Every election cycle, there are hot stocks that get a bump from the final results. If the incumbent wins, that’s a shot in the arm for predictable classes of stocks. Likewise, when the challenger succeeds, certain stocks are sure to rise.
Of course, there are a lot of factors investors can point to as catalysts for change. Certainly, the shift from a Republican presidency to a Democratic one will make big waves — tax policy will change, as will the country’s stance on China. So, naturally some industries are primed to benefit at large.
Now, investors can simply find data about which industries, groups and Political Action Committees (PACs) donated how much money to who before the election to help gauge this phenomenon.
However — since my primary interest is in buy-and-hold investing — this list is going to center on stocks that are primed to do well over the next four years. Stocks which received an immediate jump in the wake of the election have already done so. But most investors aren’t day traders. What follows is a list of longer-term stocks that investors should consider jumping into.
If you want to move around the holdings in your portfolio on the election change, this list is for you. Whether you lean left or right politically, it’s wise to get on board with the trends. Because you want your money to work for you.
- Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL)
- NextEra Energy (NYSE:NEE)
- Sunnova Energy (NYSE:NOVA)
- JD.com (NASDAQ:JD)
- Tesla (NASDAQ:TSLA)
- Albemarle (NYSE:ALB)
- Brookfield Infrastructure Partners (NYSE:BIP)
Hot Stocks to Buy: Alphabet (GOOG)
Alphabet may seem like an odd choice to lead off a story about hot stocks poised to flourish under the new administration. When Joe Biden was Vice President under Barrack Obama, tech giants were relatively unscathed by antitrust complaints. However, presently the company has an ongoing antitrust suit filed against it within the Justice Department.
Biden is going to be central to that conversation. Further, the President-elect has expressed concerns over the reach of tech giants in the past. So — now that he’s set to control the White House — there are concerns Biden could clamp down more than when he was simply Obama’s wingman.
Of course, I can’t predict the outcome of the current litigation. But I do believe these concerns are overblown. Tech is heavily partisan in favor of the Democrats. In fact, internet interest groups gave 90.7% of their contributions to Democratic candidates in the 2020 election.
Alphabet itself gave $10.5 million. On the other side, less than $723,000 was given to Republican candidates. Clearly, big tech and Alphabet aren’t as worried about a Biden presidency as some may suggest. According to the Wall Street Journal, even Vice President-elect Kamala Harris has strong ties to the Silicon Valley elite.
Finally, Alphabet stock remains one of the strongest names in the world. The company posted a third quarter earnings per share (EPS) of $16.40, soundly beating the consensus of $11.35.
NextEra Energy (NEE)
Renewable energy is sure to rise in the coming quarters — actually, it already has in the wake of the election. That’s because Democrats are keen to push green-friendly policies, companies and stocks forward. However, the GOP-controlled Senate will slow any wholesale dismantling of oil. But on balance, NextEra Energy and renewables are poised to rise and play as hot stocks in the near future.
NextEra is a renewables-based utilities company with a market capitalization of over $150 billion, making it one of the largest utility companies in the world. NEE generates more wind and solar power than anyone else. And the company is focused in continuing to do so. Between 2020 and 2021, NextEra Energy plans to bring on an additional 5,500 megawatts (MW) of wind energy. Also, NEE currently has 126 wind projects in operation.
NextEra Energy also produces 2,600 MW of solar energy in the U.S. The company plans to bring on an additional 1,000 to 2,500 additional MW between 2020 and 2021.
Wall Street analysts covering NEE stock generally favor it. Currently, there are 11 buy ratings to 7 holds. The stock also posted a Q3 earnings beat and should continue to fare well. So, for investors looking for a play on renewable energy storage and production, NextEra Energy looks like a strong pick.
Before jumping into what this company does, I want to start by noting that NOVA stock is rated nearly a unanimous buy by analysts, with two overweight ratings. So, this pick of the hot stocks may be worth a look based on trends and Wall Street sentiment alone. There are strong indications that it should rise.
Sunnova is a residential solar company, meaning it deals mostly in solar roofs and battery storage. In terms of the election’s effect on the stock, Biden has a plan to double the rate of solar panels installed in the U.S. which should provide a boon to Sunnova directly. In fact, the company is already up big this year, having grown 200% year-to-date (YTD).
What’s more, the solar firm recently expanded its solar battery storage service into Pennsylvania, Rhode Island and Connecticut. The company now offers the service in 19 states, with the storage solution acting as a backup power supply in case of outages.
Sunnova has a strong presence across the Southwest and Northeast. As it expands into other states, revenues should rise in kind. So, NOVA looks strong, given Biden’s push for increased solar panel coverage as well as strong analyst sentiment and the company’s demonstrated capacity for growth.
JD.com is a Chinese e-commerce company which has risen massively this year, up 142% YTD. In the wake of the election, Chinese companies should be the beneficiary of a softening political stance. JD stock is also already very well received by Wall Street, so it appears to have lots of appreciation in store.
The company’s 750-plus warehouses delivered $82.9 billion worth of revenues in 2019. As such, JD.com is one of China’s largest online retailers and also the country’s biggest internet company by revenue. For comparison, Amazon’s (NASDAQ:AMZN) 2019 revenues were 170.8 billion. Likewise, Walmart (NYSE:WMT) received a staggering $399.8 billion in top-line sales in 2019.
With lighter sentiment toward global trade and emerging markets like China under Biden, JD stock is one of the hot stocks for investors to consider — if they’re interested in Chinese growth. Also note that the company has R&D efforts headquartered in Silicon Valley. That might ease some investors’ concerns.
Right now, JD.com’s stock price targets run as high as $122. The current share price sits around $85. Needless to say, this e-commerce play — in a growing China and with eased U.S. relations — could spell big time appreciation.
As we all know, Biden plans to work on stricter emissions plans. That alone should increase purchases of Tesla vehicles across the country. But the President-elect has also advocated for replacing the government’s fleet of vehicles with electric vehicles (EVs). Further, Biden might even enact a plan to incentivize owners of less-efficient vehicles to trade in their gas-guzzlers for EVs.
All of these things bode well for red-hot TSLA stock, which started the year at around $85 and is now well up over $400.
Tesla’s third-quarter revenue grew 39% year-over-year (YOY). What’s more, the company delivered a record 139,593 vehicles in Q3, representing quarter-over-quarter growth of 54%, and YOY growth of 44%.
Finally, the company has also been increasing capacity across its various manufacturing sites. For instance, Tesla’s Fremont site is capable of producing 500,000 Model 3 vehicles. Its Shanghai site can produce half of that and the company’s new Berlin-Brandenburg factory should open in 2021. So, Tesla is already running very well. At over $400, clearly the EV maker is already one of the market’s hot stocks.
And now the company seems to have a Presidency behind it, too. What can I say — Tesla’s future is bright.
If all of these companies are going to produce and sell more EVs, someone has to provide more batteries for those vehicles, right? Well, those batteries need lithium. Albemarle is the industry leader in lithium and lithium derivatives. So, if Biden’s push toward EVs gains traction and increases sales in the already hot sector, ALB stock is poised for massive success.
The company recently posted Q3 earnings, which were down on volume issues related to the pandemic. However, Albemarle has continued to run plants during the novel coronavirus outbreak and maintained its quarterly dividend.
It also isn’t easy to produce lithium. That’s because the material is often removed from brines, similar to the way salt is produced. Back in 2018, a ton of lithium peaked to nearly $25,000. Today, the price is lower as battery grade lithium has slipped. However, Keith Phillips, the CEO of lithium producer Piedmont (NASDAQ:PLL) says that prices should be moving upward, and “How high they go in the next cycle peak is anyone’s guess.” With production set to rise in an industry that’s hard for new competitors to break into, then, Albemarle has some sure footing for 2021.
This company could find itself among the next hot stocks in the near future. Albemarle is positioned for big gains — if, of course, lithium prices turn in their favor and Biden’s EV hopes pan out.
Brookfield Infrastructure Partners (BIP)
As promised on the campaign trail, Biden intends to invest heavily in infrastructure. And Brookfield Infrastructure Partners is one of the largest infrastructure investors, operating across utilities, transport, energy and data infrastructure. All of these are key elements to Biden’s infrastructure plan.
Importantly, BIP stock is also very well regarded by Wall Street. With an already strong foundation in place for the company, new infrastructure on a national level should raise Brookfield’s revenues and prices. Moreover, the company says it has a goal of a long-term return on equity of 12% to 15%. It also seeks to increase dividends by 5% to 9% annually. These will be important features to draw investors in. And price appreciation from increasing business in American infrastructure will do even more good.
Finally, BIP also invests in infrastructure globally. For instance, the company recently closed a deal on about 135,000 communication towers in India.
So, ostensibly, the company should soon be able to use its infrastructure prowess in attractive projects under the Biden administration. If that happens, positive analyst sentiment should prove true. That will make BIP one of top hot stocks for the next four years.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.