No one can predict with certainty which stocks will go up over a given time frame. However, there are clues that can point investors in a certain direction. With President Joe Biden taking over from Donald Trump and the Democrats wresting control of the Senate from Republicans, some major political policy shifts will take effect.
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President Biden has indicated that he will throw his weight behind certain industries and initiatives, such as clean energy and infrastructure, that should generate more revenue going forward. Picking the top stocks in these industries, among others, is a good way to position your portfolio for the potential changes under President Biden. Here’s a look at just a few of the many options.
Last updated: Jan. 20, 2021
- Stock price as of Jan. 15: $194.62
Caterpillar is one of the obvious choices when it comes to stocks under the Biden administration, as it is the very symbol of infrastructure development. Caterpillar is a member of the venerable Dow Jones Industrial Average and is the world’s leader in construction and mining equipment. Perhaps best of all, not only is Caterpillar the leader in the right industry at the right time, it is also a traditional value stock that has only just recently begun breaking out of a multiyear trading range.
First Solar (FSLR)
- Stock price as of Jan. 15: $96.58
First Solar is a global powerhouse when it comes to photovoltaic technology. The company plays a role in every step of the solar energy supply chain, from development to financing to engineering, construction and management of photovoltaic power plants. Although it can be hard to sort out the winners from the losers in this emerging field, First Solar is fast-growing and financially stable. With the Biden administration throwing its weight behind emerging clean energy systems, First Solar stands to benefit.
Innovative Industrial Properties (IIPR)
- Stock price as of Jan. 15: $189.30
Although no one is certain how the Biden administration will handle the legalization of marijuana, Biden himself has stood in support of federal decriminalization of the drug. With the Democratic party holding control of both houses of Congress, the next two years may be an opportune window for marijuana-related stocks to thrive.
Innovative Industrial Properties is the leading provider of real estate capital for medical-related cannabis, leasing and managing properties to marijuana-related businesses. If these businesses gain federal support, IIPR stands to gain.
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- Stock price as of Jan. 15: $213.14
Salesforce is a cloud-based IT company that may thrive without any tailwinds from the Biden administration. The company operates the world’s No. 1 customer relationship management platform, which helps all of the separate divisions of a company, from marketing and sales to IT and service, work together as a unified team from remote locations.
Although the stay-at-home orders triggered by the coronavirus pandemic may be on the way out sometime this year thanks to the distribution of various vaccines, the trend toward remote working is likely to stay. Even though Salesforce was only founded in 1999, it’s already a member of the 30-strong Dow Jones Industrial Average.
Green Thumb Industries (GTBIF)
- Stock price as of Jan. 15: $28.15
Green Thumb is another cannabis-related company that should benefit from the Biden administration’s more lenient approach to the marijuana industry.
More than two-thirds of Green Thumb’s revenues come from higher-margin cannabis derivatives, such as edibles, vapes, topicals and infused beverages, which should help profit margins as sales rise. The company will also indirectly benefit if the coronavirus pandemic winds down, as it holds a large presence in the tourism mecca of Nevada. The combination of relaxed federal cannabis laws and the return of tourists to areas like Nevada are a one-two punch that can help Green Thumb thrive.
JPMorgan Chase (JPM)
- Stock price as of Jan. 15: $138.64
JPMorgan Chase Bank is another industry titan, a leader in the financial services industry and a member of the Dow Jones Industrial Average.
Banks have been hit hard in recent years, thanks to the combination of slowing economic activity and low interest rates. However, if the Biden administration keeps its promises to spend to power the economy — and that does seem to be its intention, giving the recent unveiling of a $1.9 trillion stimulus package — banks should benefit from rising economic and loan activity and rising interest rates. JPMorgan Chase is well-positioned to profit from those trends.
NextEra Energy (NEE)
- Stock price as of Jan. 15: $82.04
NextEra Energy is a “boring” utility company, but it could get much more exciting under a Biden administration. NextEra is the world’s largest utility company, operating consistently since 1925. More importantly from an immediate investment perspective, NextEra Energy also is the world’s largest generator of solar- and wind-powered renewable energy.
The company plans to install 30 million solar panels in Florida alone by 2030, an effort that will no doubt be supported by the new presidential administration. As long as Biden and the Democrats remain in power, renewable energy companies like NextEra will have a big tailwind.
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- Stock price as of Jan. 15: $171.44
Disney doesn’t directly play into the Biden economic platform, which favors clean energy and infrastructure companies, among others. However, Disney should benefit greatly if and when the coronavirus pandemic is under control, which seems likely given the Biden administration’s focus on research and vaccine deployment.
Under a more normal economy, Americans will once again flock to Disney theme parks, cruise ships and films, giving the beloved entertainment company a big boost. Until those days arrive, however, Disney is already profiting from its recent Disney+ subscription service. Fans who can’t get enough of the company’s enviable stable of content, from classic Disney films to the complete “Star Wars,” Pixar and Marvel universes, gladly fork over $6.99 per month to the company, a trend that isn’t likely to abate.
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UnitedHealth Group (UNH)
- Stock price as of Jan. 15: $351.30
United Healthcare is an HMO that should continue to thrive under the Biden administration. HMOs are an important part of the Affordable Care Act network, and with Republican opposition to Obamacare not an issue for at least the next two years, companies like United Healthcare should be able to ride a profitable wave. The company pays a respectable 1.42% dividend and trades at about 20 times earnings, which are both attractive numbers in the current market environment.
Read More: 10 Stocks That Could Bounce Back in 2021
American Water Works (AWK)
- Stock price as of Jan. 15: $159.72
American Water Works is a direct play on the environmental priorities of the new Biden administration. One of the agenda items that the Biden team outlined in July 2020 was to “ensure clean, safe and affordable water for all,” via “significantly increas(ing) funding levels and opportunities for water and wastewater infrastructure development.”
It doesn’t get much more black and white than that. American Water Works may be a utility, but it’s been around since 1886 and is currently the largest and most geographically diverse water and wastewater utility trading on a U.S. exchange. With the boost of Biden infrastructure behind it, American Water Works should be able to build on its long record of steady growth.
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