24/7 Wall St.

It’s almost that time of year again. The Russell U.S. Indexes undergo their annual rebalance after the United States markets close on Friday, June 23. While many of the larger names already in the indexes will be shifted due to reweighting, at 24/7 Wall St. we are always very interested in the new companies added to the index, as that will spark demand for the shares due to their inclusion.

One of the things we found very striking this year is the large number of companies to be added that are beneficiaries of what the financial networks like to refer to as the “Trump trade.” These are stocks in sectors that could benefit from the administration’s plans for everything from infrastructure build-outs and deregulation to added emphasis on domestic energy production and exporting energy products.

We have broken out the Trump trade stocks by category. All of them should see substantial activity leading up to and on June 23. We have screened for the companies that are more well-known to investors.

Coal

• Arch Coal Inc. (NYSE: ARCH)
• Peabody Energy Inc. (NYSE: BTU)
• Warrior Met Coal LLC (NYSE: HCC)

Energy

• C&J Energy Services Inc. (NYSE: CJ)
• Key Energy Services Inc. (NYSE: KEG)
• Halcon Resources Corp. (NYSE: HK)
• Penn Virginia Corp. (NASDAQ: PVAC)
• SandRidge Energy Inc. (NYSE: SD)
• Ultra Petroleum Corp. (NASDAQ: UPL)

Materials and Processing

• Core Molding Technologies Inc. (NYSE: CMT)
• Intrepid Potash Inc. (NYSE: IPI)
• L.B. Foster Co. (NASDAQ: FSTR)
• Northwest Pipe Co. (NASDAQ: NWPX)
• Uranium Energy Corp. (NYSE: UEC)

Produce Durables

• Eagle Bulk Shipping Inc. (NASDAQ: EGLE)
• Gardner Denver Holdings Inc. (NYSE: GDI), a recent initial public offering
• Genco Shipping and Trading Ltd. (NYSE: GNK)
• Navios Maritime Holdings Inc. (NYSE: NM)
• Safe Bulkers Inc. (NYSE: SB)
• Schneider National Inc. (NYSE: SNDR), another recent IPO

A recent Jefferies research report had this to say about the annual Russell rebalancing:

If anyone who is not aware of what rebalancing is, this is the once a year redefining of the size segments for the FTSE Russell family of indexes along with their style benchmarks. June 23 will be one of, if not the busiest trading day of the year. Given the lack of excitement around this event this year, we think those names added to the Russell 2000 benchmarks should outperform and those names deleted will underperform over the next two weeks.

Many of the stocks that we listed that fall in the Trump trade category are already starting to move despite the fact that the actual event is still more than a week away. One thing is for sure, the earlier interested investors look at these companies, the better it may show up in stock performance.