No matter who was elected as president this year — incumbent President Donald Trump or former Vice President Joe Biden — the choice was always going to be controversial. But because of this inevitability, pundits on both sides of the political aisle hoped for a clean, decisive election. Of course, we got the exact opposite, complicating the narrative for stocks to buy for a divided government.
Overall, let’s get something out of the way from the get-go: irrespective of the results of the upcoming Georgia runoffs, we will likely enter a period of unprecedented political animosity. For one thing, a Monmouth University survey revealed that “almost one-third of Americans, and more than 75% of Trump supporters, believe Biden only won because of fraud.” Second, and more importantly, Republicans must harness this anger if they wish to win future elections.
Therefore, in many ways, it doesn’t matter which party controls the Senate. The idea of an illegitimate Commander-in-Chief has gone mainstream. As an investor, you should consider adjusting your portfolio based on stocks to buy for a divided government. Remember: the Democrats didn’t exactly put up a good showing in 2020. And this sets an intriguing and bitterly contested midterm election for 2022.
Still, Republicans can do themselves a lot of good if they can maintain Senate control. Furthermore, they have the easier job; they just need to win one of the Georgia runoffs. But this too is a complex issue. Unfortunately for the right, President Trump’s insistence on pushing the voter fraud narrative may have sparked a civil war within the Republican party.
That’s according to an op-ed from the Wall Street Journal, which asserts that President Trump’s “attacks on fellow Republicans are causing a split in the party that could help the Democrats, who are flooding [Georgia] with money and absentee ballot drives.” Frankly, the situation couldn’t be more tense, which may help these stocks to buy for a divided government:
- Brookfield Renewable Partners (NYSE:BEP)
- Quidel (NASDAQ:QDEL)
- Axon Enterprise (NASDAQ:AAXN)
- Sportsman’s Warehouse (NASDAQ:SPWH)
- Canopy Growth (NASDAQ:CGC)
- Ford (NYSE:F)
- Livent (NYSE:LTHM)
- H&R Block (NYSE:HRB)
- Royal Gold (NASDAQ:RGLD)
For this list, I’ve attempted to introduce ideas that will be relevant over the next four years and not necessarily whether they appeal to either party. With stocks to buy for a divided government, this is all about making money — even if you must do it cynically.
Brookfield Renewable Partners (BEP)
Although 2020 will forever mainly be associated with the novel coronavirus, there were many horrible events that occurred. A major one that comes readily to mind is the raging wildfires in the west coast of the U.S. Of course, liberal politicians quickly blamed climate change. Assuming this argument is valid, it would mark Brookfield Renewable Partners as one of the stocks to buy for a divided government.
Indeed, BEP stock is almost a perfect play in this context. In a 2019 Pew Research Center report, 90% of Democrats felt that the federal government was doing too little to help reduce the impact of climate change. In contrast, only 39% of Republicans agreed.
Of course, I didn’t need to pull up a Pew report to tell you this. But you know what both Democrats and Republicans have consensus on? That the country’s population is rising due to multiple factors like immigration. And that means we’ll need a broad energy infrastructure to handle increased consumption, boding well for BEP stock.
If you follow the typically awful ramblings of the extreme right wing, you’ll know that they appreciate Russia because the Russians have a, shall we say complex views of racial diversity. But this year, we saw an internal crisis among conservatives with hard racialized views: right-leaning folks generally don’t trust Covid-19 vaccines, yet Russia is proud to be the first to deliver such a solution.
What to do? Well, for one of the stocks to buy for a divided government, I’d take a look at Quidel. As a manufacturer of coronavirus testing kits, QDEL stock has been fundamentally relevant this year. Further, with new daily Covid-19 cases reaching absolutely ridiculous heights in the U.S., you’d figure that Quidel will remain relevant, despite the introduction of viable vaccine candidates.
Admittedly, QDEL stock has been all over the map. Certainly, a safer approach would be Abbott Laboratories (NYSE:ABT). But if you don’t mind a little bit of risk in exchange for potential reward, Quidel is your best bet.
Axon Enterprise (AAXN)
When you have a topic like stocks to buy for a divided government, you know that the discussion will turn to controversy. And that means we can’t ignore Axon Enterprise, which is most famous (or notorious) for making the Taser smart weapon. Additionally, Axon manufactures body cameras for law enforcement officers. Naturally, this is where the hard feelings lie.
Since the terrible and unnecessary death of George Floyd, protests sparked across the country calling for social justice. Unfortunately, this made police officers the visible target for some protestors’ rage. Here’s the truth — the vast majority of law enforcement agencies hire good people, as in salt-of-the-earth types. But the reality of our fractured nation facilitates support for AAXN stock.
If it weren’t for Axon’s non-lethal devices and body cams, we may have suffered much worse violence on our streets. Yes, the media focuses on the bloodshed but what we don’t get to see are the lives saved and situations deescalated because of Axon. For that, I’m long-term bullish on AAXN stock.
Sportsman’s Warehouse (SPWH)
Before I get into my next idea for stocks to buy for a divided government, I’m going to drop a truth bomb: most Americans are conservative. In a 2019 Gallup poll, this country ideologically was center-right. Further, if President Trump didn’t flub up the national coronavirus response, he would be looking at a second term. By the way, I’m talking about a real second term.
Therefore, investors should consider Sportsman’s Warehouse and at least entertain the idea of acquiring SPWH stock for their portfolio. Sure, guns are controversial. But again, Americans are mostly conservative. Partially, this explains why we have more guns than we do people in this country.
And let’s face it folks — gun sales are only going to increase because of the political/ideological divisions. Democrats don’t trust Republicans because really, why should they? And Republicans don’t trust Democrats because many of them have been radicalized.
But the overriding catalyst for SPWH stock may not be politics. Instead, it’s that people, irrespective of their beliefs, want to protect their families.
Canopy Growth (CGC)
Clearly, there’s no love lost between Democrats and Republicans. Further, the vitriol has taken a turn for the bizarre, with some folks not only hoping for the Supreme Court to hand President Trump a second term but instead, turning to a higher power.
Whatever happens, if you’re seeking stocks to buy for a divided government that may lead to a path of unity, you may want to check out Canopy Growth. Sure, it’s unintuitive as heck. However, cannabis previously offered one of the rare instances of bipartisanship during the (first) Trump administration. Further, with the United Nations reclassifying cannabis to a less-restrictive scheduling, CGC stock has looked mighty tempting.
True, this doesn’t necessarily mean that full legalization is coming for the U.S. For one thing, Joe Biden has historically opposed marijuana legalization. Second, the Republicans taking control of the Senate would stymie cannabis reform.
However, if the Democrats can give Biden a blue slate, CGC stock would be one to watch closely.
Inarguably, the electoral race of 2020 was the most contentious over the last few decades. Just look at how Americans are treating each other. In one YouTube video, I saw a typical ‘Murican truck drop a cloud of nasty exhaust fumes over a small crowd of Biden supporters.
Here’s the thing: if we move to electric vehicles (EVs), Trump supporters won’t be able to do stuff like that. But Ford wouldn’t do something like that, would it? Because that might hurt F stock.
Well, the iconic automaker broke some hearts when it introduced the Ford Mustang Mach-E. Indeed, management did the unthinkable, slapping the iconic Mustang badge on an EV — and an SUV at that! Still, I wouldn’t let automotive enthusiasts’ outrage dissuade you from F stock.
For one thing, Ford’s keeping it real with gearheads by providing the new Bronco with a 7-speed manual transmission option. But the company’s also keeping it real with reality, hence its move toward EVs. Thus, it might be one of the most balanced stocks to buy for a divided government.
According to the Biden Plan, the incoming administration promises to make America a net-zero emissions economy and society by 2050. Logically, this ambition could be complicated if outgoing President Trump decides to run again in 2024. Given how out of touch many Democrats are, he’d have a great chance of winning.
But whatever happens, it’s obvious that consumers are gravitating toward EVs. And I’m not entirely sure that they’re doing so motivated by environmental reasons. Yeah, I like saving the spotted owls like everyone else. But if I’m forking over tens of thousands of dollars, I need greater incentives. Well, having a more reliable vehicle that’s cheaper to operate over the long run would do the trick.
But which company to go with? Fortunately, an investment in Livent and specifically LTHM stock takes some of the guesswork out of the equation. All EVs require lithium, which Livent specializes in.
Further, as technological advancements introduce more digital conveniences, lithium demand will only increase. Thus, LTHM stock is one of the best stocks to buy for a divided government, even if tensions get worse.
H&R Block (HRB)
The case for H&R Block will depend largely on what happens in the upcoming Georgia runoffs. That’s because President-elect Biden (yeah, I know the people elect the President, not the media, but the people have also spoken) indicated that he is open to raising individual and corporate tax rates to George W. Bush-era highs.
Now, that alone probably won’t increase demand for HRB stock. However, changes to tax laws can cause unforeseen consequences. Further, taxpayers will want to maximize whatever refunds are due to them. Therefore, I see this as one of the ironic stocks to buy for a divided government. Yes, taxes cause huge partisan conflicts but the implications for individual taxpayers creates a shared solutions pathway.
However, the most important catalyst for HRB stock could be the disruption of the novel coronavirus. Today, most white-collar worker bees have had a taste of professional “freedom.” Many will not want to lose the benefits of working from home. Therefore, we will see a rise in the gig economy, bolstering the case for H&R Block.
Royal Gold (RGLD)
Historically, bitter election disputes tend to cool down as the losing party accepts the results. Of course, this time, the situation really is different because most Trump supporters refuse to acknowledge Joe Biden as President-elect. Instead, they resort to bizarre arguments, such as it ain’t over until the Electoral College sings.
Here’s the thing — the media “declares” victory for the winning candidate because the losing candidate doesn’t have a mathematically viable road to the White House. Aside from some rare blunders, news agencies are usually reliable in their pronouncements.
Still, the dissociation with reality continues, which cynically bodes well for Royal Gold. If you’re looking to bank on stocks to buy for a divided government, RGLD stock seems to sell itself. Levered to a precious metal royalty and streaming company, Royal Gold may offer a safe haven play for concerned investors.
Plus, I believe that whatever economic policies Biden pursues, they will have an inflationary affect on our money supply. Obviously, that’s good for gold, which should in turn lift RGLD stock.
On the date of publication, Josh Enomoto held a long position in F and gold.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.