The election on November 3 is set to be one of the most heated and, potentially, controversial elections in U.S. history. This heightened uncertainty surrounding what will come next has been a driving force in the stock market in recent weeks, especially those days we traded in red.
The growing uncertainty and the stark differences between President Donald Trump and former Vice President Joe Biden has created a range of scenarios, each containing its own list of winning and losing stocks.
Biden is currently leading the polls and betting odds from markets like Predictit. Biden is currently a -182 favorite to win and is estimated to win 279 electoral votes before toss-ups, comfortably placing him past the 270 required to win the election.
Biden is running under the slogan “Build Back Better” and has placed a lot of emphasis on how his policies will help the U.S. recover faster and safer from the economic toll brought on by the coronavirus. In addition to wanting to hire 100,000 people for a national Covid-19 test-and-trace program, Biden seeks to raise the minimum wage to $15, invest $2 trillion in green energy, and commit a $400 billion pledge to increase the amount of American-made goods the Federal government purchases, among other things.
Below is a list of some stock groups that we expect to outpace the market under a Biden presidency:
The Essentials: CNC and TDOCA Biden victory could very well prove to be a positive driver for parts of the healthcare industry and other industries containing and supporting those essential healthcare workers. This can include companies that create and administer tests, healthcare companies, and technologies that support healthcare providers.
Centene (CNC) is a leader in managing government-sponsored healthcare solutions such as Medicaid, Tricare, and state programs. Any expansion of healthcare benefits for struggling Americans will be handled by CNC and its competitors, making them an important stock to own under a Biden presidency.
Additionally, Biden seeks to lower the cost of healthcare for Americans which should fare well for Teledoc Health (TDOC) and other innovative healthcare solutions. Teledoc helps connect rural patients who do not have easy access to healthcare professionals with providers through the internet for virtual checkups. The company has soared throughout the coronavirus pandemic, enjoying 85% year-over-year growth in sales in its second quarter.
The Cleaners: TSLA, NKLA, and NEEBiden’s ambitious $2 trillion green energy investment is set to be a massive catalyst for the involved industries. This includes clean energy and electric car and battery companies, as well as the many supplemental industries needed for creating the manufacturing plants and machinery.
Tesla (TSLA) and Nikola (NKLA) both stand to win here. Tesla and Nikola both have ambitious goals in regards to their car batteries, which will be crucial in the widespread application of clean energy. Tesla also has the added advantage of having their hands in the solar energy industry, which would certainly get a sizable boost from that $2 trillion investment.
NextEra Energy Resources, a division of NextEra Energy (NEE), is one of the largest generators of renewable energy in the world. NextEra specializes in both wind and solar power, which makes them a clear winner under Biden because of their product diversification and their existing brand and market-cap.
The Legalize-its: CGCDespite President Biden not actually supporting full legalization of recreational marijuana, he does support nationwide decriminalization. In addition to that, running-mate Kamala Harris is in support of federal legalization. Decriminalization doesn’t immediately create a larger market for cannabis stocks, but could see some states independently legalize the drug for medical and recreational purposes sooner than they would have if it remained illegal at the federal level.
Cannabis stocks have experienced an abysmal run following the Pot-Stock Bubble’s burst last year. However, under a Biden administration the industry could return to its speculative glory. This is not necessarily a good thing though, because if states don’t move fast enough for shareholders, the bubble will surely pop again.
Despite this, pot stocks will be coming off a low-base and have the potential to - with a bit of luck in subsequent elections - show higher returns on investment. The industry remains a speculative bet, but Canopy Growth (CGC) is the largest cannabis company in the country with a market cap of $5.2 billion, giving them a leg up on their competition if and when new markets emerge.