Analysts at Freedom Finance Global have spotlighted four smaller companies that stand to benefit from policies put forward by U.S. President-elect Donald Trump. Three of them operate in the financial sector, while the fourth is a developer and supplier of avionics technology for the civil and military markets.
Financials
The financial sector has responded positively to Trump’s election victory, Freedom Finance Global notes. The Financial Select Sector SPDR Fund, which invests in the sector’s major companies, gained 6% on November 6, the day after the election, when Trump was officially declared the winner. The president-elect is likely to focus on economic growth by cutting taxing and regulatory red tape, reports Freedom Finance Global, which highlights three small-cap financial stocks for investors:
— NewtekOne is a regional bank with a market capitalization of nearly $370 million. It is described by Freedom Finance Global as a leader in the small and medium-sized business lending segment. It offers an array of products, including payment processing, insurance, accounts receivable financing, and payroll solutions. According to MarketWatch, seven analysts cover NewtekOne. One of them recommends buying the stock, while the rest rate it a “hold.” Their average target price is $14.54 per share, implying upside of just over 3% versus the last closing price.
— Dave is a fintech company with a $1 billion market capitalization. Its main product is an app that is supposed to offer features that traditional banks do not. For instance, the company provides cash advances when overdrafts occur. The six analysts who cover Dave rate it a “buy,” according to MarketWatch. Their average target price of $91.33 per share implies 14% upside versus the last closing price. Since the beginning of the year, Dave has delivered a nearly 830% return to investors. Investment bank B. Riley Securities also includes Dave in its list of companies that could benefit from a different regulatory approach under the incoming Trump administration.
— CaliberCos, with a market capitalization of $12.7 million, is positioned to benefit from a potential extension and expansion of tax incentives for investing, Freedom Finance Global points out. The company offers tax-advantaged investment products in the real estate market, such as funds that allow long-term investors to defer capital gains taxes. According to MarketWatch, the one analyst covering CaliberCos recommends buying it, with a target price of $3.50 per share, more than six times the last closing price.
Manufacturing
Innovative Solutions and Support (IS&S), with a market capitalization of $131.25 million, develops and sells avionics for civil and military aircraft. It offers flight management systems, flat-panel displays, autothrottles, and integrated standby units, among other products. Freedom Finance Global sees several reasons why IS&S is poised to get a boost from Trump’s return to the White House.
First, IS&S has contracts in the U.S. defense sector, which is expected to see increased funding. Specifically, the company is part of the KC-46A tanker program for the U.S. Air Force and, in 2023, received a production order from Boeing to provide GPS sensor units for the T-7A Red Hawk trainer aircraft. This new system, for fighter and bomber pilot training, is still under development.
Second, IS&S could benefit from potential tax cuts for domestic manufacturers, Freedom Finance Global points out. Trump has proposed reducing the coporate tax rate from 21% to 15%.
In addition, IS&S is developing autonomous systems for advanced air mobility (AAM), which support next-generation aviation, like vertical takeoff and landing (VTOL) and autonomous aircraft. Trump has expressed strong support for AAM technologies, stating, “Just as the United States led the automobile revolution in the last century, I want to ensure that America, not China, leads the revolution in air mobility.”
According to MarketWatch, the one analyst covering IS&S rates it a “buy” with a target price implying almost 35% upside.
