As of [Wednesday], the United States of America has a new president and a new vice president. The country also has a new Congress.
That means it’s time to buy some new stocks.
Right now is a good time to take the long view of what a Biden presidency and Democrat-led Congress will change about America. And by change, I mean how much money will the new government spend, and on what?
If you want to make money in the market, you must follow the money…
The President’s 2021 Spending Spree
Congress is behind the President and will throw as much money as the Treasury can borrow, or better yet, as much money as the Federal Reserve can print, to pay for whatever is needed to stem the pandemic.
But healthcare spending won’t just be on testing and vaccines and whatever it takes to kill COVID-19; this Administration is going to resurrect every page of the old Obamacare playbook and add more than a few pages of its own.
During the Democrat debates, “Medicare for all” and single-payer healthcare systems were front and center, and almost all would-be Presidential candidates promised one version or another of those two “options.” Biden promised a “Medicare-like” government option for health plans, which he said would make private-sector plans more affordable.
Any which way Congress goes, on any option and the pandemic, healthcare spending is going to run into the hundreds of billions in just the first couple of years of the new administration.
One of the biggest beneficiaries of all that spending is going to be UnitedHealth Group Inc. (NYSE:UNH).
UNH specializes in Medicare supplemental plans. If President Biden gets his way and gets a Medicare-type solution through Congress, demand for supplemental plans will go through the roof. And no one’s bigger in that game than UNH.
According to Credit Suisse analysts, nearly 23 million individuals would be newly eligible for Medicare, which means UNH is looking at millions of new customers.
But that’s not all UNH does. The company offers health benefit plans and services for national employers, public sector employers, mid-sized employers, small businesses, and individuals; in other words, it covers just about everyone, including children.
After healthcare, the new Administration is going to get America’s economy back on track with lots of spending on infrastructure.
Lots of previous administrations, including the Trump administration, promised to rebuild the country’s crumbling infrastructure. Now this president will have the money, again courtesy of the Federal Reserve’s printing presses, and the support of the new Treasury Secretary nominee, the former Chairwoman of the Federal Reserve, Janet Yellen, who wants the new Administration to “go big.”
Spending on infrastructure will create millions of jobs and invigorate several industries that have languished over the past few decades.
While there are several ways to play the infrastructure spending boom, my favorite is Vulcan Materials Co. (NYSE:VMC).
VMC is a pure-play on the construction materials needed to rebuild America’s roads and highways.
Because VMC manufactures and sells “aggregates,” including crushed stones, sand and gravel, sand, and asphalt, and ready-mix concrete, all the products used in the construction and maintenance of highways, streets, and other public works.
Third, but first in a lot of Democrat’s minds and agendas, will be spending on a Green New Deal. Congress won’t approve the whole pie, but it’s going to lead with spending on alternative energy, to the detriment of fracking and fossil fuels, which no one should doubt.
There are so many great alternative energy plays to make money on that it’s almost going to be like shooting fish in a barrel.
One of my favorites is First Solar Inc. (NasdaqGS:FSLR). FSLR is a pure-play, thin-film solar panel manufacturer.
The company recently shed ancillary businesses that made it look like a vertical winner, but in reality were eating up capital and management focus. It’s now got a clear path to streamlined growth.
With $1.63 billion in cash, the company can easily increase its manufacturing capacity, and it’s going to do just that and keep its lead in the business.
That means more solar panels, more sales, and of course more profits and a rising stock price.
Sincerely,
— Shah
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Source: Total Wealth