With the US Presidential election now certain to be another Joe Biden v Donald Trump showdown, we’ve looked at so-called ‘Trump stocks’ (stocks that may win if Trump wins) and now we’re looking at so-called ‘Biden stocks’ (stocks that could be beneficiaries if Biden wins).
Biden stocks: Stocks that could do well if Biden wins
Well, in one sense you could say is the stocks that have already done well under him. At the same time, a second term could be different from the first in some respects.
1. Stocks exposed to the decarbonisation thematic
One of the biggest centrepices of the Biden administration’s agenda is the decarbonisation thematic, with a Net Zero by 2050 target inked in. There’ll be plenty of sectors that could gain in a way that they probably wouldn’t under a Trump administration including EV makers, hydrogen plays and renewable energy companies. This is because this all costs money and a Biden administration is more likely to continue with the current stimulus measures.
2. Consumer discretionary stocks
It has been a tough time for consumer discretionary stocks (and even some staple stocks) given high inflation. Unlike in Australia, inflation is coming under control faster and is now nearly back to usual levels. This could encourage consumers to come out and spend on discretionary goods again (from fashion to entertainment) and will help staple stocks maintain their margins.
3. Semiconductor stocks
You may remember we said semiconductor stocks could be a winner under Trump by virtue of the fact that an invasion of Taiwan (the home of TSMC) would be less likely. However, it is not a certainty that it couldn’t happen under Trump, and the US may be better prepared from a supply chain perspective under Biden. The CHIPS Act for Semiconductor manufacturing was passed in August 2022 and will boost American semiconductor research, development, and production, ensuring U.S. leadership in the technology. Good news for companies like SkyWater Technologies (NYSE:SKYT), the first business partner of Weebit Nano (ASX:WBT). So perhaps semiconductor stocks will win no matter who wins the White House, only that whoever wins will mean semiconductor stocks will benefit for different reasons.
4. Infrastructure stocks
Some of these we have covered under decarbonisation stocks. But the bipartisan Infrastructure Act will see hundreds of billions of dollars spent on infrastructure. The final bill provided for $1.2tn in spending, with $550bn being newly authorised spending. This will include money for EV chargers and power infrastructure.
However, the biggest spending amount will come to transport including:
- $110bn for roads, bridges and other major projects
- $39bn to modernise transit and improve accessibility
- $66bn for passenger and freight rail
Obviously it will help companies involved in the construction of these pieces of infrastructure, as well as the eventual operators. There aren’t many ASX stocks involved in US infrastructure – although toll road operator Atlas Arteria (ASX:ALX) is one.
Could a second Biden presidency be a boom for all stocks?
Yes, it could well be. We acknowledge, stocks could boom under a return of Trump term just as easily as if it were another term for Biden. The US share market reached record highs under Trump and have done so again under Biden.
At the same time, no matter what administration is in charge, good companies with strong management teams that can make the right decisions will do well and be recognised by investors accordingly. And besides, the US presidential election is just one of several major elections this year (others including India, the UK, the EU and Indonesia) that could have ramifications for the stock market.
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