Pre-Election Stock Report

One of Andrew Goetz's earliest political memories dates back to the summer of 1974, when he and his camp buddies tuned in to the resignation of President Richard Nixon. "I didn't understand all that was going on," he says, "but I was old enough to know it was time for change."

More than 30 years later, the co-owner of Malin+Goetz, a 4-year-old modern beauty and skin-care apothecary in New York City, thinks the U.S. is due for more dramatic changes--political, economic and social. His presidential pick is Sen. Barack Obama (D-IL), and he's showing support via his ballot and his investment portfolio, picking stocks that would fare well with Obama in office. It's a way "to put my money where my mouth is," says Goetz, 46.

Goetz's approach has merit, experts say. "Political considerations have to enter an investor's overall decision process," says Walter Gerasimowicz, CEO of Meditron Asset Management. "Not only will [politics] affect fiscal policy, but it also trickles to economic well-being."

Get Picky
Experts say no matter who's elected, the broader market is in for a slow 2009. Buying a general market fund, such as the SPDR S&P 500 (SPY), because you think a new president will help reverse the downturn would be politically incorrect. "There's so much fundamental and economic uncertainty [in the market] that has nothing to do with politics," says Alec Young, an equity strategist with Standard and Poor's. He cites the real estate malaise, job market uncertainty, and rising food and fuel prices as the macroeconomic headwinds likely to continue in 2009.

Instead, pick stocks and funds in sectors that may improve thanks to a certain president-elect. Sen. John McCain (R-AZ), for example, is calling for more offshore deepwater drilling. That may bode well for companies like Atwood Oceanics (ATW), Diamond Offshore Drilling (DO) and Transocean (RIG). Because McCain supports U.S. presence in Iraq, defense stocks like Lockheed Martin Corp. (LMT), the largest defense contractor in the world, may advance under his command.

Obama, meanwhile, is a proponent of bolstering the country's infrastructure, which would create more middle-class jobs. One stock poised to fare well under Obama, says Gerasimowicz, is Jacobs Engineering Group (JEC). "It's one of the world's largest, most diverse providers of professional and technical services," he adds. Goetz has his eyes on the generic drug industry, a sector he believes Obama will support through his proposal for more affordable health care. He recently picked up shares of Barr Pharmaceuticals (BRL) and Teva Pharmaceutical Industries (TEVA).

Bipartisan Wins
Some sectors may boom under either candidate. Take nuclear energy production: "The industry could benefit under [either candidate] as we move to more of a nonfossil-fuel program for the energy markets," says Gerasimowicz. Enriched uranium supplier USEC (USU) is one of his party-neutral stock picks.

Analysts also point to green alternatives. "With gas prices at $5 in an election year, everyone agrees on the need for alternative energy," says Young.

Goetz is looking closely at stocks in the wind turbine sector, like Vestas Wind Systems (VWS). Says Goetz, "The government will make it easier for companies like this to prosper."