$1.9 trillion is quite a big number. But that’s the amount president-elect Joe Biden aims to spend to keep American consumers and businesses afloat until vaccines against Covid-19 are more widely distributed.
Biden’s plan includes a number of measures designed to keep the U.S. economy moving throughout 2021 and beyond, including direct payments of $1,400 to most Americans, extending federal unemployment benefits through to the end of September, increasing the federal minimum wage to $15 an hour, and providing $350 billion in state and local government aid.
It’s a bold plan and it remains to be seen if Biden will get it through Congress. Mohammad Niamat Elahee, Ph.D., a Professor in the Department of International Business at Quinnipiac University, applaudED Biden’s “American Rescue Plan,” sayING the new stimulus measures will “Lessen cases of bankruptcy, help maintain strong consumer demand, and keep the economy humming.”
As Democrats move to approve more stimulus, we look at four stocks that investors should consider adding to their portfolios:
That being said, investors shouldn’t just be watching for further stimulus. As Professor Elahee points out, “Ultimately, it is the success of vaccinations that will help the economy rebound.”
Stocks To Buy If Democrats Approve More Stimulus: Honeywell (HON)
A lot of big fish on Wall Street are urging investors to rotate out of technology stocks and into industrials. The logic being, industrial companies will benefit from increased government spending and the reopening of the economy from the pandemic. And few industrial companies in the U.S. are bigger than Charlotte, North Carolina-based Honeywell.
This company, with nearly 120,000 employees, is involved in sectors ranging from aerospace to manufacturing and building controls to supply chain management. Honeywell today is a true multinational company that should see an increase across its business lines the world over as we emerge from Covid-19.
HON stock rebounded nicely from its bottom last March when markets melted down. And since the end of October, the company’s share price has risen 28%, carried by excitement over Covid-19 vaccine approvals and the prospects of returning to normal life sooner rather than later.
Honeywell also has a strong balance sheet and an enviable track record of beating earnings guidance. And the company is clearly eager to see the American economy moving again, going so far as to help with Covid-19 vaccine distributions in North Carolina. Plus the stock comes with a dividend yield of 1.78%.
Dollar General (DG)
If Joe Biden gets his way, most Americans will receive a total of $2,000 in new stimulus payments. That’s just enough money to send consumers bargain shopping at their local Dollar General store.
The company proved resilient during the last year as people looked to save money by shopping at dollar stores. While not a “dollar store” in the true sense of the term, Dollar General still sells items for less than competing retailers such as Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN).
Dollar General’s pricing has proved so popular that the company was able to open 885 new stores across the U.S. in 2020, arguably the worst business climate in more than a decade. And now, Dollar General looks likely to benefit further as Americans stretch their stimulus checks as far as they can in the coming weeks and months.
DG stock is up 54% since last March and now trades at $211.44 a share. The share price has held steady since October, but should breakout when and if Biden’s stimulus plan passes through Congress.
Another discount retailer that’s sure to benefit from new stimulus measures is Target. The eighth largest retailer in the U.S., Minneapolis, Minnesota-based Target sells groceries, clothing and household items in a price range most Americans can afford. Many turned to the retailer in the depths of the pandemic and could very well take their additional stimulus checks to Target this year.
Analysts and pundits expect TGT stock to perform well throughout 2021. Indeed, the pandemic has proved to be a catalyst for the company. Today, Target offers its customers the options of order pickup, drive-up service or home delivery. Those services were each up more than 200% in the third quarter of 2020, while its online sales grew more than 150% in the same period.
TGT stock has responded to the company’s strong performance over the past year, up 114% since March at $194.80 per share. And Target continues to diversify, giving consumers more reasons to shop at its stores.
The company is now in the process of increasing its grocery offerings to ensure that it provides a solid mix of both fresh and frozen products. Patrons can also take advantage of the company’s grocery pick-up service that is today available in nearly 1,500 stores nationwide.
Target has already reported blockbuster holiday sales for 2020, breaking its own sales record on Cyber Monday alone.
Home Depot (HD)
Most Americans are at home around the clock these days. The lines between work and home have blurred and people are eager to improve their domicile with various home improvement projects. New stimulus checks could provide the financial boost needed for Americans to finally start renovating their kitchens or finishing their basements.
Enter Home Depot. The largest home improvement retailer in the U.S. is sure to benefit as Americans spend their stimulus checks and the economy turns upward in the second half of 2021.
Not that 2020 was a bad year for Home Depot or its shareholders by any means. The company benefitted from the first round of government stimulus spending and the fact that a good number of people spent their time sheltering in place by improving their home.
HD stock has risen 81% since last March and now stands at $275.59. The company and its stock have proven to be largely resilient during the pandemic, and are likely to grow further as social distancing measures are loosened and people emerge to spend the next round of stimulus checks they receive.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.