The U.S. presidential election is heating up. We’re less than 100 days away from the big vote now. The decision by Democrats to swap President Joe Biden for Vice President Kamala Harris has shaken up the race and seemingly given the party momentum, at least judging from current polling. Markets have gotten rocky over the past month, likely in part due to the heightened uncertainty around the election. These are seven stocks to sell now that are at particularly high risk heading into election day.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) finds itself between a rock and a hard place. CEO Elon Musk has publicly aligned himself with the Trump campaign for 2024, and Musk frequently tweets political commentary which seemingly line up with a conservative point of view.
And yet, a potential second Trump Administration seems unlikely to return the favor. Trump has already threatened to end the so-called electric vehicle mandate. And Trump’s VP choice, Senator JD Vance, is also staunchly against EVs while calling for subsidies to gas-powered vehicles.
Would a Harris term be much better for Tesla? Musk has already gone all-in politically with Trump and so it’s easy to imagine a scenario where Tesla faces political and consumer backlash regardless of which party wins this fall. Since the future of TSLA is so uncertain now seems like a good time to add it to your list of stocks to sell.
Palantir (PLTR)
Palantir (NYSE:PLTR) is a leading data analytics and consulting company. The secretive firm has long prized its connections to leading government intelligence and defense agencies.
That’s where the political risk comes in. Palantir is reliant on those government contracts for a large chunk of its overall business, and any change at the White House could disrupt the company’s current trajectory. Palantir founder Peter Thiel is also a highly controversial figure, politically speaking. This could draw backlash for PLTR both in the U.S. and with foreign governments.
PLTR stock recently popped on an upbeat earnings report tied to its generative AI business. Traders should strongly consider locking in profits before that enthusiasm fades.
The GEO Group (GEO)
The GEO Group (NYSE:GEO) is an operator of private prisons. In theory, this could be a highly profitable business. Government contracting to take care of tenants who literally can’t leave a property, after all, makes for an intriguing economic opportunity.
On the other hand, there are many opponents of private prisons. Some politicians oppose the concept on principle. And others worry that attaching a profit motive to incarceration will lead to over policing of populations and longer jail sentences for relatively minor crimes.
GEO stock ran up earlier this year as Trump’s position in the polls was advancing. With the rebound on the Democratic side of the equation, however, GEO has started to slump. Harris formerly endorsed the concept of “defunding the police” and GEO could find its finances seriously challenged in a potential Harris administration. With the presidential race up in the air GEO seems to risky to hold onto at the moment which is why I see it as one of the stocks to sell.
Sunrun (RUN)
Sunrun (NASDAQ:RUN) is a solar technology company. It offers a broad product line-up, delivering both solar power generation and storage solutions through direct-to-consumer channels and third-party affiliates.
Years ago, RUN stock used to trade at a lofty valuation. It seemed like an obvious winner amid the government’s subsidy program for domestic solar power. As the total market grew, analysts expected Sunrun to enjoy a healthy piece of a larger pie.
However, subsidies are starting to run out, and the government has launched inquiries into the solar rooftop installers specifically. Now, Sunrun’s investors must face a grim reality. The company has huge operating losses and a shaky balance sheet. Sunrun lost almost $2 billion from operations over the past 12 months.
A potential Trump administration could be the final blow for the already struggling U.S. rooftop solar industry. Investors should consider RUN one of the stocks to sell before it’s too late.
Insteel Industries (IIIN)
Insteel Industries (NYSE:IIIN) produces and sells steel wire reinforcing products for concrete construction applications. Think of applications such as bridges, parking garages and commercial buildings.
Insteel was a winner from the Biden Administration’s infrastructure spending. That huge infrastructure investment funded countless highway, bridges, renewable energy and other such projects which use a great deal of reinforced concrete.
There’s no guarantee the government’s enhanced funding for infrastructure will continue once Biden leaves office. In addition, the economic slowdown should limit commercial demand for reinforced steel. With IIIN stock trading at an estimated 29 times this year’s earnings, there is little margin for error.
Coinbase (COIN)
Coinbase (NASDAQ:COIN) is a leading cryptocurrency brokerage. Shares have blasted off over the past year thanks to renewed enthusiasm in the cryptocurrency market.
I’m a long-term skeptic on Coinbase due to its relatively high transaction fees. Over time, I expect profit margins to be competed down as traditional brokerages expand trading services. And, with the emergence of low-cost cryptocurrency exchange-traded-funds (ETFs) which reduce the need for trading crypto assets directly.
There’s also political risk here. Cryptocurrency remains a financial frontier with a relatively uncertain regulatory environment. Trump has seemingly signaled more openness toward crypto this election cycle. However, Harris is viewed as having a “fraught” relationship with the crypto industry and backed out of a recent planned meeting with crypto industry members.
The Biden Administration has established a reputation for cracking down on digital assets. COIN stock had already baked in a Trump win this November and could be in for a surprise if the political winds shift. Depending on which way polling trends COIN could easily become one of the stocks to sell.
Warrior Met Coal (HCC)
Warrior Met Coal (NYSE:HCC) is an Alabama-based company which produces and exports non-thermal steelmaking metallurgical coal for the steel production by metal manufacturers in Europe, South America and Asia.
The political case here is apparent. HCC stock has surged over the past year pricing in the odds of a Trump presidency. Indeed, HCC stock is up close to 50% over the past 12 months.
Now that Trump’s surge in the polls has started to fade, HCC stock could be in for a rough surprise. Additionally, the rapid slowdown in the global economy could significantly reduce demand for steel, thus hitting Warrior Met’s revenues and profit margins.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.