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By now, we all know Big Bird's fate may hang on the elections, since Mitt Romney said during the first presidential debate that he'd pull the plug on PBS funding.

But what about Big Energy and Big Banks? And little companies of all stripes?

Winners all, if Romney is the victor.

In contrast, a second term for President Barack Obama would favor health insurance companies, hospitals and green energy businesses, among others. And the stock market overall has gained strongly since Obama took the helm, with the Standard & Poor's 500 Index ($INX) up 73%. Historically, stocks overall and the economy do better under Democrats.

Those are the key take-aways on how the election outcome might help -- or hit -- select stocks and sectors, according to more than a half-dozen money managers, analysts and political experts I spoke with recently.

Let's take a closer look and how stocks might move, depending on who wins.

Big banks expect big gains under Romney

A good way to figure out what's going on in any situation is to follow the money. With banks, the money trail tells us lenders think they'll do much better under Romney. How so? In campaign contributions, banks favor Romney by a ratio of about 2-to-1, points out Daniel Dorn, an associate professor at Drexel University's LeBow College of Business. And this isn't just business as usual. Last election, the split was more even, according to OpenSecrets.org, which tracks campaign contributions. (Find out more on financial giving on OpenSecrets.org.)

Image: Michael Brush

Michael Brush

Why are banks with Romney? For two main reasons, says Anton Schutz, of the Burnham Financial Industries (BURFX) fund, which has outperformed competitors over the past five years, according to Morningstar.

First, a Romney victory would boost business confidence, says Schutz. That should help the economy, which in turn helps banks. This scenario would be particularly good for the big banks with capital market operations doing things like issuing stock and debt for companies and managing initial public offerings.

Top on the list: Banks such as Goldman Sachs (GS), JPMorgan Chase (JPM) and Bank of America (BAC), all of which have contributed to the Romney campaign. They've given three or four times as much money to Romney as to Obama. Citigroup (C) and Morgan Stanley (MS) would also benefit, since they, too, have big capital market operations, says Schutz.

Second, Romney would help banks by repealing most or all of the Dodd-Frank financial reform legislation, believes Schutz. Indeed, during the debate last week, Romney confirmed he would "repeal and replace" Dodd-Frank regulations on banks. He's also said he'd roll back the Sarbanes-Oxley reform legislation passed in 2002, after the Enron and WorldCom meltdowns.

New regulations have been particularly burdensome for smaller regional banks, says the money manager. So they'd see some good upside, he says.

Among regional banks, Morningstar has four-star ratings (of a possible five) on the following:

  • City National (CYN), which focuses on serving the wealthy, primarily in Los Angeles. Wealthy clients are a plus, because they default less on loans, and they flood the bank with cheap deposits, says Morningstar analyst Michael Kon. The bank has also established a presence in New York City, and it recently expanded in San Diego and Nevada by purchasing failed banks.
  • Comerica (CMA), a Michigan-based bank that is expanding into California, Texas and Florida. Given its exposure to Michigan, which was hit especially hard by the recession, Comerica has had a lot of bad loans. But Morningstar analyst Maclovio Piña thinks that the bank has turned the corner on bad loans and that it has adequate capital to deal with any more that surface.
  • Wells Fargo (WFC), a superregional bank that is a favorite of Warren Buffett for its high-quality management. By avoiding the big mistakes other banks made during the credit bubble, Wells Fargo has positioned itself well to grow as the economy recovers, says Morningstar analyst Jim Sinegal. Following the 2008 purchase of Wachovia, Wells Fargo is now one of the four largest banks in the United States. It still has plenty of room to grow by cross-selling services to Wachovia customers.

Even if Romney fails to repeal Dodd-Frank regulations altogether, a GOP victory would boost sentiment toward banks, pushing their shares higher, believes Randy McLaughlin, of Baird Investment Management. "Banks are dirt cheap," he says, singling out JPMorgan Chase and PNC Financial Services Group (PNC).

Another company that would benefit if Romney wins is the student lender Sallie Mae, formally known as SLM (SLM), says Jason Benowitz, a co-manager of the Roosevelt Multi-Cap Fund (BULLX). A Romney victory would likely reduce the role of the federal government in student lending. "Then we would see an expansion of private education lending, and SLM is the largest private education lender," says Benowitz.