Now is the time to take a breath and identify bargains, as investors weigh the risks tied to a host of President-elect Donald Trump’s picks for top jobs across his Cabinet and administration. Big swaths of the market have pulled back since the Nov. 5 election. Vaccine makers and processed food companies suffered after Robert F. Kennedy Jr., a prominent vaccine skeptic, was tapped to lead the Department of Health and Human Services. Solar stocks tumbled, as did China stocks. Defense contractors and other companies with heavy exposure to government spending also slid, after the announcement that Elon Musk and Vivek Ramaswamy would lead an outside panel called the Department of Government Efficiency. For investors, however, the resulting tumult can also mean an opportunity to buy into a company that has strong earnings potential, a great management team, a fortress balance sheets and a competitive moat, at a bargain. “With every announcement, the market reacts very quickly and paints an entire sector with a single brush,” said Nanette Abuhoff Jacobson, global investment strategist at Hartford Funds. “And that’s the opportunity for active investors and stock selection to find those sub sectors and companies that are stronger than the rest and can withstand political headwinds.” Similarly, Luke O’Neill, portfolio manager at Catalyst Dynamic Alpha Fund, said the “major knee-jerk reaction” following each Cabinet or White House staff pick will eventually wear off, at which point, “it still comes back to what companies are doing, [which] companies are seeing positive change in their businesses.” Here are some stocks that have pulled back since the election. Moderna, a vaccine maker that has plummeted roughly 30% since the election, is nevertheless a stock that could roughly double from current levels, according to FactSet. Just this week, HSBC upgraded Moderna to buy from hold, saying that its “pipeline deserves more than the market is giving it credit for.” The pharmaceutical stock is rated consensus hold on the Street, according to LSEG. BioNTech, which pulled back more than 5% this month, was identified by Evercore ISI this week as a buying opportunity. The Wall Street firm on Tuesday upgraded the stock to outperform from in line, saying investors can take advantage of the “chaos” following the RFK Jr. news to buy into a company with a rich pipeline of cancer treatments. AbbVie and First Solar are two other stocks with strong upside potential, based on analysts’ consensus price targets compiled by FactSet.
