With just under 100 days until Election Day, several small-cap and midcap stocks could see significant gains if former President Donald Trump wins, according to a report from Jefferies. Currently, Trump is seen as a leading candidate in several national polls, and Wall Street anticipates that his victory would result in less regulation overall. This could particularly benefit smaller companies by reducing the costs associated with compliance.
Recently, small-cap stocks have experienced a strong surge. Investors shifting their focus from large-cap technology stocks to smaller companies have driven the Russell 2000 index up by almost 10% over the past month. “One of the many reasons small caps have been rallying is the increased odds of a Trump victory, which is perceived as favorable for stocks, especially small caps,” Jefferies stated in a Monday analyst note. “We saw a similar trend after his victory in 2016.”
Jefferies highlighted several “smidcap” stocks that could see a significant lift from a potential Trump win:
Live Nation: Shares of Live Nation could benefit from a Trump victory. The stock has risen more than 6% over the past three months, and Jefferies believes there is more room for growth. The firm has a buy rating and a $112 price target on Live Nation, indicating an 18% potential upside from Tuesday’s close. The stock has rebounded after facing pressure when the U.S. Department of Justice announced a lawsuit to break up the entertainment company following an investigation into inflated ticket prices for Taylor Swift’s The Eras Tour.
Ovintiv: The oil and natural gas company Ovintiv could also see benefits if the Republican party wins in November. Jefferies notes that Ovintiv is “one of the few remaining midcap producers following the wave of upstream consolidation,” and anticipates substantial upside ahead. The firm has a $68 price target on the stock, suggesting nearly 48% potential upside. Although the stock is down nearly 2% over the past month, it is up more than 4% this year.
SoFi Technologies: SoFi Technologies is another company that Jefferies sees as poised for significant gains. The firm has a $12 price target on the stock, implying more than 61% potential upside from Tuesday’s close. Despite shares being down 25% in 2024, Jefferies sees considerable growth potential.
These smaller stocks could see a significant boost if Trump wins the upcoming election, driven by anticipated deregulation and investor optimism.
