Introduction
I don’t want to be that guy or anything, but I told you so.
While there is still some scuttlebutt out and about pertaining to who will end up being the final, official nominee for the democratic party, Kamala Harris’ name has sure been brought up a lot and being that she is the current Vice President of the United States combined with President Biden’s formal resignation from running again, I think the odds are pretty high that Harris is up next to the plate.
Nevertheless, I’d like to make it clear that a better title for this article might’ve been “Best Stocks to Buy in a Democrat-Led Economy,” as the stocks I am about to briefly mention and outline would likely be favored under any democratic commander-in-chief, whoever that ends up being.
Now, I honestly had to do a good deal of thinking prior to drafting this piece, as I think it is objectively easier to think of companies that would do well under a republican leader being that they tend to be much more friendly (or at least this is the widespread historical perception) towards business owners for reasons that I’ve already explained within my recent Trump article, and while I am certainly not saying that the stock market automatically underperforms when a democrat is in the Oval Office, one might still have to be a little more methodical or picky in considering which stocks to consider buying into and holding.
Of course, it can be said that those that identify with the democratic party tend to favor policies that apparently aim to combat climate change (whether I or you believe in it is neither my business nor yours), whether it is through the implementation of solar energy or the continued electrification of vehicles, and they are also pro-inbound immigration as well as the cancellation of outstanding student debt within this country, and they also tend to be more relaxed on matters related to drug (marijuana, for example) and alcohol consumption, to name a few of the main, general stances held within the Party.
This being the case, I have a few specific companies and associated stocks in mind that I think would benefit wonderfully from the proliferation of these ideas and associated policies.
Again, I am stating no political opinions here; I’m just the guy that writes about stocks.
Don’t shoot the messenger.
Hey, would you look at that, I’ve previously written about Allstate.
Drifting away from my ever so shameless plug, one of the primary reasons I think Allstate has a good deal to gain from having a democrat in at the helm of the Nation is largely due to the fact that if the United States’ borders remain as open as they are today, or even more so, this only leads me to believe that more documented and undocumented migrants would pour into the United States and as this relates to Allstate, one of the US’ largest and most trusted auto insurance companies, it is not really in the insurance business, but at its core is in the business of managing risk and handing out policies accordingly.
With that being said, a company with a lot of pricing power and market share such as this one can most certainly justify charging more expensive premiums for the aforementioned migrant parties given that the likelihood that they have a formal, documented driving record from where they are from is slim to none.
Also, being that the inherent risks of driving without auto insurance are far greater than those of being insured in this realm, I don’t feel like it would be the largest leap to presume that both undocumented and documented migrants coming to the United States would be inclined to invest in some auto insurance right when they arrived and bought a vehicle or two of their own.
2. Duolingo (NASDAQ: DUOL)
This is a much less policy-rooted one than that of the case for Allstate, however, the undisputed fact of the matter is that with more and more people migrating from one place to another, learning a language in a very conversational context has never been as important, and with more open border policies probably means more people coming from access points such as the southern border of the United States, and with the vast majority of the language learners out there learning English, instead of having to pay for a rather resource intensive and expensive program such as Rosetta Stone, a fun, free and actually useful alternative in learning a new language (including English, of course) can be found in publicly traded Duolingo.
The company derives most of its revenues through the ads it runs on its interactive learning platform but also has been further fortifying the amount of revenues it generates through its premium subscription offerings, enabling it to be a “free” learning platform (it’s not technically free even if you aren’t paying for the premium package because you’re expending time through watching ads, but that’s just the stubborn economist in me) for essentially anybody with a smartphone.
I’ll also briefly say that I’ve taken French courses for years now, both in high school and college, and I seriously have learned so much more through using Duolingo casually, whether it is on the bus ride to or from work or any other ounce of short-term free time I’m allotted, than in any previous formal classroom setting. The lessons are pretty fun, the animations are spot-on, and the developers have seriously done an excellent job in designing a platform that makes learning fun to all.
No, this message is not brought to you by Duolingo, but I’ve got to be fair and give credit where it is due.
Nevertheless, let me steer back to the main essence of this article and mention that as globalization continues and more and more folks are migrating from one country or part of the world to another, from Mexico and other regions in Central America to the United States, being one of many examples, it is far from challenging to rationally envision a lot of potential demand-driven growth in this company’s platform and services in the years and decades to come, perhaps specifically throughout the next four-and-a-half years.
3. First Solar (NASDAQ: FSLR)
Another topic of discussion that is on a lot of democrat’s minds is the climate.
With more and more politicians and agencies on that side of the aisle pushing more green initiatives, I think one company that particularly stands to gain a lot from heightened infrastructure subsidy dollars and other government (taxpayer, come on now, let’s be real) grants, aids and other forms of spending from government to the private sector is Tempe, Arizona-headquartered First Solar.
Being one of the world’s largest solar panel manufacturers (although it does concentrate most of its operations in the United States), First Solar is a company with a fantastic track record of production and stateside manufacturing and with both current and existing climate-related initiatives being passed in and out of Congress and other branches and divisions of the government, given this company’s sheer size and scale, with more bills and initiatives being put into play than not, First Solar is definitely a company that is highly likely going to be on the receiving end on not only some government funds, but also probably some access to lucrative solar panel projects around the United States.
In all honesty, democratic politicians are known to be a bit spendy or a bit less gripped when it comes to holding onto tax dollars (no offense, but history is history and this just happens to be a general fact of the matter), and with that, I can see millions if not multiple billions being directed into solar enterprises and projects they get involved with in the not-so-distant future, that is, if a democrat were to become the next President of the United States.
4. Amazon (NASDAQ: AMZN)
Yet another major line item for democrats is the cancellation of student loans.
As most of us know, this has been a hot button issue for quite some time now, but has certainly flared in popularity in more recent months and years, and while the intricacies of this issues are quite complicated and nuanced, and that is saying the absolute least, if a democrat residing at 1600 Pennsylvania Avenue were to successfully lead the charge on this measure and have the outstanding student loan debt wiped out and canceled for good, it is fairly obvious that there would be a perhaps seismic boom in consumer confidence and subsequent spending, and where else will they increase their spending other than with the greatest e-commerce company that has ever existed, Amazon.
Don’t get me wrong, I think Amazon is doing just fine as is and I enjoy the fact that it has so many different revenue levers and I love what it is doing in the Cloud and with streaming and other facets of its business as well, but in terms of where the growth will be in the context of a democrat taking Office, consumer spending will surely skyrocket to new leaps and bounds.
5. Innovative Industrial Properties (NYSE: IIPR)
This is the most interesting one.
For those that don’t know, Innovative Industrial Properties is a real estate investment trust (REIT) that is in the business of acquiring, owning and selling physical properties to well established operators in the cannabis industry to do what they do best and grow marijuana.
Like basically any other REIT, Innovative Industrial Properties collects a lot of its revenues in the form of rent from its tenants, and as more legislation is pushed to not only reduce the punishments on those that engage in using or selling marijuana, but fully legalize, as many states have already done, I could definitely see a democratic leader in the White House (specifically Kamala Harris, please click on this link and you’ll see what I mean) working with state leaders to continue democratizing and formally legalizing marijuana across the United States.
If or when this happens, growers will need to expand their lines of production, and thus their facilities and space therein, and thus they will look to a specialized manager such as Innovative Industrial Properties to build out and lease from, directly benefiting the REIT in question.
Conclusion
Yes, there are plenty of other companies that I think would benefit tremendously from having a democrat as the next President of the United States, such as Tesla and Rivian, (the thesis being climate concerns and with that, more tax dollars and other incentives being thrown at major electric vehicle manufacturers to increase production and related capabilities) along with other discretionary spending outlets that could benefit from the cancellation of student loan debt like Starbucks, Lululemon and other somewhat pricey consumer retail venues that are largely favored by those being crushed by student loan interest payments alone as we speak, and one couldn’t forget about the credit card and payment processing companies that would directly benefit from more consumer spending and transactions, such as Visa, Mastercard, Discover, Square and travel and popular lodging platforms like Airbnb and Marriott, with vacationing and travel being largely deemed as a discretionary expense and one of the ultimate discretionary expenses being food delivery services, like DoorDash and Uber Eats.
But I wanted to hit on a few that I think would most directly benefit, some of them being rather out-of-the-box ideas at first, however, if I’ve learned anything about investing it is that it usually pays to not follow the herd to a tee, but actually sit down and devise your own ideas and frameworks behind companies.
I did it in today’s article and you should too.
The world of politics is markedly contentious, complex and messy, but hopefully some of these ideas brought some clarity and can act as a helping hand when it comes to navigating the upcoming presidential election cycle.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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