The bank’s head of equity strategy, Dubravko Lakos-Bujas, said that President Trump is likely to increase affordability efforts ahead of the midterm election season.
- The analyst added that this push will boost companies targeting low-income consumers.
- Lakos-Bujas said that he continues to favor stocks catering to the low-end consumer, a group that has been strained by persistently high inflation.
- Lakos-Bujas named consumer retailers Dollar Tree Inc. (DLTR) and Dollar General Corp. (DG), and financial companies Citigroup Inc. (C) and Western Union Co. (WU), among others, as potential beneficiaries.
JPMorgan Chase’s (JPM) head of equity strategy, Dubravko Lakos-Bujas, believes that U.S. President Donald Trump’s administration is likely to increase its affordability efforts ahead of the midterm election season and this will boost companies targeting low-income consumers.
Lakos-Bujas said in a note to clients, according to a CNBC report, that while the White House’s affordability efforts at present have not had widespread impact, this would likely change ahead of the November midterm elections.
“A shift in policymaking towards affordability has favored value-oriented themes as the administration positions itself ahead of the November midterm elections,” Lakos-Bujas said in the note.
The bank named 10 U.S. companies likely to benefit from its exposure to lower-income consumers.
Analyst Rationale
Lakos-Bujas said that he continues to favor stocks catering to the low-end consumer, a group that has been strained by persistently high inflation, adding that tax cuts in the “big beautiful bill” and falling gasoline prices are reasons to be optimistic about this group.
The analyst also highlighted Trump’s efforts to cap credit card rates in the short term and ban large institutions from buying houses as signs of the president’s growing focus on affordability.
Trump said earlier this month that he would introduce a one-year 10% cap on credit card interest rates, citing the exorbitantly high rates at present. The President also said that he will ban large institutional investors from buying single-family homes to address housing affordability amid soaring home prices. Separately, Trump also said he would be instructing representatives to buy $200 billion in mortgage bonds to bring down mortgage rates and make the cost of owning a home more affordable.
The Companies That Made The Cut
Consumer retailers Dollar Tree Inc. (DLTR) and Dollar General Corp. (DG) made it to the list, along with off-price retailer Burlington Stores Inc. (BURL) and multinational company Walmart Inc. (WMT).
Hunt-focused value retailer Dollar Tree recently received a downgrade from BNP Paribas to ‘Underperform’ from ‘Neutral’ and a cut in its price target to $87, down from $118, citing a weaker sales environment and a fall in consumable units. However, DLT shares have gained over 78% in the past year.
Meanwhile, Walmart has been gaining from a recent surge in AI-driven traffic, emerging as a key product discovery entry point for consumers. WMT shares have risen over 25% in the last one year.
Financial companies Citigroup Inc. (C) and Western Union Co. (WU) also made the cut. AI-lending platform Upstart Holdings (UPST), and credit card company Bread Financial Holdings (BFH) were the other financial companies that Lakos-Bujas named as potential beneficiaries from Trump’s affordability push.
Others on the analyst’s list include low-cost flyer Southwest Airlines Co. (LUV) and hospitality company Choice Hotels International, Inc. (CHH).
Shares of C and BFH have gained over 38% and 6% in the past year while shares of WU and UPST have each lost over 8% and 35% respectively in the same period.
LUV stock has risen over 32% while CHH stock has lost over 28% in the last 12 months.
Meanwhile, S&P Retail Select Industry Index (SPSIRE), which features discount retailers, gained over 10% in the past year and the State Street Consumer Staples Select Sector SPDR ETF (XLP) gained over 6%.
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