3 Stocks to Sidestep in 2024 if Democrats Keep the White House

  • The White House can create big problems for sectors it doesn’t like. With that in mind, here are three stocks to avoid if President Joe Biden gets reelected.  
  • Coinbase (COIN): If Biden gets reelected, the SEC will likely continue to pursue its crusade against COIN.
  • Arch Resources (ARCH): The Democrats do not like coal, so this coal miner may be in big trouble if Biden wins.
  • American Public Education (APEI): The Obama and Biden administrations have not been kind to for-profit education companies. 
stocks to avoid - 3 Stocks to Sidestep in 2024 if Democrats Keep the White House

Source: Shutterstock

In a previous column, I noted that each political party has sectors of the economy that they tend to support more than the opposing party. Furthermore, when Republicans and Democrats are in office, they usually reward their supporters and often take steps to harm the opposing party’s backers. I also pointed out that the party that controls the White House can wreak havoc on the industries that it doesn’t like by enacting adverse regulations, deploying regulators to harm companies, and convincing Congress to pass legislation. Moreover, I believe that the tendency to crack down on industries tends to be more pronounced when presidents are in their second terms and don’t need to worry about completely alienating a sector and its employees. Of course, if President Joe Biden wins the 2024 Presidential election, he will start his second term in 2025. With that said, here are three stocks to avoid if Biden is indeed reelected. Also noteworthy is that these stocks to avoid could make good short-selling targets if he does win the 2024 election.

Stocks to Avoid: Coinbase (COIN)

Coinbase (COIN), is an American company that operates a cryptocurrency exchange platform. Ethereum (ETH-USD) coin on the background of the Coinbase inscription.
Source: Sergei Elagin / Shutterstock.com

The Biden administration, in general, and the Securities and Exchange Commission (SEC) have made no secret of their tremendous antipathy towards Coinbase (NASDAQ:COIN).

Indeed, in June, the SEC sued COIN for allegedly “operating as an unregistered broker, exchange and clearing agency for…securities.” The agency also contended that the company’s “staking and wallet services violate securities laws.”

If Coinbase loses the lawsuit, it would, at a minimum, have to treat all of the coins on its platform except Bitcoin (BTC-USD) as securities (The SEC has stated that Bitcoin is a commodity). As a result, the company would have to provide Washington with detailed information about all the owners of the other cryptos who trade on the exchange and data on their trades.

I believe that such a scenario would cripple Coinbase’s business. That’s because I think many of those who trade crypto on the exchange are tax evaders and criminals who use crypto to hide from law enforcement. Although these individuals could still use Bitcoin to accomplish that goal, Coinbase’s profits on Bitcoin are relatively low compared to what it generates on other cryptos.

A reelection of Biden would ensure that the SEC would have sufficient time to complete its litigation against Coinbase. Moreover, the agency could also take multiple additional measures against the company in a second Biden administration.

Arch Resources (ARCH)

A top aerial view of an open pit mine industry, with a big yellow mining truck for coal
Source: Shutterstock

Democrats are intent on reducing carbon emissions, and coal is very carbon-intensive. Therefore, Democrats tend to be very hostile to coal.

Indeed, in May, Biden’s Environmental Protection Agency “proposed new carbon pollution standards for coal and natural gas-fired power plants.” According to the agency, its rule “would require ambitious reductions in carbon pollution based on proven and cost-effective control technologies.” That rule will be rather costly for power plants that use coal. As a result, they may be disincentivized from buying coal from miners such as Arch Resources (NYSE:ARCH). If Biden gets reelected, this rule will definitely be enacted.

Also, in May, the agency decided that existing rules on coal ash disposal would be extended to many additional sites. That move will likely increase Arch’s costs.

If Biden gets reelected, the agency will likely issue many more regulations that will hurt Arch’s top and bottom lines.

American Public Education (APEI)

text books on a desk with a chalkboard in the background
Source: Shutterstock

The Obama and Biden administrations have enacted regulations limiting the amount of tuition that for-profit colleges can charge. I believe they have done so primarily because Democrats tend to receive significant campaign contributions from traditional, nonprofit colleges. And for-profit colleges compete with nonprofit colleges for limited funds from Washington.

Of course, such rules, along with the hostility that the administration holds towards for-profit colleges, are negative for American Public Education (NASDAQ:APEI). which owns and operates multiple for-profit universities.

Last September, the Biden administration proposed a new version of the “gainful employment rule” that would prevent for-profit colleges from obtaining federal funds if their alumni did not earn adequate amounts of money.

In a second Biden administration, the government would crack down tremendously on for-profit colleges, including American Public Education.

Despite this considerable risk, APEI stock has an elevated forward price-earnings ratio of 24 times.

On the date of publication, Larry Ramer held a short position in COIN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

Article printed from InvestorPlace Media, https://investorplace.com/2024/01/3-stocks-to-sidestep-in-2024-if-democrats-keep-the-white-house/.

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