR and building material company Simpson Manufacturing.

However, a large bipartisan infrastructure bill is unlikely if Trump uses the Mueller outcome against the Democrats, and they in turn keep their intense investigations of the president.

"Is it time for infrastructure? Democrats and the administration are very far apart," James Pethokoukis, economic analyst at the American Enterprise Institute, said on CNBC's "Squawk Box " on Monday. "I highly doubt we are going to see anything like that. Maybe if this was like the beginning of last year, now that we are deep into the election season, I don't think so."

Health care

The new development is positive for health insurers as a Democratic sweep in the Senate is now less likely in 2020, alleviating the risks of having big changes to the health-care system, according to one industry analyst.

A divided government post 2020 "reduces market perception of single payer risks," Lance Wilkes, equity analyst at at Bernstein, said in a note. "We see continued pressure on drug prices and middlemen, ongoing Medicaid expansion at a state level, and the potential for stabilization of public exchange funding and policies."

Bernstein noted insurers and government Managed Care Organizations took a hit since the introduction of the "Medicare-for-all" bill in the House as Anthem, UnitedHealth, Centene and Humana were down as much as 11 percent.

"We would see this environment as positive for government Managed Care Organizations, Anthem and its company specific earnings drivers, and continued policy pressure on Pharmacy benefit managements," Wilkes said.

Defense

Stocks overall have had an epic run since Trump's election at the end of 2016, with the S&P 500 gaining more than 30 percent as Trump's overhaul of corporate taxes gave an unprecedented boost to corporations. One of the biggest winners has been defense stocks as the White House continuously upped its military budget over the past two years.

The SPDR S&P Aerospace and Defense ETF is up 55 percent since the Nov. 8 election and has returned more than 13 percent year to date.

Many of the large defense stocks including Lockheed Martin and Northrop Grumman have posted double-digit gains on the improved outlook for U.S. defense spending under the Trump administration.

The administration has approved two defense-friendly budget bills that have elevated the Pentagon's spending power to $700 billion in 2018 and $717 billion in 2019.

During Trump's State of the Union address last month, he pledged to increase the Pentagon's budget and reassess military alliances and agreements with foreign nations.