Key Points

• Many stocks have seen double-digit returns since Election Day.
• This is largely due to a combination of likely policy stances from the incoming Trump administration and positive quarterly earnings reports, experts said.
• President-elect Donald Trump will likely support deregulation and take a softer stance on mergers and acquisitions, experts said.
• Tesla shares also got a “premium from Elon Musk,” one analyst said.

Many large American companies have seen their stocks rise since the presidential election.

The 10 Best Performing Stocks in the S&P 500 Index
posted returns of 18% or more since Election Day, according to data provided by S&P Global Market Intelligence, which analyzed returns based on closing prices from Nov. 5 to Nov. 20.

Two companies: Axon Enterprise (AXON), which provides police technology, and Tesla (TSLA
), the electric vehicle maker led by Elon Musk, an adviser to President-elect Donald Trump, saw its shares gain more than 35%, according to S&P Global Market Intelligence.

By contrast, the S&P 500 gained about 2% over the same period.

‘Usually a bad idea’ to buy on short-term gain

Investors should be careful about buying individual stocks based on short-term momentum, said Jeremy Goldberg, certified financial planner, portfolio manager and research analyst at Professional Advisory Services, Inc., which ranked No. 37 on the list. CNBC’s annual Financial Advisor 100.

“It’s usually a bad idea,” Goldberg said. “Momentum is a powerful force in the market, but relying solely on short-term price movements as an investment strategy is risky.”

Investors need to understand what is driving the move and whether the factors driving up the stock price are sustainable, Goldberg said.

Why did these stocks outperform?

The elevated stock returns were due in part to the Trump administration’s policy stances that are expected to benefit certain companies and industries, investment experts said.

Deregulation and a softer view toward mergers and acquisitions are two “key” themes driving bullish sentiment after Trump’s victory, said Jacob Manoukian, head of U.S. investment strategy at J.P. Morgan. Morgan Private Bank.

Take the energy sector as an example.

Analysts expect the Trump administration to be more likely to greenlight oil and gas projects, for example.

Trump has called for increasing fossil fuel production and reversing Biden-era policies to reduce greenhouse gas emissions in the United States. He tapped Chris Wright, CEO of fracking company Liberty Energy, to lead the Energy Department.

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EQT Corporation (EQT
), one of the largest natural gas producers in the United States, saw its shares increase 24% between November 5 and 20, according to S&P Global Market Intelligence.

It’s an example of a company that benefited from “Trump’s push for energy,” Goldberg said.
Relying solely on short-term price moves as an investment strategy is risky.

Relying solely on short-term price moves as an investment strategy is risky.

Additionally, U.S. regulators will likely be much less strict in allowing potential mergers during Trump’s second term, experts said.

Companies in the streaming ecosystem, such as Warner Bros. Discovery (WBD)
owner of the streaming service Max, and owner of Disney+, The Walt Disney Co. (DIS)
they said.

Rosy earnings and AI

For some stocks, the outperformance was tied to upbeat quarterly earnings results or the forecasts some companies reported around or after Election Day, experts said.

Many of these companies cited artificial intelligence as a growth driver.

For example, Palantir Technologies (PLTR
), cited “unprecedented” demand for its artificial intelligence platform in the third quarter, which helped deliver “exceptionally strong” earnings, Treasurer and Chief Financial Officer David Glazer told investors Nov. 4.

Similarly, Axon beat analyst estimates in its Nov. 7 earnings results, with officials touting its “AI era plan” and raising earnings forecasts, Goldberg said.

Shares of Axon and Palantir rose 38% and 22%, respectively, from Nov. 5 to Nov. 20, according to S&P Global Market Intelligence.

Some companies benefited from a combination of policies and profits, experts said.

Take Vistra Corp. (VST), an energy provider, for example. The company’s shares rose 27% after Election Day.

Vistra is in talks with large data centers, or “hyperscalers,” in Texas, Pennsylvania and Ohio to build or upgrade nuclear and gas plants, Stacey Doré, Vistra’s chief strategy and sustainability officer, said on the company’s earnings call. company’s third quarter on November 7.

Tech companies are building more and more such data centers to fuel the AI ​​revolution, and they need to source increasing amounts of energy to run them.

The ‘Elon Musk premium’

And then there’s the Elon Musk factor.

Tesla stock got an “Elon Musk premium” from Trump’s victory, said Goldberg of Professional Advisory Services.

Musk, the CEO of Tesla, was a major supporter of Trump’s campaign. Trump tapped him to co-lead a new Department of Government Efficiency. Shares of the electric vehicle maker soared 14% the day after the election and nearly 30% by the end of the week.

But Tesla stock has additional tailwinds, experts said.

On the one hand, Trump wants to end a $7,500 federal tax credit for electric vehicles. Eliminating that policy is expected to hurt Tesla’s electric vehicle rivals.

Tesla has also been developing technology for driverless vehicles. On Tesla’s recent earnings call, Musk said he would use his influence in the Trump administration to establish a “federal approval process for autonomous vehicles.”