US midterm elections: 5 stocks to explore as nation goes to the polls

Highlights:

• Lockheed Martin increased its quarterly dividend rate by seven per cent in Q3.
• Elevance Health, Inc. (NYSE:ELV) noted a revenue growth of over 11 per cent in Q3 FY22.
• Revenue of ON Semiconductor Corporation (NASDAQ:ON) rose 26 per cent YoY in Q3 FY22.

The investors' focus will likely shift to the US midterm elections on Tuesday, November 8, as they might also impact the equity markets.

The election on Tuesday is set to determine who will be in control of Congress, which might trigger several developments in the corporations. Companies from a wide range of sectors, including energy, defense, cannabis, infrastructure, etc, might witness a change in their traditional movements lately if the Republicans pick up momentum in polls.

Several analysts are anticipating a split government, with the Republicans gaining control over the House of Representatives and maybe the senate, which could hinder several agendas of Democrats while spurring a period of gridlock.

The split government often results in a political gridlock, which impedes several policy advancements. However, investors generally see the gridlock period as a favorable factor for the stocks.

Talking about some sectors, some investors are hopeful that the defense sector might not have to go through a heavy change, regardless of the election's result. Given the recent geopolitical turmoil, both parties might keep the investment in the defense sector stable.

On the other hand, the energy sector, which has benefited this year due to higher prices, might see policies boost energy production if the Republicans take control of both houses.

While it may pad support to the oil exploration firms, it could also drift the energy stocks while creating pressure on the oil prices. On the other hand, the recent threat of imposing a windfall tax from the Biden administration has weighed on oil producers. This policy some analysts think might be blocked by the Republicans if they attain the winner's position.

So, let's take a look at some stocks from different sectors, which include Lockheed Martin Corporation (NYSE: LMT), Phillips 66 (NYSE: PSX), Consolidated Edison, Inc. (NYSE: ED), Elevance Health, Inc. (NYSE:ELV), and ON Semiconductor Corporation (NASDAQ:ON), and see how they have performed in recent months.

Lockheed Martin Corporation (NYSE:LMT)

The leading defense and aerospace firm by market cap, Lockheed Martin holds a dividend yield of 2.33 per cent. The, LMT stock rose over 35 per cent YTD and about 43 per cent YoY.

In the continuing quarter, the LMT stock jumped over 24 per cent while reaching its 52-week high of US$ 491.155 on November 1 this year.

Lockheed Martin Corporation's net sales were US$ 16.6 billion, and its net earnings were US$ 1.8 billion or US$ 6.71 per share in Q3 FY22.

In the year-ago period, the US$ 126.23 billion market cap aerospace and defense firm's net earnings were US$ 614 million.

During its third-quarter earnings release on October 18, the company said it had raised its quarterly dividend rate by seven per cent to US$ 3 per share.

Lockheed Martin expects its net sales to be about US$ 65.25 billion in the fiscal year and its diluted EPS to be about US$ 21.55.

Phillips 66 (NYSE:PSX)

The major petroleum refineries firm, Phillips 66's dividend yield was 3.75 per cent. The company's stock, which claims to provide energy and other related services to improve lives, rose about 43 per cent YTD and around 34 per cent year-over-year.

In the ongoing quarter through November 7, the PSX stock gained over 28 per cent. On October 7, the US$ 49.28 billion market cap energy firm declared a quarterly dividend of US$ 0.97 per share of its common stock, payable on December 1, 2022.

The diversified energy firm Phillips 66's Q3 FY22 earnings were US$ 5.4 billion, against US$ 3.2 billion in the prior quarter, and its adjusted earnings were US$ 3.1 billion, versus US$ 3.3 billion in Q2 FY22.

Consolidated Edison, Inc. (NYSE:ED)

Consolidated Edison is a major utility holding firm that offers energy-related services, and its dividend yield was 3.51 per cent. The firm's stock, which offers its services through its subsidiaries, rose over five per cent YTD and about 15 per cent YoY.

In the continuing quarter through November 7, the ED stock was up nearly five per cent. The firm declared a quarterly dividend of 79 cents per share on October 20, 2022, payable on December 15.

In Q3 FY22, Consolidated Edison's net income was US$ 1.73 per share, against an income of US$ 1.52 per share in Q3 FY21.

Elevance Health, Inc. (NYSE:ELV)

The major healthcare insurance firm, Elevance Health's dividend yield was 0.97 per cent. The company's stock, which provides medical, pharmaceutical, dental, and other related services, surged around 13 per cent YTD and 24 per cent YoY.

In the running quarter through November 7, the ELV stock soared nearly 16 per cent and touched its 52-week high of US$ 549.52 on October 31, 2022.

In Q3 FY22, Elevance Health Inc's revenue rose 11.5 per cent YoY to US$ 39.62 billion, and its shareholders' net income jumped nine per cent YoY to US$ 6.68 per diluted share.

The US$ 125.78 billion market cap healthcare firm now expects its GAAP net income to be above US$ 25.33 per share in fiscal 2022, and for its adjusted annual net income, it estimates to be more than US$ 28.95 apiece.

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ON Semiconductor Corporation (NASDAQ:ON)

The major semiconductor manufacturing firm, ON Semiconductor Corporation, had a market cap of US$ 27.68 billion. The firm's stock that provides analog, standard logic, and discrete semiconductors, fell about six per cent YTD.

In the continuing quarter through November 7, the ON stock soared about two per cent while adding about five per cent YoY.

ON Semiconductor Corporation's revenue rose 26 per cent YoY to US$ 2.19 billion in Q3 FY22, and its GAAP diluted EPS was flat annually to US$ 0.70 apiece.

Bottom line:

Regardless of the speculations that who would be taking control of Congress, some investors might be expecting an upward market trend as witnessed after the previous midterm elections.

The S&P 500 was down about 21 per cent through the year, and over 19 per cent YoY. Notably, it acts as a barometer of the overall equity market and is comprised of 500 companies from different sectors.

Some analysts believe that the S&P 500  tends to perform better after the midterm election period.However, historical performance doesn't signify future performance. Given the recent concerns over soaring costs, hikes in policy rates, etc., traders should be careful while placing their bets in the market.