Successful investing is largely the result of keeping the odds in your favor, observes Jim Powell, editor of Global Changes & Opportunities. The investing expert offers a non-partisan look at stocks that would benefit in the case that Vice-President Joe Biden wins the November election.
If Mr. Biden becomes president, I expect to see legislation that favors infrastructure projects. The long-overdue program to upgrade our roads, bridges, airports, and other critical infrastructure should finally get underway.
An infrastructure build-out is particularly likely because Mr. Biden — and most other Democrats — are eager to pump a great deal more money into the economy to help fight the Covid-19 recession.
No other program has the potential to put as many people to work or help as many companies. The proposed national infrastructure program is being called, the “New, New Deal.” If there is a Democratic sweep of Congress and the White House, infrastructure companies should do even better.
Caterpillar (CAT) should be one of the biggest winners of an infrastructure building program. Most infrastructure projects require the heavy lifting and material moving capacity that CAT’s equipment can provide. A national infrastructure program will also lead to increasing commercial demand for CAT’s products.
Vulcan Materials (VMC) should also prosper from an infrastructure renewal program. The company is America's largest supplier of sand, crushed rock, asphalt, concrete, and other unexciting — but essential — construction materials that will be needed in vast amounts for many years. I think VMC is a long-term slam dunk that deserves a place in your portfolio.
Fluor Corp. (FLR) should be considered by aggressive investors who would like a fallen angel infrastructure stock that has the potential to make a dramatic rebound if Mr. Biden wins the presidency.
Fluor is the world’s largest publicly traded construction firm. The company has a long and successful track record building big ticket projects, including many of FDR’s “New Deal” public works, several rebuilding projects in New Orleans after Hurricane Katrina, and over a dozen US military facilities in Iraq – to name only a few.
Mr. Biden also continues to support a blockbuster clean energy program. As with our infrastructure stocks, there is enough political and economic pressure to support clean energy that it should do well no matter what happens on November 3.
If a construction project is big, costly, complicated and essential, Fluor can build it. Starting several years ago, Fluor entered a tough period during which big construction projects — were put on hold.
Those projects can’t be put off much longer — which should be good news for Fluor. The company carries more risk than Caterpillar or Vulcan, but I believe it has greater potential for appreciation.
Meanwhile, a Democratic sweep would probably supercharge wind and solar developments. My top clean energy recommendations continue to be SunPower (SPWR) and Vestas Wind Systems (VWDRY).
Although no investment is a slam dunk for long-term success, clean energy comes as close to that mark as Wall Street ever gets. No matter who wins the November presidential election, clean energy should grow rapidly because it is finally becoming competitive with energy produced by fossil fuels.
Mr. Biden is a long-term supporter of technologies that will reduce the production of CO2 that is thought by most scientists to be a main contributor to climate change.
Mr. Biden recently put clean energy at the center of a $2 trillion plan to revive the US economy. The goal is to reach net-zero CO2 emissions by 2050. Green New Deal supporters want the target date to be changed to 2035 – and will probably get their wish.
Curiously, a Biden win in November should also be good for the financial service industry that is heavily supporting his bid for president. That’s a switch from the usual Wall Street practice to give most of its support to Republican candidates.
Since nothing in Washington is given without expecting something of at least equal value in return, I think a Biden win will benefit our portfolio of major banking companies — Citigroup (C), Bank of America (BAC), Goldman Sachs (GS), Wells Fargo (WFC) and JP Morgan Chase (JPM).
I also think managed healthcare companies will prosper if Mr. Biden wins the presidency. UnitedHealth Group (UNH) should head that parade due to its success managing President Obama’s Affordable Care Act (ACA).
As you may recall, Vice President Biden was put in charge of the ACA. He has repeatedly indicated that he would like to see the plan expanded using the Medicare model.
Mr. Biden probably wouldn’t be able to get an expanded ACA passed by himself because Republicans are dead set against it. However, we are likely to see at least some ACA growth if there is a Democratic sweep in November.
One sector that some analysts think should be avoided if Mr. Biden prevails in November is big oil. In my opinion, only the shale oil and gas industry will take a hit — primarily because it has not been doing well for over a year.
The great shale energy bonanza that was expected has struggled to break even — much less make a profit. With reduced federal support, I expect to see many shale energy bankruptcies in the near future.
On the other hand, well established oil and gas companies with proven reserves in the Gulf of Mexico and the Permian Basin should continue to rebound from the Covid-19 energy plunge. At the top of that list is ExxonMobil (XOM).
The company’s stock has yet to respond to the improving energy outlook — and is down some 40% for the year. I think investors have oversold XOM just as it’s starting to bounce back. Meanwhile, this Dividend Aristocrat of 37 years has an exceptional 8.7% yield.
