Heading into the final weeks before the 2020 Presidential election, it appears that Joe Biden, a Democrat, has a slight lead over the Republican incumbent, Donald Trump. That said, investors of all stripes are trying to figure out which stocks to buy for each candidate’s victory.
If Trump wins, investors can expect relations with China to get even dicier than they already are because a second term is always meant for creating a legacy. China will most certainly be Trump’s stamp on the presidency.
Thus, you probably don’t want to be overweight Chinese-based stocks. You might also avoid U.S.-based agriculture stocks, as China gives American farmers the cold shoulder. In fact, as Zachary Cohle — assistant teaching professor of economics at Quinnipiac University — wrote in an email to InvestorPlace:
“A continuation of the tariff war that the Trump administration has pushed will make a number of industries, including the agriculture, computer, and smartphone industries, less profitable in the global economy.”
As for Biden, I’m sure energy investors aren’t particularly excited about the prospects of a Democratic victory. On the other hand, clean energy producers will probably be delighted were Biden to win the day.
- Tesla (NASDAQ:TSLA)
- Nikola (NASDAQ:NKLA)
- Caterpillar (NYSE:CAT)
- Canopy Growth (NYSE:CGC)
- UnitedHealth (NYSE:UNH)
- Centene (NYSE:CNC)
- Sherwin-Williams (NYSE:SHW)
- Summit Materials (NYSE:SUM)
- Prologis (NYSE:PLD)
- Teladoc Health (NYSE:TDOC)
- American Water Works (NYSE:AWK)
- NextEra Energy (NYSE:NEE)
- Procter & Gamble (NYSE:PG)
- Walt Disney (NYSE:DIS)
- Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B)
- A.O. Smith (NYSE:AOS)
- S&P 500 Equal Weight ETF (NYSEARCA:RSP)
- iShares MSCI Canada ETF (NYSEARCA:EWC)
- iShares Gold Trust (NYSEARCA:IAU)
- iShares U.S. Healthcare ETF (NYSEARCA:IYH)
On Nov. 3, Americans over 18 have to get out and vote or mail in your ballot. Until then, though, here are 20 stocks to buy should Joe Biden win the election.
Election Stocks to Buy: Tesla (TSLA)
Tesla suffered its worst single-day loss on Sep. 8 when it lost 21.1% of its value after being left out of the latest reshuffle by the S&P 500 Index Committee. However, it did manage to get back some of those losses a day later.
Not to worry, though. There are plenty of people who think Tesla’s a great long-term buy should Biden win, including RBC Capital Markets, who suggested as much at the end of July.
When people think of Tesla, they usually think of electric vehicles. However, it is the company’s solar ambitions — not to mention its desire to build a battery that can last a million miles — that have investors excited about a Biden victory.
On that note, here’s what Biden has to say on the subject of clean energy:
“[Innovation will] Drive dramatic cost reductions in critical clean energy technologies, including battery storage, negative emissions technologies, the next generation of building materials, renewable hydrogen, and advanced nuclear – and rapidly commercialize them, ensuring that those new technologies are made in America.”
Imagine making America cleaner, while also creating manufacturing jobs. I thought that was Trump’s job.
Whatever happens on this front, however, Tesla shareholders ought to benefit.
What’s good for the goose (Tesla) is good for the gander (Nikola and the other American electric vehicle manufacturers).
The company got a big shot in the arm Sept. 8 when it secured General Motors (NYSE:GM) for its manufacturing partnership. Nikola’s Badger electric truck will now include GM’s Ultium battery technology, with production’s slated to begin in 2022.
To make the deal happen, Nikola issued $2 billion of its stock, giving GM an 11% stake in the electric vehicle startup. “What we’re focused on is creating an all electric future and this announcement is very important today because it shows another very strong validation of our technology, our hydrogen fuel cell technology as well as our ultium batteries,” GM Chairman and Chief Executive Officer Mary Barra stated in the press release announcing the partnership.
That said, Biden will love two American companies coming together to deliver cleaner energy.
Moreover, on Aug. 26, I suggested that investors “should wait for the picture to get a little clearer before hopping on the bandwagon.”
However, you can’t get much clearer than GM. And thus. NKLA stock is a buy on this news.
Election Stocks to Buy: Caterpillar (CAT)
This is a stock that should benefit whether Biden or Trump wins because they’re both going after the infrastructure vote.
“(Biden will) create millions of good, union jobs rebuilding America’s crumbling infrastructure – from roads and bridges to green spaces and water systems to electricity grids and universal broadband – to lay a new foundation for sustainable growth, compete in the global economy, withstand the impacts of climate change, and improve public health, including access to clean air and clean water,” states Biden’s section on infrastructure investments.
I seem to remember Trump saying he was going to tackle that in his first term. That said, if I were the CEO of Caterpillar, I’d be rooting for Biden.
Either way, Caterpillar’s sizeable earth-moving equipment will benefit from the rebuilding of America’s infrastructure — albeit, 20 years too late.
Canopy Growth (CGC)
Despite the fact Joe Biden once thought cannabis was a gateway drug and is against total federal legalization, he does believe that cannabis should be decriminalized from coast to coast.
Meanwhile, Kamala Harris is from California and could be a significant influence on Biden and change his mind on the subject. Harris once was against federal legalization, but she changed her tune in 2018.
“Making marijuana legal at the federal level is the smart thing to do, it’s the right thing to do,” Harris said in 2018. “I know this as a former prosecutor, and I know it as a senator.”
In turn, that’s vital to Canopy Growth’s future growth in the U.S.
In 2019, Canopy agreed to a deal that would see it pay $3.4 billion to acquire Acreage Holdings — but only if the U.S. were to legalize marijuana at the federal level. Since then, most cannabis stocks have performed terribly, including Canopy.
However, in late June, Canopy and Acreage agreed to new terms on its deal. Canopy will now pay $843 million for 70% of the company, which lowers the business’s value to $1.2 billion or slightly more than one-third the previous price. Furthermore, it retains the right to buy the remaining 30%. Acreage got $37.5 million in cash and up to a $100-million loan for the revised terms.
Overall, Acreage is a little banged up — hence the revised terms — but Canopy’s still got a shot. And if legalization happens, Canopy gets a steal.
Election Stocks to Buy: UnitedHealth (UNH)
If Biden wins the presidency in November and the Democrats take control of both the House of Representatives and Senate, healthcare is going to be top-of-mind with the Biden/Harris brain trust.
Ned Davis Chief Strategist Ed Clissold stated in early August that he believed the managed healthcare industry would do very well if the Democrats were able to win the trifecta in November.
Many Republicans argue that Biden will fall in with the left-leaning Democrats who want “Medicare for All.” However, Clissold sees Biden adding a public option, and that’s the extent of it. That said, managed healthcare companies such as UnitedHealth will continue to run the big insurance exchanges created under the Affordable Care Act.
“If Trump is going to get re-elected, it will be because he can convince the electorate that he is the better candidate for the economy going forward. History is not on the incumbent’s side in this situation,” Clissold stated.
In April 2019, I recommended UNH stock — and I still like it today.
InvestorPlace contributor Neil George recommended the managed healthcare solutions provider in late August. George argued that Centene’s wheelhouse in government-sponsored healthcare solutions such as Medicaid, Tri-Star, and the various state programs makes it an excellent choice to benefit from Joe Biden’s healthcare initiatives.
“Given the current challenges to both the U.S. healthcare system and the economy, the spotlight will be on healthcare and healthcare reform this election cycle. And that means Centene will be a key player in its solution,” George wrote on Aug. 21. “If the economy is slow to recover, CNC’s services will be in great demand as the unemployed and underemployed reach out for healthcare assistance during the pandemic.”
Sure, CNC stock’s lost a lot of its momentum in recent weeks. However, that makes it much cheaper than what you would have paid at the beginning of the summer — and that’s an excellent thing.
Election Stocks to Buy: Sherwin-Williams (SHW)
The paint manufacturer is another of the stocks RBC Capital Markets believes will benefit from a Biden victory in November. Tesla was mentioned previously.
In my opinion, it doesn’t matter whether Biden or Trump wins, Sherwin-Williams is a great company. I said as much last December, including SHW, in a group of seven stocks to buy for $250 or more per share.
“…[I]n July 2018, I called SHW one of seven stocks to buy over $200,” I wrote on Dec. 18, 2019. “At the time, I argued that its purchase of Valspar would make the combination an unbeatable force. The same thought holds as we enter 2020.”
I like Sherwin-Williams so much, I’ve got it on my list of nine stocks to buy for the next decade. In almost any economy, it’s a winner, because an unpainted house is an unsellable house.
Summit Materials (SUM)
In case you’re unfamiliar with Summit Materials, it is one of the top-10 suppliers of aggregates (sand, gravel, crushed stone, etc.) in the U.S. When you add water and cement, you get concrete — and the company is one of the top-15 concrete producers in the country.
With that in mind, I believe Biden has a better shot at carrying out an infrastructure plan than Trump does. Concrete is vital to the construction of many types of buildings. In addition to the cement and aggregates, Summit generates a significant amount of revenue from paving and asphalt. Highway and bridge rebuilding is part of a Biden infrastructure plan providing the company with lots of opportunities to generate increased revenues over the next four years.
RBC currently has a target price of $25 over the next year. In fact, analyst Michael Dahl likes it because it’s cheaper than the company’s larger peers.
“We … prefer SUM as we see greater relative upside potential given its relative leverage and valuation discount to larger aggs peers. We believe for aggregates, the risk of higher taxes is more than offset by the higher probability of the passage of a federal infrastructure bill,” Dahl said in early August.
Election Stocks to Buy: Prologis (PLD)
The rationale behind buying a real estate investment trust to benefit from Biden’s victory has less to do about wanting to own real estate, and more to do with benefiting from the ongoing acceleration in the e-commerce business in the U.S. and elsewhere.
In case you haven’t noticed, some of the world’s best e-commerce companies are located in the U.S., and they’re always on the hunt for additional warehouses to fulfill business.
I recently recommended investors consider buying Prologis on account of the novel coronavirus accelerating online sales, which were already benefiting from a long-term secular trend to e-commerce.
“Prologis, the world leader in logistics real estate with 963 million square feet of space in 19 countries, is ideally situated to benefit from this acceleration. Despite the gains it will see from e-commerce, PLD stock is up just 14.6% year to date through August 26,” I wrote on Sept. 1.
Overall, it’s an excellent stock to ride the e-commerce wave. And with or without a Biden win, it will do just fine.
Teladoc Health (TDOC)
Right there on page 11 of the Biden-Sanders Unity Task Force Recommendations is the idea that every American has a right to quality, affordable health care. And at the moment, Americans spend more per capita for healthcare than anywhere else on the planet. That said, Biden wants to change this.
Teladoc’s telehealth services can do an excellent job servicing patients in rural America where access to in-person medical care isn’t easy to come by. And while Teladoc experienced tremendous growth so far in 2020 — its second-quarter results include 85% year-over-year growth in sales — Biden’s healthcare policies could accelerate this growth as his administration continues to find ways to deliver quality care at a lower cost.
I was excited about TDOC stock before we hit the homestretch in the run for President. And now, I’m even more excited with less than eight weeks until voting day.
“During Covid-19, it’s become increasingly clear that virtual healthcare isn’t a fad, and that’s excellent news for TDOC shareholders,” I wrote in July.
So, collectively, the future looks promising for Teladoc in a Biden presidency.
Election Stocks to Buy: American Water Works (AWK)
On page 46 of the Biden-Sanders report, it states that the Democrats under Biden plan to invest in the country’s water and wastewater infrastructure. That is music to the ears of American Water Works CEO Susan Story.
American Water Works is the largest water utility in the country. It generates revenues from customers in Pennsylvania, New Jersey, Missouri and several others. Overall, it expects to grow its annual earnings per share between 7-10% over the next few years.
So, with Biden’s desire to invest in water and wastewater infrastructure, you can be sure it will be in on this investment. As it stands, it already plans to spend up to $22 billion over the next decade bringing its infrastructure up to date.
It continues to deliver excellent risk-adjusted returns for its shareholders, and Joe Biden is not going to put a dent in those returns.
NextEra Energy (NEE)
The Florida-based utility has two divisions: Florida Power & Light, a regulated utility that delivers power to more than five million people in Florida, and NextEra Energy Resources, the world’s largest generator of renewable energy.
Florida’s an essential state for Biden, so I’m sure he’ll spend a fair amount of time there as we get closer to the election. Well, at least as much as is scientifically reasonable during Covid-19.
Search the words “clean energy” in the Biden-Sanders 110-page report, and you’ll find there are 63 mentions of the two words. In fact, here’s a good bit on it:
“We will use federal resources and authorities across all agencies to accelerate development of a clean energy economy and deploy proven clean energy solutions; create millions of family-supporting and union jobs; upgrade and make resilient our energy, water, wastewater, and transportation infrastructure; and develop and manufacture next-generation technologies to address the climate crisis right here in the United States.”
NextEra is already doing this, so expect it to lead the charge over the next four years under Biden. Furthermore, it takes diversity seriously, something Donald Trump does not. Perhaps that’s why it’s one of America’s most admired companies.
Overall, this investment will make you money while helping the planet at the same time.
Election Stocks to Buy: Procter & Gamble (PG)
The RBC analysts I’ve mentioned several times in this article feel there will be a positive outcome for utilities if Biden wins, along with a neutral outcome for REITs, communication services and consumer staples. That said, Procter & Gamble falls squarely under the last sector mentioned.
Some of its brands include Head & Shoulders, Oral-B, Tide, Dawn and Bounty. I use all five of them on a regular, if not daily, basis. And I’m sure many of InvestorPlace’s readers could say the same.
Sometimes, rather than betting on which of the two candidates you think is going to be good for a particular stock, maybe it makes sense to consider which stocks are going to be okay no matter who wins in November. And PG stock is just that.
The Cincinnati company went through a challenging period a few years back. However, over the past five years, it has an annualized total return of 17.6%. That’s better than both its consumer product peers and the entire U.S. markets.
Additionally, as InvestorPlace’s Mark Hake pointed out recently, Procter & Gamble has an excellent focus on free cash flow productivity. In fact, in the latest quarter, P&G’s FCF productivity was 161%. That means for every dollar it earned; it turned $1.61 into free cash flow.
So, Trump or Biden, that’s what you want from any company in your investment portfolio. Therefore, consider PG stock.
Walt Disney (DIS)
Of the two potential candidates, Biden is far more optimistic about life than Donald Trump. If Joe says it’s okay to go back to Walt Disney World, it will be more than okay. But if Trump says it’s okay, you know he’s got an ulterior motive.
My InvestorPlace colleague Divya Premkumar recently made some excellent contrarian points about Disney and its Disney+ streaming platform:
“The pandemic presented the company with a unique opportunity to take the emerging streaming platform to the next level. Disney’s plan paid off as subscriptions accelerated in the third quarter,” Premkumar stated on Aug. 26. “Since then, the platform continued to add some big-ticket names, including Hamilton that was set for a theater release in October 2021. After purchasing the rights to the movie for $75 million, the show premiered on Disney+ for its paid subscribers. It was downloaded 752,000 times three days after the release.”
As I used to be told as a child, “When you get lemons, make lemonade.” That said, this is just what Disney has done.
In May, I thought you’d be able to buy DIS stock below $100. However, it never fell below triple digits. And unless there’s a significant correction in the overall markets, I don’t think it will.
Overall, Disney has been remarkably resilient — and that’s an excellent sign for the long haul.
Election Stocks to Buy: Berkshire Hathaway (BRK.A, BRK.B)
In February, Berkshire Hathaway CEO Warren Buffett admitted that he is a Democrat and would have no problem voting for billionaire candidate Michael Bloomberg. However, the “Oracle of Omaha” also admitted that he has voted for Republicans in the past. In fact, his dad was a Republican congressman.
Moreover, Fox Business — desperate to help its sister news network — recently discussed how a Biden election victory represents the “biggest risk” to Berkshire Hathaway’s deal to buy Dominion Energy’s (NYSE:D) natural gas transmission and storage business for $9.7 billion.
Fox bases this premise on the belief that Biden will crackdown on the energy industry, and that’s simply not true. Sure, he’ll make sure frackers don’t poison the country’s well water, but he won’t leave Americans out in the cold.
“I am not banning fracking, no matter how many times Donald Trump lies about me,” Biden said in a recent speech in Pittsburgh.
In turn, Buffett will do just fine under Biden. And you’ll do just fine owning Berkshire Hathaway under Biden.
A.O. Smith (AOS)
A.O. Smith, a maker of water heaters, hasn’t had an easy go of it in recent years. Over the past three years, it’s delivered an annualized total return of -3.4% — well-below its peers and the entire U.S. markets.
Seeking Alpha contributor Patrick Doyle recently discussed why the company is a great business, but a terrible investment. And if you’re looking at the past three years, Doyle is right on the money. However, over the past decade, a $10,000 investment would be worth $58,890 today — well ahead of its peers and the entire U.S. markets.
Thus, it’s all a matter of timing.
Doyle believes that AOS stock needs to drop a decent amount before it’s trading at fair value if you consider that it has trailing 12-month free cash flow of $440 million and an enterprise value of $7.8 billion.
Biden’s Made in America plan will help companies such as A.O. Smith, who’ve been manufacturing in China and India for years but still produce most of the products destined for the U.S. right here in America.
“Donald Trump’s main manufacturing and innovation strategy is trickle-down economics that works for corporate executives and Wall Street investors, but not working families. He gave huge tax cuts to the largest multinationals with no requirement that they invest in the United States or favor U.S. jobs over offshoring,” Biden’s “Made in America” plan states.
Therefore, A.O. Smith wins under Biden.
Election Stocks to Buy: S&P 500 Equal Weight ETF (RSP)
The Globe & Mail recently published an article about exchange-traded funds to buy if the Democrats and Joe Biden win the election. Focused on Canadians, most of the ETFs were listed on the Toronto Stock Exchange and not on a U.S. exchange.
Nonetheless, the author suggested investors might want to buy the S&P 500 Equal Weight ETF because it balances out the tech-heavy nature of the S&P 500. The iShares Core S&P 500 ETF (NYSEARCA:IVV) has a tech weighting of 27.6% while the RSP is just 14.1%.
Although Biden is considered a centrist when it comes to Silicon Valley, some believe a win by the Democrats will bring increased scrutiny of the “Too Big to Fail” tech companies such as Facebook (NASDAQ:FB).
So, by investing in RSP, you’re hedging your bet on which industries will win and lose under Biden.
iShares MSCI Canada ETF (EWC)
As a Canadian, the one thing I do know about a Biden victory is that the U.S. will be a much better partner with Trump out of office. He’s been so bad toward Canada that Canadians are contemplating selling their winter homes in Florida if he wins a second term.
On Aug. 7, Trump announced a new 10% aluminum tariffs on more than 60 products imported into the U.S. from Canada. The country’s Deputy Minister, Chrystia Freeland, called Trump’s administration the most protectionist in America’s lengthy history.
Collectively, Trump has been terrible for Canada’s business community. But with a Biden government, the two countries can go back to being excellent allies and trading partners. And to benefit from this improvement, an investment in iShares’ Canada ETF is sure to deliver healthy returns in Biden’s four years in office.
Election Stocks to Buy: iShares Gold Trust (IAU)
Thanks to the recovery of gold prices over the past five years, the iShares Gold Trust has generated an annualized total return of 11.8% over this period. Go back another five years, and the annual return drops to 4.2% or less than half.
In mid-August, cryptocurrency investor and former hedge fund manager Michael Novogratz predicted that gold prices could hit $3,000 an ounce if Biden’s elected. Right now, they’re currently trading below $2,000.
“Electing Biden and Harris, as much as it’s gonna be great for the country, is not going to be great for the market,” Novogratz told Bloomberg.
Thus, if you want a little downside protection, IAU will give you that.
iShares U.S. Healthcare ETF (IYH)
You might think it’s overkill to have a healthcare ETF in a list of 20 stocks to buy if Biden wins. Especially when UnitedHealth, Centene, Canopy Growth and Teladoc are already representing the healthcare sector.
Well, I don’t think you can go wrong with a diversified portfolio of healthcare stocks no matter who wins the White House.
That said, over the past one-, three-, five-, and 10-year periods, IYH has delivered an annualized total return above 10%. Except for technology, it’s hard to find another ETF sector that’s been nearly as successful.
As many pundits suggest, Biden’s not going to be nearly as controversial on the healthcare front as some people might think. And as a centrist, he’s not about to cave on Medicare for All.
I’ve stated that I think UNH, CNC, CGC, and TDOC are going to be four winners from a Biden election. But if you don’t want to guess, IYH stock is a better alternative.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.