Here are the top 'blue wave' buy and sell ideas from BTIG

Published Tue, Nov 3 20209:53 AM ESTUpdated Fri, Nov 6 20206:50 AM EST

(This story is for CNBC Pro subscribers only.) In the event of a win by former Vice President Joe Biden and a Democratic-controlled Congress following the election , BTIG expects a shake-up in the leaders of the stock market. The Wall Street firm said in the case of a "blue wave," this year's big gainers will start to underperform, while cyclical stocks — those tied to economic recovery — will rally. "We would look for [year-to-date] winners to underperform with the expectation that a capital gains tax hike would be forthcoming from a Democratic Congress and Democratic President," Julian Emanuel, BTIG's chief equity and derivatives strategist, said in a note to clients. Biden has said he would boost the corporate tax rate from 21% to 28%, basically reversing the Republican tax cuts from 2017, and would raise capital gains taxes and taxes on the rich. It is also likely a Biden victory and a Democratic sweep of Congress would yield a hefty stimulus package. "Conversely, cyclical laggards are likely to outperform as big Stimulus ($3T or more) would be forthcoming in 1Q2021 and such an expectation backstops growth and results in a steeper yield curve, enabling investors to look past a Q4/Q1 slowdown (or even a recession) precipitated by the unfortunate acceleration of the Virus," Emanuel wrote. To help clients decide what to sell and what to buy heading into Tuesday's election, BTIG created two stock screens, blue wave outperformers and underperformers. BTIG says a blue wave and a big stimulus will benefit the companies whose earnings took the biggest hit in 2020. The research firm screened for stocks that ranked in the lowest fifth in the S & P 500 in terms of earnings growth for 2020 but are expected to have above-average profit growth next year. Financials are the most represented sector on BTIG's list. The sector has had a weak 2020 due to the economic fallout from the Covid-19 pandemic and record low interest rates. However, two major U.S. banks, Wells Fargo and Citigroup , are expected to grow earnings more than 500% and 50%, respectively. Meanwhile, Wells Fargo stock is down almost 60% this year and Citigroup has lost nearly 50% in 2020. Capital One Financial , Discover Financial , Regions Financial, Citizens Financial , Synchrony Financial and Huntington Bancshares are also expected to have earnings growth outperforming in 2021. Insurance giant AIG and General Motors also made the outperformers list. BTIG's blue wave underperformer's list are some of the biggest winners this year that would be impacted by a rise in capital gains taxes. The firm screened for stocks that ranked in the highest fifth in the S & P 500 in terms of earnings growth for 2020 but are expected to have below average profit growth in 2021. Major technology companies, which emerged as beneficiates of the pandemic, are expected to have a duller 2021. After rallying 50% in 2020, Apple is expected to have earnings growth below the average S & P 500 stock. Microsoft is up 30% this year, and the software giant is expected to grow earnings by only about 13% in 2021. PayPal, Adobe , Salesforce and Intuit are among the other expected underperformers next year. — with reporting from CNBC's Michael Bloom.

A pedestrian wearing a protective mask walks past a Wells Fargo & Co. bank branch in New York, U.S., on Thursday, July 9, 2020.

Peter Foley | Bloomberg | Getty Images

(This story is for CNBC Pro subscribers only.)

In the event of a win by former Vice President Joe Biden and a Democratic-controlled Congress following the election, BTIG expects a shake-up in the leaders of the stock market.

The Wall Street firm said in the case of a "blue wave," this year's big gainers will start to underperform, while cyclical stocks — those tied to economic recovery — will rally.