Play The Trump Factor With These 4 Large-Cap Stocks

2016 was a year full of surprises and uncertainty with the markets facing volatility in the face of economic and political pressure. However, the volatility that was experienced in the run-up to the elections has subsided somewhat. As we know, key indices reacted favorably to the surprise win of Donald Trump with some sectors in particular clocking major gains.

Although the market is relatively stable now, a certain element of uncertainty still remains regarding the extent to which President-elect Trump will be able to implement the promises made by him during elections. Moreover, analysts and market watchers expect a Fed rate hike next week while the commencement of the Brexit process, scheduled to start by Mar 2017, will keep the markets volatile.

In such a scenario, it makes sense to diversify your portfolio by investing in some blue-chip stocks -- these large-cap stocks (market cap of more than $5 billion) are companies that have a proven track record and represent a certain level of financial strength, resilience and stability.

With the help of the Zacks Stock Screener, we have zeroed in on 4 large-cap stocks – these companies have a favorable Zacks Rank - #1 (Strong Buy) or #2 (Buy), have witnessed positive estimate revisions (over the last 4 weeks) and have encouraging growth prospects. Moreover, these stocks have a good VGM style score, a useful tool that allows investors to gain an insight into a stock’s strengths and weaknesses.

While “V” stands for Value, “G” stands for Growth and “M” for Momentum -- the score is a weighted combination of these three metrics. Our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 make solid investment choices. You can see the complete list of today’s Zacks #1 Rank stocks here.

While selecting these stocks, we have also focused on sectors that stand to benefit under a Trump presidency assuming he is able to deliver on his promises.

Play It Safe with These Large-Cap Stocks

Booz Allen Hamilton Holding Corporation (NYSE:BAH) : McLean, VA-based Booz Allen Hamilton Holding Corporation provides management and technology, consulting, and engineering services to the U.S. and international governments, major corporations, and not-for-profit organizations. The company’s second quarter fiscal 2017 results were better-than-expected with both earnings and revenues surpassing expectations. Following the release of second quarter fiscal 2017 results, BAH raised the lower end of its previously issued guidance range and now expects revenues to grow in the range of 3-5% and earnings in the range of $1.68 to $1.75 per share. The company had previously guided towards revenue growth of 2-5% and earnings per share of $1.65 to $1.75. The Zacks Rank #2 stock has a VGM score of A and has been witnessing upward revisions in earnings estimates over the last 30 days for both fiscal 2017 and 2018.

Government services firms like BAH are expected to benefit from the Trump administration in the long run once favorable policies are in place including potential tax cuts and increased government spending. A look at BAH’s performance shows that the company has outperformed the Zacks-categorized Government Services industry with the company gaining 21.6% versus the industry gain of 13.6%. Shares have been on an upswing ever since election results were announced.

McDonald's Corporation (NYSE:MCD) : While the selection of a restaurant stock may come as a bit of a surprise considering the challenges being faced by this sector (rising labor costs, increasing employee turnover, declining traffic and higher non-discretionary spending to name a few), Trump’s proposed plan to lower and simplify individual taxes could provide this sector with a much needed boost. Lower taxes mean more money to spend on dining out and other luxury items.

McDonald's, the world's leading global foodservice retailer with more than 36,000 locations in 100+ countries, holds a Zacks Rank #2 and a VGM score of B. Despite soft industry conditions, the company has consistently surpassed earnings expectations so far in 2016 and has also been witnessing positive estimate revisions over the last 30 days. The company has been working on making changes to its business through its global refranchising efforts slated to complete by the end of 2018. McDonald’s has also been pretty active in rewarding shareholders through dividends and share buybacks. Last year, the company had increased its three-year cash return to shareholders target to $30 billion by the end of 2016 and is on track to achieve the same. While McDonald’s does face some near-term headwinds, longer-term an improved consumer spending scenario will bode well for the stock. Where price performance is concerned, MCD has performed better than the Zacks categorized Retail-Food & Restaurants industry which declined 0.1% year-to-date (YTD) while McDonald’s has gained 1%.

Regions Financial Corporation (NYSE:RF) : Bank stocks were among the biggest gainers following the election results on expectations of a softer regulatory environment as well as higher interest rates and inflation following the implementation of Trump’s policies. Regions Financial’s shares are up 28.7% ever since election results were announced – the stock is up 46.1% YTD having outperformed the Zacks categorized Banks-Southeast industry which is up 32.7% YTD. RF, a Zacks Rank #2 stock with a VGM score of B, has surpassed earnings expectations in three of the last four quarters and is expected to record earnings growth of 13.8% in 2016.

Regions Financial is one of the nation's largest full-service providers of consumer and commercial banking, wealth management, mortgage, and insurance products and services across the South, Midwest and Texas.

Regeneron Pharmaceuticals, Inc. (NASDAQ:REGN) : Biotechs were also among the biggest gainers on Trump’s victory with the market expecting reduced focus on the sector’s pricing policies. Not just that, President-elect Trump’s pro-business stand is also expected to benefit the sector. Major biotech and pharma companies should gain from Trump’s proposed tax plan and proposal to repatriate corporate profits held offshore at a one-time tax rate of 10%.

With focus on drug pricing expected to subside and given the possibility of repatriation of funds, hopes are up that mergers and acquisitions will pick up.

Regeneron shot up 13.8% following the election results – the Zacks Rank #2 stock, which has a VGM score of B, has been witnessing positive estimate revisions for 2016 as well as 2017. The company’s flagship product, eye treatment Eylea, continues to be the key financial driver. Although Regeneron has underperfomed the Zacks categorized Medical-Biomedical Genetics industry, that could very well change as the company has quite a few catalysts in store which could boost the stock significantly. Major catalysts for the stock would be FDA approval of Dupixent, currently under priority review for atopic dermatitis with a response expected on Mar 29, 2017. Dupixent is being investigated for other indications as well including asthma, nasal polyps, and eosinophilic esophagitis. Another major catalyst would be positive cardiovascular outcomes data on PCSK9 inhibitor Praluent as this would help boost sales significantly. Regeneron is also looking to grow its ophthalmology segment and is evaluating Eylea in combination with other treatments.

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