Buy Wal-Mart, other stocks with low-income customers on a potential Clinton election win: Cowen

Published Tue, Oct 25 201611:07 AM EDT

Cowen on Tuesday released its top picks for the U.S. presidential election, highlighting a list of stocks that are likely to perform best on a potential victory by Democrat Hillary Clinton . "We continue to believe the presidential race remains Clinton's to lose with a dwindling path to 270 electoral votes for Trump. To us, the bigger question is Trump 's margin of loss," wrote the firm's Washington strategist Chris Krueger. As a result, Krueger advises clients to position their portfolios according to the policies that are likely to take center stage under a Democratic presidency. "We believe Mrs. Clinton's top legislative priorities will include: sweeping immigration reform, launching her infrastructure program and tax reform," wrote Krueger as potential investment areas. Given the possibility of an increase in the minimum wage, reduced taxes for low-income earners and immigration reform, the firm believes exposure to discount retailers such as Wal-Mart could pay off. Among apparel and footwear brands, Cowen recommends Ross Stores , Foot Locker and Burlington as three companies with the "greatest potential to benefit from rising minimum wages among their shopper base." "Minimum wage increases serve as a nice tail wind for our categories, whose consumers often skew lower income," wrote Krueger, whose research was backed by a team of equity analysts. Other picks by the firm include Reynolds American , Constellation Brands and Monster Beverage , which produce certain brands of beers, energy drinks and tobacco products that are favored by low-income consumers. Similarly, casual-food restaurant chains such as Yum Brands and Jack in the Box , could see a spike in sales as wages go up, according to Cowen's research. The proposed repatriation of foreign cash at a lower tax rate could also benefit a group of stocks. "Under U.S. law, multinational corporations based in the U.S., in theory, must pay taxes on foreign profits at a rate of 35 percent. Under either election outcomes, both Mrs. Clinton and Mr. Trump are proposing repatriation of foreign cash at a lower rate," wrote Krueger. Research by Cowen shows that companies such as Fossil , Movado , Sotheby's , Coach and TJX have the largest cash pile of foreign earnings held overseas, representing at least 64 percent of total cash holdings. "Historically, several of the retailers in our coverage universe have used such cash to pay down debt (e.g. COST ) or fund share repurchases and/or special dividends (e.g. BID, LULU )," said Krueger.

A voting sign points early voters to the polling station at the Hillsborough County Supervisor of Elections office on Oct. 24, 2016 in St. Petersburg, Fla.

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Cowen on Tuesday released its top picks for the U.S. presidential election, highlighting a list of stocks that are likely to perform best on a potential victory by Democrat Hillary Clinton.

"We continue to believe the presidential race remains Clinton's to lose with a dwindling path to 270 electoral votes for Trump. To us, the bigger question is Trump's margin of loss," wrote the firm's Washington strategist Chris Krueger.

As a result, Krueger advises clients to position their portfolios according to the policies that are likely to take center stage under a Democratic presidency.

"We believe Mrs. Clinton's top legislative priorities will include: sweeping immigration reform, launching her infrastructure program and tax reform," wrote Krueger as potential investment areas.