Stocks to Buy If Democrats Win: The election season is well underway, and the candidates have a number of critical issues to address. For example, supporting economic recovery from the COVID-19 pandemic is a top priority, yet this has to be balanced with taking measures to prevent the spread of disease.
Weather-related emergencies are prevalent, including more frequent and stronger hurricanes, drought, and record-breaking heat waves. These issues, when added to other pressing concerns like national security and volatile trade relationships, make campaigning particularly complex for this year’s presidential hopefuls.
There is a sharp divide between Republicans and Democrats in terms of strategy, and a win on either side is sure to impact the market. The question is, of course, how a win for Republicans might impact the market differently than a win for Democrats. These are five industries – along with top stocks – that stand to benefit if Democrats win.
Green Stocks Set To Pop On A Democrat Win
There are stark differences in the Republicans’ position on pursuing eco-friendly technology versus the Democrats’, as evidenced by the current administration’s decisions to weaken environmental protections.
Research by the Brookings Institution shows that as of August 2020, 74 actions have been taken since 2017 to reduce rules that were put in place to ensure water and air quality, address climate change, and cut greenhouse gas emissions.
The Democratic platform, on the other hand, is built around strengthening those same protections. For investors, that means green companies are among top stocks to buy if Democrats win.
Within this category, Nikola is a current favorite. It recently announced a partnership with General Motors (GM) to build advanced electric vehicles, and share prices had increased steadily until Hindenburg Research put a note claiming deceptive behavior on the part of the company.
This optimism appears due to the prospect of an electric pickup truck – the Badger – which promises to create the first real competition that rival Tesla has ever faced.
Marijuana Stocks Face Headwinds Under Republicans
While decriminalization and outright legalization of recreational marijuana is spreading across the United States and around the world, marijuana remains illegal at the federal level.
It’s an interesting position, given the fact that most Americans support the use of medical marijuana and a strong majority support the legalization of recreational marijuana.
However, despite public support, the current administration has chosen to maintain the status quo – a position that is likely to carry over if Republicans win the White House again in 2020.
For now, the Democratic nominee has come out against widespread legalization of marijuana, but it appears there is a greater chance of his position changing in the coming years versus his Republican counterpart.
Those close to the campaign have shared that the hesitation is strictly due to concern for public health. If a persuasive argument can be made through evidence-based research that the benefits outweigh the risks, it is likely this position will evolve.
There are no guarantees that a Democratic win in November will bring good news for marijuana stocks in the near-term, but the chances of national legalization are far higher under a Democratic President than a Republican.
Investors who are willing to take on the risk in hopes of being rewarded down the road may wish to focus their attention on industry leaders like Canopy Growth (WEED.TO).
A Democrat Win Is Good For Vaccine Stocks
More than six months into the coronavirus pandemic, it has become clear that the best way to definitively halt the disease’s progress is a vaccine.
Massive amounts of money have been invested in vaccine development, and a variety of biotechs are working around the clock to produce a safe, effective solution.
Their goal is to bring a product to market in record time – less than 12 months – which has never happened in the history of vaccination. The process typically requires a decade of research.
From a political perspective, Republicans have downplayed the seriousness of the pandemic, and so-called “red states” were slow to put preventative measures in place such as quarantines, stay-at-home orders, and business closures.
With that perspective in mind, many analysts believe that when a vaccine is ready for widespread distribution, a Republican administration is less likely to invest in promoting vaccination and managing the logistics of delivering the vaccine to a population of more than 330 million.
Democrats, on the other hand, have been faster to address the pandemic. They have promoted the benefits of wearing masks, social distancing, and remote learning in an effort to limit community spread. This leads most industry experts to believe that vaccine-related stocks are a buy if Democrats win.
Moderna is one of the top contenders in the race to produce a COVID-19 vaccine. It was the first company to get its candidate into human trials, and so far, results look good.
Of course, Moderna (MRNA) isn’t alone in this competition. AstraZeneca and Pfizer are well into human trials now, too.
AstraZeneca (AZN) recently had a setback that might take it out of the running, but there are some indications that Pfizer could obtain emergency approval for its vaccine by November 1st. Investors interested in capitalizing on vaccine-related stocks are likely to find a winner among these three.
Will Democrats Be Better For Chinese Stocks?
The relationship between China and the United States has been difficult over the past three years, and escalating tensions over trade are just the beginning.
In May 2020, the Senate passed the Holding Foreign Companies Accountable Act and sent it to the House for action. The Act is intended to close a loophole that allows certain foreign companies to list their stock on US exchanges, though they don’t meet auditing methods and standards required under the Sarbanes-Oxley Act of 2002.
If passed, the Holding Foreign Companies Accountable Act could force hundreds of Chinese companies off of the New York Stock Exchange and the NASDAQ.
This represents more than a trillion dollars of investor funds. Given that the mere possibility of the Act becoming law drove Chinese stock prices down, passage could mean massive losses for the Chinese firms and their shareholders.
Most analysts theorize that the tensions with China will ease if the Democrats see victory in November. That means Chinese stocks could be a lucrative buy if Democrats win. Examples of top Chinese stocks include tech leaders Alibaba, OneConnect, and Xiaomi.
Solar Energy Stocks Win If Democrats Are Victorious
There is a definite contrast between Republicans and Democrats when it comes to environmental issues, and alternative energy is an area of constant debate.
While the current administration regularly pledges its support for big oil and the coal industry – then backs it up with financial incentives – the Democratic platform is more focused on green energy sources such as solar and wind.
Of course, the solar energy industry is poised for growth with or without friends in the White House. Solar technology is becoming more affordable each year, which has driven up demand in the development of new construction.
Despite the challenges presented by COVID-19, solar installations are expected to grow 37 percent year over year for 2020, and from 2021 – 2025, the market is projected to expand 42 percent over the previous five-year period.
If Democrats win, leading companies in the solar energy space stand to profit, as it is likely growth and expansion of solar power will be encouraged. That means good news for shareholders – especially those with stock in strong companies like Brookfield Renewable Partners (BEP), First Solar (FSLR), NextEra Energy (NEE), and SunPower (SPWR).
Stocks to Buy if Democrats Win: The Bottom Line
The 2020 Presidential election is sure to go down in history, regardless of who wins. After all, it has been an unusual year.
For investors, once the results are in, the key is to choose stocks that stand to profit from the incoming or returning administration.
If Democrats win, the industries that are most likely to benefit include green and alternative energy, marijuana, and vaccine-related biotech. In addition, there is likely to be a resurgence among Chinese stocks.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.