Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

What are we looking for?

As the saying goes, “when the U.S. sneezes, the world catches a cold,” and Canada is no exception. According to FactSet’s geographic revenue data, Canadian companies in the S&P/TSX Composite Index generate a collective 31.3 per cent of their revenue from their southern neighbour.

With the U.S. presidential election rapidly approaching, certain stocks and sectors will inevitably be affected depending on the results. To better understand which companies to consider targeting and which to avoid, we conducted an analysis of the historically best and worst performing sectors in the calendar year after an election to identify potential trends.

The screen

To begin, we compiled a list of the four most recent U.S. presidential election years, the winners and the party they represented, starting with George W. Bush’s win in 2004.

Story continues below advertisement

We then took a look at historical data for the S&P/TSX Composite over that period, to see which two sectors did best in the year after a presidential election based on stock market performance.

Finally, a screen was created to select the three companies that currently lead in each of the two top sectors that we selected based on our historical data. They are ranked by five-year historical beta, a measure of stock price volatility relative to movements in the overall stock market. Companies with high beta tend to have higher returns than the overall market during upswings and lower returns during downswings. By identifying sectors that may perform well, and singling out those companies most affected by market movements, we can identify some of the potential winners after an election year.

More about FactSet

FactSet is a leading global financial data and technology company. FactSet’s superior suite of content, analytics and workflow solutions covers the entire portfolio life cycle and offers actionable insights for asset managers and investment professionals around the world.

What we found

Looking back over the presidential elections since 2004, The S&P/TSX Composite returned an average of 20.3 per cent in the year after the election, compared with 2.4 per cent during the actual election year and an average of 9.2 per cent for any given year. Stock markets tend to respond negatively to uncertainty, which may explain the poorer returns in an election year. This hypothesis is supported by the fact that there have been outsized returns in the year after an election as uncertainty around a winner is wiped away. Over all, whichever party wins the presidency seems to have had an inconclusive impact on the returns of the S&P/TSX the following year.

Looking at individual sectors, health care performed the best (34.5 per cent), followed by energy (27.4 per cent). Health care is often a hotly debated topic in elections and Canadian health care companies derive 26.9 per cent of their revenue from the United States, according to FactSet GeoRev, which may explain the outsized returns. On the other hand, energy is a global commodity priced in U.S. dollars and fluctuations in the strength of the currency may explain energy’s volatility around election time.

Canopy Growth Corp., a marijuana producer and distributor, had the highest five-year beta (2.3) in the health care space followed by Aphria Inc. (2.1), another marijuana producer, and lastly, Trillium Therapeutics Inc. (1.8), a clinical-stage oncology company. Canopy Growth and Aphria may benefit from a Democratic win; vice-presidential nominee Kamala Harris has discussed decriminalization of marijuana at a federal level, potentially making it easier for future reforms to pass.

In the energy sector, Cenovus Energy Inc. had the highest beta (3.6), followed by Enerplus Corp. and MEG Energy Corp. With the 2020 oil crash, these companies are trading at significant discounts. A win for incumbent Donald Trump may benefit these energy companies, as Joe Biden’s campaign has advocated for renewable energy at the expense of conventional oil and gas producers.

Story continues below advertisement

The worst performing sector in the year after an election, on average, regardless of which party won, was materials (7 per cent). The Canadian materials sector is dominated by gold companies; the yellow metal tends to perform well during times of uncertainty and its low returns are consistent with the theme of uncertainty dissipating the year after an election.

Select high-beta TSX-listed stocks

RankCompanyTickerGICS Sector Mkt. Cap. ($ Mil.)5Y Beta1Y Ttl. Rtn. (%)YTD Ttl. Rtn. (%)LTM EPS ($/Shr.)Div. Yld. (%)Recent Close ($)
1Cenovus EnergyCVE-TEnergy5,493.03.60-60.1-65.6-1.17n/a4.47
2Enerplus Corp.ERF-TEnergy565.33.59-68.4-71.8-2.424.72.54
3MEG EnergyMEG-TEnergy708.13.48-55.6-68.3-1.13n/a2.34
4Canopy GrowthWEED-THealth Care9,088.72.32-14.2-10.4-2.34n/a24.48
5Aphria Inc.APHA-THealth Care1,741.82.09-17.3-11.2-0.23n/a6.02
6Trillium Therap.TRIL-THealth Care1,631.01.834,300.01,124.1-2.47n/a16.28

Source: FactSet

The information in this article is not investment advice. FactSet assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained above.

Arjun Deiva, CFA, is a vice-president at FactSet Canada’s consulting division.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies