After months of campaigning, the race to the White House is over and Donald Trump has won the 2024 US Election.
Investor attention will now turn to Trump’s policies and what they could mean for stock markets and the wider global economy going forward.
While these policies could bring some volatility to markets, it will no doubt also create opportunities.
Here are three share ideas to consider.
This article isn’t personal advice. If you’re not sure an investment is right for you, seek advice. Investments and any income from them will rise and fall in value, so you could get back less than you invest. Yields are variable and no return is ever guaranteed. Ratios also shouldn’t be looked at on their own.
Investing in an individual company isn’t right for everyone because if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.
Baker Hughes
Baker Hughes is a US-based major equipment and services provider to the energy industry.
A combination of lower commodity prices and cost pressures has seen domestic activity among its oil and gas customers pull back from the heights of the shale boom.
But the US only makes up around a quarter of Baker Hughes’ revenue. And its expertise in subsea systems leaves it well placed to benefit from the resurgence in deepwater exploration and development both offshore US and overseas.
Its Industrial & Energy Technology (IET) division has been enjoying the strongest revenue momentum of late, despite a dip in order intake. IET houses the company's gas technology and new energy activities.
A strong growth driver here is the ongoing build-out of liquefied natural gas infrastructure (LNG), where capacity is set to increase by about 60% by the end of the decade.
We’re also supportive of the push to develop and sell more digital solutions across the client base. If Baker Hughes can continue these trends, it should further improve margins and revenue visibility.
The order book is close to $33bn, meaning that it can deal with short-term lulls in commercial activity. This makes it less sensitive to energy price fluctuations than oil and gas producers, but it would still feel the impact if prices were weak for a prolonged period.
We're excited about the growth story emerging at Baker Hughes, but that’s also reflected by a valuation towards the top of the peer group.
It’s well deserved in our opinion, but means the shares are likely to be sensitive to any sustained weakness in order intake.
Coca-Cola
Soft-drinks powerhouse Coca-Cola is one of the most profitable companies in its sector.
We think that’s mainly down to two things. Unparalleled brand power and an efficient operating model.
Brand power can’t be taken for granted. It’s been a partner of the Olympic Movement since 1928 and an official sponsor of the FIFA World Cup since 1978.
Coke is updating its strategy and brand portfolio to focus more on sharpening its proposition on a regional and local level, but it looks more like a refinement than a revolutionary change to us.
Nonetheless, it's encouraging to see the group moving forward in a market where we still see room for further growth.
Changes in consumer preferences are something we’re monitoring. But the group’s made big steps to integrate lower-calorie alternatives and has also been diversifying into the nutritional beverage market.
The group’s strong balance sheet and cash flows provide the firepower to keep feeding the marketing machine.
It also supports a strong dividend for investors. In fact, Coca-Cola has managed to raise its dividend for each of the last 62 years – and it currently offers a 3.1% dividend yield. Though of course there is no guarantee this will continue.
In recent years Coca-Cola has successfully navigated a challenging inflationary environment, but after a period of hefty price increases, volumes have started to wobble.
Cost increases are starting to moderate now though, so there’s less to pass onto the consumer, which does provide Coca-Cola with a bit more wiggle room on pricing.
The valuation doesn’t look too demanding currently, but there’s still room for disappointment if recent volume declines continue.
Microsoft
Microsoft’s launch of the Windows operating system in the mid-80s saw it quickly become a dominant force in the world of software and computer services.
These days, the focus for future growth has shifted towards its cloud platform Azure, which is a key enabler for organisations seeking transformation through the adoption of artificial intelligence (AI).
Microsoft’s significant holding in Open-AI, the creator of Chat-GPT, has enabled it to lead the way in integrating AI into its own software offering. Users of Microsoft Office can now ask the Copilot virtual assistant to create written content, presentations and spreadsheets.
Recent growth rates have continued to impress, and the company is having to spend heavily on building out the infrastructure to accommodate that demand.
However, there’s no guarantee that revenue will continue to grow at the same pace as costs and investment, so expect some bumps in the road as this megatrend plays out.
One such bump to watch out for is the evolution of the regulatory environment as policymakers get to grips with increasingly intelligent machines.
But ultimately, Microsoft is a top dog in the computing world. It’s been at the forefront of several generational shifts and looks set to repeat that again.
That’s reflected in a valuation above the long-term average, which means there’s more risk of loss if growth disappoints.
The US makes up over half of the global stock market. It’s the world’s biggest economy and home to some of the globe’s largest companies.
The HL US Fund provides a way to invest in this powerhouse where the hard work is done for you. HL’s experts have handpicked an external team of fund managers, who pick US stocks they believe offer the best potential for long-term performance.
The HL US Fund is managed by Hargreaves Lansdown Fund Managers Ltd, part of the HL Group.
Investing in this fund isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.
Photo by Chip Somodevilla/Getty Images