The 2016 general election looks to be a close one, with no presidential candidates claiming an insurmountable lead and the Democrats within just five seats of regaining control of the Senate. Political spending during presidential election years has consistently smashed total spending in previous years and it looks like this year could top the $6.3 billion mark set in 2012.

#-ad_banner-#And that spending could be heading into overdrive with the Super Tuesday primaries in 14 states on March 1. Both sides of the aisle have seen multiple candidates come out on top in other state races. Clinton and Cruz topped the Iowa caucuses while Trump and Sanders ran away with the New Hampshire primary. 

Candidates and political action committees (PACs) will be opening their pockets to get their candidate nominated and sent to Washington. Rather than picking the winners of each race, investors should be focusing on picking the winners in the election spending race.

Super Spending Ahead Of Super Tuesday
Political spending has surged ever since the 2010 Supreme Court decision that campaign spending by independent groups, i.e. PACs, was protected by the First Amendment. The 2012 election hit an historic $6.3 billion with the cost of the presidential race alone reaching $2.6 billion.

Source: OpenSecrets.org

Polls by Fox News and Quinnipiac show a tight race for the general election in November with most heads-up races within 5% or less. That means fundraisers are out in force and election spending could top the historic 2012 race. Spending by the top six candidates reached $95.5 million in January alone and is about to heat up. 

Besides the nail-biter presidential election, a total of 469 seats are up for grabs in the U.S. Senate and House of Representatives. Democrats need to win just five additional seats to regain control of the Senate, so spending could be through the roof to take the day. 

The passing of Justice Antonin Scalia makes control of the Senate even more important than usual. Confirmation of a Supreme Court justice requires 60 votes in the Senate, meaning the Republican-controlled body could block any appointments. The current Senate could try to block any appointments during the remaining Obama Administration and leaving it to the winners of the 2016 race to decide.

How You Can Win In 2016
The biggest winners in all of this are the media companies that carry the unending messages to potential voters. Media spending accounts for 30% of campaign expenditures, more than any other single category. Television and radio broadcasting win a disproportionate amount of the spending, especially in swing states and for important demographics.

EW Scripps (NYSE: SSP) is diversified across newspaper (13 markets), television (21 stations) and digital publishing. More than half of the company’s TV stations are network affiliates which should draw strong advertising revenue on political spending. Five of the stations are affiliated with Azteca America for exposure to the growing Hispanic market. Last year was a transition year for the company as it merged with Journal Communications and then restructured for a stronger focus in television broadcasting. Analysts expect sales higher by 29% this year with earnings surging 24 times to $1.49 per share. Shares jumped 27% in the first 10 months of 2012 before the election.

Gray Television (NYSE: GTN) is a television broadcasting company with 88 stations in 50 markets reaching 10.7 million households. Gray reached an agreement last September to acquire all the television and radio assets of Schurz Communications, giving it a #1 ranked station in 40 of its 50 markets in 28 states. The company holds a strong position in swing states like Ohio and Florida with research showing that the top ranked station secures more than half of the market’s political ad buys.

Political ad revenue topped $143 million in 2012, more than 35% of the company’s total revenue for the year. Analysts expect sales higher by 39% this year with earnings more than tripling to $1.76 per share. Shares jumped 27% in the first 10 months of 2012 before the election.

Salem Media Group (Nasdaq: SALM) is a radio broadcasting and publishing company with a strong position in the Christian and Conservative segments, two segments that are sure to receive a lot of attention in the heated field of Republican presidential candidates. The company operates a national portfolio of 108 local stations with 65 in top 25 markets and one of only three broadcasters with stations in all of the top 10 markets. Analysts expect 2016 sales nearly 8% higher and a 37% increase in earnings to $0.33 per share. Shares surged 118% in the first 10 months of 2012 before the election.

Risks To Consider: Media revenues may fall in 2017 after a strong year for political ads and spending around the Summer Olympics in 2016.

Action To Take: Political ad spending could be ready to heat up and drive media stocks higher. Position for a strong year for television and radio broadcasters.

P.S. How did a group of amateur investors crush Wall Street and earn $175 million in five years? By using a centuries-old investment strategy that quietly delivers gains of up to 170%…185%… even 297% per year. You can learn this strategy here — and see which stocks it’s currently tagged as a “Must Buy” today.