The best mid cap stocks for a Trump government

The election of Donald Trump has wide-ranging implications for investors.

On the upside, corporations can be expected to benefit from lower tax rates and lower energy cost. Domestic companies focusing on the US market stand to gain from Trump’s highly protectionist trade policy.

At the same time, a Trump government comes with risks. Handouts and heavy restrictions on immigration may rekindle inflation, and thus keep interest rates higher for longer.

What is clear, however, is that domestically focused companies stand to benefit the most. These are companies with little to no exposure to foreign markets. In light of Trump’s immigration policy, limited reliance on manual labor is an additional important consideration.

The best mid cap stocks under a Trump government

Immediately following the election results, we put our proprietary stock research engine to work to identify US-centric stocks. The most likely segment to find these is in the mid cap and small cap stock segment. For the purpose of this article, we focused on mid cap stocks, i.e. companies valued at between $2 and $10 billion.

Here is our shortlist.

1. Texas Roadhouse: TXRH 📈

2. Enova Internation: ENVA 📈

3. Cactus: WHD 📈

4. CSW Industrial: CSWI 📈

5. AAON Inc.: AAON 📈

Why mid cap stocks stand to benefit disproportionately

The tariff game

Tariffs on China and Europe under a Trump administration could favor mid cap stocks by making foreign competitors’ goods more expensive, encouraging consumers and businesses to buy domestically produced products. Mid cap companies are often more U.S.-focused and less dependent on international supply chains than large-cap corporations. This domestic market protection could improve revenue for MidCap firms in sectors like manufacturing, consumer goods, and technology, which are more vulnerable to foreign competition. Additionally, tariffs might encourage investment into U.S.-based production, allowing these companies to scale up and capture market share within the protected U.S. market.

Tax cuts

Trump’s policies on corporate tax rates will seek to extend his previously implemented tax cuts, and potentially even lower corporate taxation. This stands to stimulate economic growth and investment. Lower corporate taxes increase net income for companies, freeing up capital that mid cap stocks can reinvest in expansion, innovation, or workforce development. This tax advantage is especially beneficial for mid cap companies, which generally operate with fewer resources than large-cap firms, making any additional retained earnings impactful for their growth.

Lower energy cost

Donald Trump’s energy policy can be summed up as drill, baby, drill. Pundits go as far as to predict that some of the tax breaks for renewable energy in the Inflation Reduction Act could be redirected to fossil fuel. Oil and gas companies stand to win big in a Trump Presidency. Given that the oil market already experiences a degree of overproduction, increased drilling in the US could lead to a significant drop in the oil price, benefitting everyone’s pocket – from consumers to corporations. Due to their limited scale of operations, lower energy cost will benefit mid cap companies’ bottom line significantly more than large caps.

Five high-potential mid cap stocks under a Trump government

1. Texas Roadhéouse (TXRH) 📈

Texas Roadhouse operates around 700 casual dining restaurants in the United States and internationally. The company operates and franchises restaurants under the Texas Roadhouse, Bubba’s 33, and Jaggers names. The company was founded in 1993 and is based in Louisville, Kentucky.

Robust growth trajectory

TXRH is on a very strong growth trajectory with double digit profit growth. Lower taxation and other measures put in place by a Trump administration will accelerate the growth of the company’s bottomline.

2. Enova International (ENVA) 📈

Enova International, Inc. is a technology-driven company offering online financial services across the U.S., Brazil, Australia, and Canada. It provides various financial products, including installment loans, lines of credit, and loan-related services, partnering with third-party lenders and banks to offer near-prime unsecured consumer loans.

Strong performance on both top and the bottomline

ENVA has been experiencing significant growth in revenue. In Q2 2024, ENVA reported a 26% increase in revenue compared to the previous year, along with a substantial rise in adjusted EBITDA, as demand for the company’s services has been strong.

Enova has demonstrated solid operational efficiency, which has manifested in successive annual profitability gains.

The company’s strategic focus on shorter-duration loans, thereby lowering credit risk has cleary been paying off.

3. Cactus (WHD) 📈

Cactus specializes in wellheads and pressure control equipment for the oil and gas industry in the United States, Australia, China, and the Kingdom of Saudi Arabia. It also provides field services, such as 24-hour service crews to assist with the installation, maintenance, repair, and safe handling of the wellhead and pressure control equipment. Cactus, Inc. was founded in 2011 and is headquartered in Houston, Texas.

Drill, baby, drill

Cactus clearly stands to benefit from President Trump’s energy policies. His administration’s focus on increasing domestic fossil fuel production and reducing regulatory constraints will lead to heightened drilling activities, thereby boosting demand for Cactus’s products. Additionally, the potential rollback of environmental regulations will lower operational costs for oil and gas companies, further encouraging exploration and production efforts.

4. CSW Industrials (CSWI) 📈

CSW Industrials is a diversified industrial company that operates through two main segments: Industrial Products and Specialty Chemicals. The Industrial Products segment provides specialty mechanical items, building products, and equipment for various industrial applications, while the Specialty Chemicals segment offers a range of products, including lubricants, sealants, and adhesives. These products cater to general industrial needs, focusing on protection, maintenance, and application in various industries both in the U.S. and internationally.

Earnings growth and margin expansion

Thanks to strong management execution, CSW has been firing on all cylinders. Earnings results have gone from strength to strength, driven by effective pricing strategies, cost management, and strategic acquisitions like Cover Guard and Falcon. Earnings growth in 2025 and 2026 is projected at 27% and 14% respetively.

CSW has shown a an impressive ability to enhance operating margins through reduced freight costs and operational efficiencies across its various segments, particularly in contractor solutions.

5. AAON, INC (AAON) 📈

AAON engages in engineering, manufacturing, marketing, and selling air conditioning and heating equipment in the United States and Canada. It offers rooftop units, data center cooling solutions, cleanroom systems, chillers, packaged outdoor mechanical rooms, air handling units, makeup air units, energy recovery units, condensing units, geothermal/water-source heat pumps, coils, and controls. The company was incorporated in 1987 and is based in Tulsa, Oklahoma.

A mid cap stock benefitting from two secular growth drivers

AAON is a major beneficiary of two secular growth drivers: AI and global warming. The cooling business doing extremely well. This hasn’t been lost on the market. The company’s solutions are in hot demand (no pun intended) by data centers powering artificial intelligence. In addition, as global surface temperatures rise, the demand for cooling units will only increase.

It should be noted that AAON is not a cheap stock. The market currently values the company’s secular growth prospects at 42x next year’s earnings.

The excitement about mid cap stocks stands to last

Already off to a good start, we expect mid cap stocks to be major beneficiaries of the upcoming Trump reign. Most mid cap stocks will stand to benefit from lower tax rates, lower energy cost and insulation from trade conflicts.

Finally, in an increasingly uncertain world, we believe there is a real potential for US domestic mid cap stocks to acquire a safety premium over global players. In financial market, certainty has value.

Disclosure

Ziggma team members may presently hold shares in some of the stocks mentioned in this article.

Important Notice

We believe the information contained in this text to be reliable but do not warrant its accuracy or completeness. Opinions, estimates, and investment strategies and views expressed in this document constitute our judgment based on current market conditions and are subject to change without notice. Please consider your full financial situation prior to making an investment decision.