We’ve entered another election year, with President Biden likely to face off once more against former President Trump. The polls currently show a tight race, though Biden’s approval ratings have slipped since his victory in 2020. There’s ample time for that to change before November 2024 – if the economy stays strong under Democratic policies, Biden could regain his edge.
I’m not here to make election predictions. But it’s wise for investors looking to make strategic investments to game out various scenarios. If the Democrats pull off another win, what stocks should be on your shopping list? Which companies and sectors stand to benefit from four more years of Biden’s plans and priorities?
I’ll share seven stocks worth snatching up if you think Team Blue will hold the White House. These aren’t partisan picks – just smart bets based on where Biden and the Democrats plan to steer the economy. I’ll look at stocks poised to profit from continued government spending on infrastructure and climate initiatives.
Of course, I’ll have another article soon for investors betting on a potential Republican win. These stocks will highlight companies aligned with former president Trump and the GOP’s tax-cutting, deregulatory vision. Let’s focus today on Democrat-friendly stocks and start building a portfolio to prosper if Biden manages to repeat his 2020 feat. Even if Biden’s prospects look murky, savvy investors should plan multiple moves ahead. The Justice Department is throwing sand in Trump’s gear, so nothing is crystal clear yet.
Tesla (TSLA)
If you are a long-time Tesla (NASDAQ:TSLA) investor, the company’s latest earnings report was likely a disappointment for you. Revenue missed estimates, and the company’s quarterly net profits declined sequentially due to production and delivery challenges. However, I believe too many investors are overly pessimistic about Tesla’s future prospects.
It’s true that rising interest rates have dampened demand for big-ticket items like EVs. Tesla also faces intensifying competition, especially in China. Yet, with just 1% EV adoption in the massive U.S. auto market, Tesla retains tremendous room for growth in its home territory over the long-run. Once interest rates decline and macro conditions improve, pent-up demand for Tesla vehicles could drive surging sales.
Currently, being able to buy TSLA stock under $200 per share seems like a bargain to me. This is a revolutionary company leading the sustainability revolution. Even with near-term headwinds, few can match Tesla’s brand power, vertically-integrated structure, and software/AI expertise. Tesla holds the technology to eventually offer an autonomous ride-hailing network that is far more profitable than selling vehicles.
I’m also bullish because Democrats overtly favor EVs and clean energy incentives. So, policy tailwinds could strengthen considerably if a Democrat retakes the Presidency in 2024. Betting against Tesla has proven foolish time and again. I believe investors with a five-to-ten-year horizon will be rewarded handsomely buying TSLA stock at today’s depressed valuations.
First Solar (FSLR)
Like Tesla, First Solar (NASDAQ:FSLR) has faced demand issues thanks to rising interest rates and the chilling macro environment. Its stock has plunged over 32% from its highs. Yet, I spy a golden buying opportunity for solar stocks, and FSLR stock is one I’m including in this bunch.
As mentioned already, Democrat administrations strongly back renewable energy development, with solar and wind at the forefront. If a Democrat retakes the White House in 2024, expansive climate incentives could supercharge solar adoption. Even under divided governance, ongoing cost efficiencies will continue, making solar ever more cost-competitive for households and businesses.
In the company’s third quarter, First Solar delivered 27.4% revenue growth. Analysts forecast 33% revenue growth for all of 2023, with strong profitability to follow. The company’s superb 33.5% net profit margin is due partly to generous government solar subsidies, and I think those subsidies are unlikely to disappear anytime soon. With a forward price-earnings ratio of 12-times based on 2024 earnings estimates, FSLR stock seems like a bargain relative to its earnings growth potential.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) is an American energy tech innovator specializing in advanced solar solutions like microinverters. Its systems are gaining share by maximizing solar efficiency in residential and commercial markets.
Like its peers, Enphase faces demand uncertainty in today’s macro environment. Its stock slid 60% from peak levels as part of the broader selloff in equities and higher-multiple tech names. Yet, with ENPH stock having cratered, the company’s risk/reward now looks far more positively-skewed.
Assuming Democrats regain power in 2024, Enphase is set to benefit enormously, given the Biden administration’s generous stance toward renewable energy credits and incentives. Even more impactful could be the passage of a nationwide clean electricity standard accelerating the shift from fossil fuels. Regardless of policy shifts, U.S. solar capacity will likely increase by 38% this year.
Enphase aims to keep gross margins near 40% in 2024 while reversing its sales downturn. Its systems will be integral as more households, businesses, and utilities adopt solar plus storage solutions. Enphase’s depressed valuation prices in an overly bearish future. Thus, I think this beaten-down clean energy stock appears primed for upside once growth visibility improves.
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) has not had the prettiest stock chart recently. This EV charging company still operates at a loss and relies heavily on government funding to finance growth. This has led to dilution for current shareholders, and a stock price that has plummeted nearly 96% from its 2021 peak.
However, the pace of decline has slowed recently, after a very tough 2022/2023. CHPT stock has been trading relatively flat since last November, and I don’t anticipate it breaking below the $2 level soon, barring an economic black swan. With $367 million in cash reserves available today, ChargePoint should have enough capital to finance operations for a couple of quarters without requiring further dilution.
More government stimulus could prove to be the catalyst that kicks ChargePoint’s growth into overdrive. Just last month, we got word of $623 million in new federal grants for EV charging networks. Consider that a drop in the bucket relative to what’s truly needed to build nationwide infrastructure for mass EV adoption. If the Democrats retain the White House, expect billions more to flow into this still-nascent industry. ChargePoint’s first-mover status in EV charging could pay off in a big way.
This stock might look ugly today, but future prospects remain bright if infrastructure spending keeps growing under president Biden.
General Dynamics (GD)
Alongside the clean energy and EV sectors, the Biden administration has nurtured another sector – defense. Regional wars and geopolitical tensions have escalated over the past two years, with no signs of cooling anytime soon. The U.S. has flooded battlefield allies with American-made weapons and vehicles. A Democrat victory would likely perpetuate this foreign policy agenda and sustain the torrent of money flowing into the military-industrial complex.
That bodes especially well for General Dynamics (NYSE:GD). This defense giant manufactures cutting-edge ships, combat vehicles, weapons systems, and information technology for the Pentagon and allies abroad. General Dynamics’ revenue nudged up 7.5% in the fourth quarter of 2023, while operating profit saw a 5% bump. However, the G700 Gulfstream business jet certification delays did create a slight drag on its results. The company still churned out $3.8 billion in free cash flow for the full year 2023, with a superb 115% cash conversion rate. Expect delayed G700 deliveries to shift into 2024, powering earnings growth. And don’t forget – General Dynamics’ backlog expanded to a towering $93.6 billion.
The company paid $1.4 billion in dividends last quarter alone, and anticipate another $4 billion in share buybacks this coming fiscal year. General Dynamics also used $434 million of this cash to repurchase shares, ending 2023 with $1.9 billion in cash and cash equivalents on hand. I think GD stock offers nice value, alongside a safe 1.96% dividend yield. This defense giant wins no matter which party captures the White House.
Lockheed Martin (LMT)
Lockheed Martin (NYSE:LMT) produces some of the most lethal and technologically-dominant aircraft weaponry in the world – from stealthy F-35 fighters to missile defense systems. As one of the primary arms suppliers for NATO forces and allies, Lockheed has cultivated strong international demand. With military tensions escalating globally, defense spending is skyrocketing across Eastern Europe, Asia, and the Middle East. Much of that budget increase directly benefits Lockheed.
Unlike Russia and China, NATO military doctrine relies heavily on aerial combat operations. That strategic focus prompts member countries to invest disproportionately more in fighter jets and missiles than ground vehicles or naval assets. In other words – the world needs Lockheed Martin’s specialty now more than ever. Despite a slight drop in FY23 revenue and earnings due to one-time impacts, Lockheed achieved a record-high $160.6 billion backlog last quarter. Free cash flow also nudged up to $1.66 billion.
This defense titan continues funneling capital back to shareholders, even amid macro uncertainties. Last year, the company returned $9.1 billion to shareholders via dividends and buybacks. The stock now trades at reasonable valuation levels compared to historical norms. Expect expanded production of Lockheed’s stealthy F-35, plus elevated demand for tactical missiles like the Hellfire and Javelin. Geopolitical crises show no signs of abating anytime soon. With a new Cold War brewing, Lockheed Martin promises strong, steady growth regardless of election outcomes.
Pfizer (PFE)
Pfizer (NYSE:PFE) may not seem the most exciting stock pick these days. This vaccine giant benefited immensely from taxpayer support through Operation Warp Speed. Pfizer’s share price skyrocketed to nearly $60/share at its peak. But with the pandemic fading and underwhelming demand for boosters, Pfizer has retreated more than 54% from its highs.
Don’t let the recent slide fool you, though. Pfizer remains a dominant force in the healthcare arena. Excluding pandemic products, the company still delivered 7% year-over-year operational sales growth in 2023. While Covid-19 vaccine revenue will continue fading, Pfizer’s core pharmaceutical business shows enduring strength thanks to new product launches.
Management guided for another 6%-8% operational sales expansion in 2024, plus ~11% adjusted earnings per share growth. Pfizer’s robust pipeline and diverse portfolio should power top-line strength for years, making the current valuation look rather tempting. Shares trade at just 12-times forward earnings estimates – dirt cheap by historical benchmarks.
Rising free cash flow generation also enables Pfizer’s generous capital return programs. The company rewards shareholders with a 6% dividend yield, plus ongoing buybacks. For investors with longer time horizons, PFE stock appears primed for upside.
On the date of publication, Omor Ibne Ehsan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
