Romney Beating Obama in Another Way You Might Not Have Thought About

"Certainly looking at a lot of key industries, the ones most aligned with the Republicans, like coal, have been doing phenomenally well."

As the vice presidential debate approaches, stocks that could fare better with a Republican in the White House continue to bounce, just as Mitt Romney has done in the polls.

The move up in Republican-friendly stocks has been apparent since the presidential debate. President Barack Obama’s weak performance chiseled away his lead in key polls, and the industries that Democrats favor have also been sliding.

The latest polls show a dead heat, with Romney gaining a slight edge. Gallup’s poll of likely voters shows the candidate tied at 48 percent each.

“Certainly looking at a lot of key industries, the ones most aligned with the Republicans, like coal, have been doing phenomenally well. HMOs have been doing well,” said Jeff Kleintop, chief market strategist at LPL Financial.

CNBC created its own Obama and Romney portfolios, compiled from multiple sources. As of Wednesday, those portfolios showed a similar trend, with the Romney portfolio gaining 0.7 percent since the presidential debate, and the Obama stock portfolio down 2.7 percent in the past week.

Obama's portfolio has since improved with a 5-percent jump in First Solar, and Romney's portfolio also rose Thursday, powered by coal stocks.

LPL’s election index, released Thursday morning, shows the first significant move higher in the Republicans' favor since June. The relative strength index, run on a weekly basis, has been showing gains in Democratic sectors, particularly since the Supreme Court upheld the Affordable Care Act in June.

But last week’s debate was a clear turning point. Republican-favored sectors could continue to gain as the election gets closer. “I would expect a shift but probably not a reversal of all the gains we’ve seen for all the Democratic sectors,” Kleintop said.

Thursday's 9 p.m. ET vice presidential debate is the only one between Vice President Joseph Biden and Rep. Paul Ryan, R-Wis. The pressure is on Biden to win back some of President Obama's prior edge, lost after the last debate.

“Homebuilders are down about 5.5 percent since then. We have the diagnostic labs, health-care services companies down over two percent. We’ve seen some of the more Obama-favored industries underperforming the market. The market’s down about 1 percent since then, and the hospitals, health care facilities are down about 5 percent,” Kleintop said in an interview Wednesday.

LPL’s Democrat-favored industries include health care facilities, food and staples retailing, gas utilities, health care services, life sciences tools and services, construction materials, homebuilding and construction and farm equipment. The GOP portfolio includes coal and consumable fuels, diversified financial services, oil and gas exploration, oil and gas drilling, managed care, electric utilities, specialty retail and telecommunications services.

In CNBC’s Romney portfolio, Arch Coal and Peabody Coal are both up about 20 percent since the debate. There could be other factors behind the move, including a 6 percent jump in natural gas prices this week alone. But Republicans are seen as bigger supporters of the coal industry, and Romney mentioned coal during the debate. Eagle Rock, a company involved in oil and gas storage, is up more than 6 percent since the debate.

On the Obama list, Healthsouth was down 7 percent since the debate, and HCA Holdings is down 5 percent. Vanguard Health Systems is down about 7 percent, and DR Hortonis down 7 percent.

Romney is viewed as a bigger booster of oil and gas “fracking,” or hydraulic fracturing, even though that industry has surged during the Obama years.

“I wouldn’t say he’s against it,” said Kleintop. “I would say Republicans are more for it.”

He said Republicans would probably be easier on regulation while the Obama Administration is more likely to develop a national regulatory framework on the state-regulated industry.

Wells Fargo Securities did its own study of how the election outcomes would impact stocks it follows.

“Not surprisingly, Governor Romney’s plans to boost domestic fossil fuel production are popular with the oil and gas sector and President Obama’s Affordable Health Care Act is generally viewed as a plus for the healthcare sector. A split executive branch versus Congress will produce more of the same -- gridlock,” Wells Fargo analysts wrote in a recent note.

Some of the industries that Wells Fargo analysts said could be hurt if the president were re-elected include master limited partnerships, which might be hurt by tax law changes since the Democrats may favor broad tax reform. They also expect regulatory costs, under Democrats, to rise for the materials, energy, financial and industrial sectors.

Materials companies, however, could benefit from increased infrastructure spending under President Obama, and they expect he would continue to favor wind energy and ethanol with special tax breaks to promote activity.

The Wells Fargo analysts also note that Democrats might support housing more but could impose more environmental regulation on construction. Republicans could be more negative for the sector, due to less government support for the industry and because of a firmer stance on immigration, which means less household formation.

Kleintop said the market appears to be pricing in a “status-quo” election, with a Democratic White House and Senate and Republican House, but the market could see a strong rally post-election if the Republicans sweep. Republicans holding both houses of Congress with Obama retaining the White House could be problematic, he said.

“I think the market continues to believe there will be a compromise. It’s going to be a close election. It’s going to prompt both sides to come together and avert the fiscal cliff,” said Kleintop of the actions Congress needs to take on expiring tax cuts and the onset of automatic spending cuts Jan. 1. “While I do think we are going to get a deal done, it’s not going to be easy.”

He expects the market to be volatile until at least through the election, and then as the “fiscal cliff” is addressed.

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