It’s one of the most contentious issues on the Hill that has significant implications for the economy and for whether the Biden administration can keep power in Washington. Of course, I’m talking about student loan relief, which on paper sounds like a feel-good story but may not turn out that way. Nevertheless, if such relief is granted, you’ll want to strategize the stocks to buy that will benefit the most.
Back in late 2019 to early 2020, the total student loan debt amounted to approximately $1.56 trillion. Therefore, I understand the proponents of student loan relief. In some ways, it’s a humanitarian crisis for society to impose such a heavy burden on its young workers. Further, it contributes to substantial problems, such as the inability for these people to acquire homes and build their wealth.
According to a CNBC report, President Biden stated that he supports eliminating $10,000 for all borrowers, with a higher relief amount for “those who attended public colleges or historically Black colleges and universities.” On surface level, this policy would appear to benefit stocks to buy in the broader consumer market now that young folks will presumably have extra cash on them.
However, many are opposed to Biden’s plan – and it’s not just Republicans raising a furor. Indeed, the President is under pressure from his own party to forgive $50,000 per person and to push this expanded student loan relief through executive action. The economic consequences of such a drastic move is not clear, which makes the narrative for stocks to buy all the more critical.
Personally, if this goes through, some market segments will benefit and others will not. Also, a Washington Post op-ed made a strong argument: student loan relief is an “upward redistribution of wealth.” You have to be somewhat blessed to even think about a college education these days. Thus, the narrative for stocks to buy is complicated but I’m going to give it my best shot.
- Expedia Group (NASDAQ:EXPE)
- Interactive Brokers Group (NASDAQ:IBKR)
- Opendoor Technologies (NASDAQ:OPEN)
- Grand Canyon Education (NASDAQ:LOPE)
- MGM Resorts (NYSE:MGM)
- H&R Block (NYSE:HRB)
- Under Armour (NYSE:UA, NYSE:UAA)
Because this is the internet, an ever-present risk exists that my words will be taken out of context. Personally, I do not support student loan relief to the extent that the Democrats are pushing for because it creates a moral hazard. My point with this write-up is presenting ideas to position your portfolio with stocks to buy just in case this unprecedented relief package goes through.
Expedia Group (EXPE)
If you need to know anything about millennials, it’s that they tend to prefer experiences over products. Of course, you can’t make a blanket statement about everyone so please don’t inundate my inbox. What I’m saying is that many younger Americans abide by the ethos of “YOLO,” or you only live once. That being the case, you should check out Expedia Group as one of your stocks to buy.
Essentially, EXPE stock has a two-fold bullish argument. First, there is the broader thesis that the novel coronavirus pandemic is slowly but surely fading away. Of course, I don’t want to speak too soon given how infection rates can again skyrocket. But so far, the vaccination rollout has apparently produced very encouraging results.
Second, millennials snapped up cheap planet tickets during the onset of the pandemic. Yes, that might sound reckless, but I look at it this way: they truly want their experiences! That’s a huge positive for EXPE stock if millennials no longer have to worry about onerous debt thanks to student loan relief.
Interactive Brokers Group (IBKR)
When the coronavirus first imposed the new normal upon us, the devastation was evidenced by the red ink in the investment markets. With most folks panicking out of their position, suddenly, an ungodly amount of money “evaporated.” Admittedly, I feared for the worst. What I should have done, though, was to look up Interactive Brokers Group’ ticker symbol and place it on my stocks to buy list.
That’s because during the depths of the crisis, many worker bees who found themselves operating remotely now had more time on their hands. And when you have time on your hands, what do you do? Apparently, speculate on Wall Street. Logically, this helped spark a huge recovery rally in the equities sector. But if Biden moves forward with student loan relief, IBKR stock could see continued demand.
Why? Simply, young Americans will have one less burden to deal with (or a substantially reduced liability). And because these workers saw their peers getting rich off Robinhood, they’re much more interested in building wealth through equities. This will be a huge positive for IBKR stock.
Opendoor Technologies (OPEN)
Before I start my discussion about Opendoor Technologies being possibly a candidate for stocks to buy if the Democrats push student loan relief, let me be completely transparent: I don’t have the warm and fuzzies for OPEN stock. Don’t get me wrong – I love the technology underlining the business. It’s just that the timing is both on and off.
Sure, on one hand, you have the iBuying innovation, which facilitates contactless searching and purchasing of real estate. As well, sellers can get an instant offer on their homes and they can schedule exactly when they wish to sell to avoid paying double mortgages if they also bought another home.
However, I’ve been concerned about the economy – I may be mentally regressed, but I question how a pandemic can be the catalyst for economic growth. Remember, people were worried about a recession in 2019, when all the headline numbers were pointing positively.
Still, if Biden follows through with debt relief, that leaves more money in the hands of young college-educated workers. They can more quickly save for their first home, which could be positive for OPEN stock.
Grand Canyon Education (LOPE)
You’ll notice that this list of stocks to buy isn’t focused on direct education plays and that’s for a reason. Honestly, I’m not sure how the Democrats want to initiate student loan relief. I imagine that this will be a benefit for current students or those just entering college. However, names like Grand Canyon Education can move higher if President Biden gives the green light.
For one thing, I imagine that debt relief will be an extra motivator for students to stay in school. We all know at least one person who deferred higher education to handle personal matters, usually dealing with finance. Therefore, with that burden out of the way or strongly mitigated, this should keep students in the books, which will be positive for LOPE stock.
Second, people who have already graduated will see their debt profile be reduced or eliminated. If so, this could inspire them to seek graduate-level education. I’m no expert but this may be a shrewd strategy – get more education or credentials and look more attractive to potential employers. So, don’t ignore LOPE stock.
MGM Resorts (MGM)
Back during the worst of the Covid-19 crisis, I didn’t care for companies like MGM Resorts. For the record, it was never about the organization – I’m sure they are all fine folks. But you’ll forgive me for simply looking at reality. With a mysterious virus ravaging the nation and Las Vegas – Sin City, baby! – turning into a ghost town, the whole ecosystem just looked apocalyptic for MGM stock.
But with President Biden at the helm, he could make MGM one of the higher-risk, higher-reward stocks to buy.
Indeed, shares have already performed tremendously well, with a year-to-date return of nearly 11%. Much of that I’m sure is due to the sharp decline in Covid-19 cases and the vaccination rollout. It implies that American consumers who have been cooped up at home will start flocking to entertainment centers.
Naturally, this should represent a tailwind for MGM stock. Plus, if students don’t have a massive debt problem, they’ll be more open to heading to Vegas. Remember that whole experience bit.
H&R Block (HRB)
I’ve been talking about H&R Block quite frequently and it’s only recently that HRB stock has finally made good on its long-term potential. On a YTD basis, shares are up over 24%, which is a far cry from the pedestrian returns they have seen in recent years.
It’s not surprising either. I mean, who wants to deal with taxes? However, changing norms in the workplace, along with potential ripples stemming from a student loan relief program could truly reinvigorate HRB stock.
Primarily, data from Paychex reveals that “82% of employed people are interested in freelancing in addition to their full-time job since the pandemic began.” Moreover, two in 10 employees “started freelancing during the COVID-19 pandemic,” and over one in three workers “intend on freelancing indefinitely.” In other words, the work-from-home phenomenon may at least be a semi-permanent fixture in the post-pandemic era.
Second, if student debt is out of the picture, this could inspire younger Americans to pursue the entrepreneurial lifestyle. Since they’ve already gotten a taste of it during the Covid lockdowns, the transition won’t be totally alien.
Therefore, this could be a positive catalyst for H&R Block as tax preparation for entrepreneurs is much more complicated than that for W2 employees.
Under Armour (UA, UAA)
A few years ago, I had a skeptical view about Under Armour which did not go over well with proponents of UA stock. I’m not sure what it is, but Under Armour fans are very passionate about their choice investment. From casting aspersions and speculation about my orientation to aggressive remarks about my chromosomal integrity (or lack thereof), I think I’ve heard it all.
Well, if I switch to the bullish side of things, do I receive a full set of chromosomes? I’m not sure how this works.
Anyways, I was going to put Nike (NYSE:NKE) on this list of stocks to buy if student loans go bye-bye but I figured, why not save the most speculative idea for last? And so, I obliged my darker angel.
Now, we would like to think that if younger folks got their student debt expunged, that it will lead to more responsible living. For many, it’s reasonable to assume that. But let’s be real – when you’re young, you’re going to do stupid things. Therefore, UAA stock should benefit from increased consumer sentiment, particularly because the brand resonates so strongly with millennials and Generation Z.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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.