Who will be the next U.S. president? Flip a coin. It's that close between Vice President Kamala Harris and former President Donald Trump.
Investors who buy stocks now based on which candidate they think will win could be taking a big risk. A better bet is to find stocks that should perform well no matter how the election goes.
But which stocks fit the bill? I predict two stocks will soar in 2025 regardless of whether Harris or Trump is president.
Winners either way
The first stock I expect to deliver big gains next year is D.R. Horton(NYSE: DHI). Founded in 1978, the company ranks as the largest homebuilder based on volume in the U.S. It operates in 33 states.
D.R. Horton's shares spent much of 2024 in negative territory. However, the stock has taken off since early July and is now up more than 20% year to date. This solid performance follows on the heels of a 70% gain in 2023.
The other stock I predict will soar next year with either Harris or Trump in the Oval Office is Realty Income(NYSE: O). This real estate investment trust (REIT) has been in business for 55 years. It owns 15,450 properties leased to tenants representing 90 industries.
Like D.R. Horton, Realty Income's performance throughout much of the first half of this year was dismal. Also like the homebuilder, though, Realty Income's shares have rebounded strongly in recent weeks.
Why D.R. Horton and Realty Income?
The common denominator between the two is that both should benefit from lower interest rates.
Federal Reserve Chairman Jerome Powell has hinted strongly that a rate cut is on the way. Inflation is trending in the right direction. The labor market is cooling off. Those two factors are exactly what the Fed wants to see to reduce interest rates.
Lower interest rates usually cause mortgage rates to decline, and when mortgage rates fall, Americans are more likely to buy new homes. That's music to the ears of D.R. Horton, which closed on a whopping 94,255 homes during the 12 months ending June 30, 2024.
Realty Income likes to see lower rates because they reduce the company's borrowing costs. REITs typically fund purchases of new properties with debt. When rates fall, it makes sense that REIT stocks often rise.
Looking beyond interest rates, both of these stocks have solid growth prospects. D.R. Horton has a huge opportunity thanks to the ongoing U.S. housing shortage, and Realty Income is eyeing a big European market for much of its future expansion efforts.
Some impact from the election
I genuinely believe that D.R. Horton and Realty Income will be winners regardless of whether Harris or Trump wins. However, it's not that the winner will have no impact on the companies.
For example, Harris has proposed providing significant financial assistance to promote the construction of new homes. She wants to give tax incentives to homebuilders who sell "starter homes" to first-time homebuyers. The vice president's plan would likely provide a major windfall for D.R. Horton.
On the other hand, Trump seeks to lower corporate tax rates from 21% to 15%, while Harris wants to increase the rates to 28%. The bottom lines for D.R. Horton and Realty Income could improve if the former president achieves this goal.
Of course, whether Harris or Trump can implement their proposals hinges on which party controls the U.S. Congress. And you can probably flip a coin on that outcome, too.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Realty Income. The Motley Fool has a disclosure policy.
