Most of Georgia’s largest public companies did their bit to make investors richer last year, but President-elect Donald Trump could claim some of the credit.
If you had invested $1,000 in each of Georgia’s 16 Fortune 500 companies — which ranks the nation’s largest public firms by revenues — you’d have had $18,544 at the end of 2016, or a return of 15.9 percent for the year.
Almost two-thirds of the Georgia giants’ annual gains came in the last seven weeks of the year, after Trump was elected.
Many stocks in Georgia and across the nation saw a “Trump bump,” which analysts said reflected investor optimism that the new president will push through less regulation and more stimulus and infrastructure spending, perking up the economy.
The S&P 500’s total return was 12 percent for the year, and roughly half of that was after the Nov. 8 election. The S&P 500 index includes the nation’s 500 largest companies, by market value.
“What the market said is this is a business guy who wants to make money, and we want to make money,” said Randy Cain Jr., a principal and portfolio manager at Herndon Capital Management in Atlanta.
Not that investors haven’t done very well under President Barack Obama’s watch. The S&P 500 has gained more than 175 percent during his eight-year term, according to Macrotrends, an online financial site. That’s second only to the 211 percent gain under former President Bill Clinton among the last five presidential terms, spanning 36 years.
Cain, whose firm manages about $1.4 billion for pension funds and other institutional investors, said the recent run-up in stocks could unravel if Trump runs into trouble getting support for his policies on Capitol Hill, or if the economy flat-lines. Trump’s shoot-from-the-hip style could also add to volatility for specific stocks or sectors, as seen Wednesday when he accused drugmakers of “getting away with murder” on pricing. Pharmaceutical stocks quickly tanked.
But overall, Cain said he thinks the economy could shift into a higher gear after a long, slow recovery since the 2007-2009 recession.
“The stock market has done incredibly well. We made it through the Great Recession. The economy has improved,” he said. “I’m optimistic.”
He thinks “a more business-friendly environment” under Trump will be especially good for cyclical industries that do well in a rising economy or that depend on big consumer purchases or big projects.
That includes auto dealers, materials suppliers, credit card firms, and technology and industrial companies, he said. Banks also could benefit from lighter government oversight and rising interest rates, which allow them to make more profits on loans, he said.
The Federal Reserve raised its benchmark interest rate in December, and signaled that three more increases were likely this year.
Several Georgia companies that jumped the most after Trump’s election fit Cain’s list.
Leading the pack, with post-election returns topping 20 percent, were Atlanta industrial supplier HD Supply Holdings, Duluth auto dealer chain Asbury Auto Group and Atlanta bank SunTrust.
Not far behind was NCR Corp., a manufacturer of ATMs and self-service kiosks, with an 18 percent post-election gain. It was also the hottest company on Georgia’s Fortune 500 list in 2016, with a 66 percent gain.
Atlanta airline Delta Air Lines and Duluth farm equipment maker AGCO also had post-election gains topping 10 percent.
The stock returns, supplied by online site DQYDJ.com, include dividends.
‘Periods of volatility’
Joe Sroka, chief investment officer at NovaPoint Capital in Atlanta, is also optimistic about 2017.
“We believe the economy should continue to improve in 2017,” he said. “But we should continue to see periods of volatility” in the stock market, he added, as Trump’s campaign promises are put to the test in Washington, D.C.
He thinks some of the post-election jump was due to relief that the presidential election ended without a crisis similar to the 2000 contest between George H.W. Bush and Al Gore, in which the U.S. Supreme Court stepped in.
“There was a lot of uncertainty going into the election,” said Sroka.
But after Trump’s surprise win, he said, investors were willing to bet on riskier stocks, including smaller companies that tend to see faster profit growth in a rising economy.
He said several of the best post-election performers are relatively small companies compared to Wall Street behemoths like Coca-Cola and United Parcel Service.
“Out of the top five performers, four of them have a market (value) under $10 billion,” he said, including HD Supply, Asbury Auto, NCR and AGCO.
The ‘Trump bump’ at Georgia’s biggest companies
Most of Georgia’s biggest companies had strong stock performances last year, but the post-election jump was especially pronounced for some, including SunTrust Banks, Delta Air Lines and Home Depot.
Company Annual stock return*, Post-election stock return*
HD Supply Holdings 41.7%, 33.1%
Asbury Automotive Group -8.5%, 25.2%
SunTrust Banks 29.0%, 22.2%
NCR Corp. 66.1%, 18.4%
AGCO 27.9%, 16.8%
Delta Air Lines -3.0%, 14.7%
Home Depot 1.9%, 10.9%
Genuine Parts 12.1%, 9.9%
United Parcel Service 20.2%, 7.2%
Mohawk Industries 5.5%, 4.7%
Aflac 17.1%, 1.5%
PulteGroup 3.7%, 0.8%
Coca-Cola -2.8%, -0.6%
Southern 6.3%, -1.8%
First Data Corp. -11.4%, -1.9%
Veritiv 48.5%, -4.7%
Median 9.2%, 8.5%
* Returns include dividends. DQYDJ calculated returns for the nearest Friday to beginning and end dates. Annual returns are for 1/2/2016 to 12/30/2016; post-election returns for 11/5/2016 to 12/30/2016.
Source: DQYDJ.com, E*Trade, staff calculations