Where to Invest Under Trump or Biden? — Sectors to Watch
In today’s Money Morning…sectors to watch if Trump wins…sectors to watch if Biden wins…sectors to watch no matter who wins…super funding the future…and more…
We’re now two days into a torturous US election. One that is edging ever closer to a slim Biden victory if you trust the mainstream.
Don’t rule out Trump yet though. He is not going to go out without a fight, and his base is running rabid at the prospect of a ‘stolen’ election.
So, as Australians, all we can do is watch and wait. Looking on in horror, sadness, or utter pity.
But, as investors you can (and should) be preparing for whatever the outcome may be.
That’s why today I’ve prepared a shortlist of sectors to focus on depending on the presidential outcome. Including a few stock examples.
Please keep in mind these aren’t recommendations, just ideas to consider in wake of a bitter and divisive US election.
So, let’s dive right in…
Sectors to watch if Trump wins
If Trump secures four more years, I expect we’ll simply see more of the same.
Sure, he may up his attacks on China, or even bring his trade war to other nations. But for the most part, I wouldn’t expect anything too extreme.
For this reason, I fully expect military spending to remain a big focal point. Something that could benefit several local stocks.
Codan Ltd [ASX:CDA] is one company that comes to mind, for instance. An Australian-based military equipment provider that also has operations in the US. Therefore, if Trump keeps upping the defence budget, Codan and its ilk could be a big winner in coming years.
However, for a more speculative and off-the-wall defence pick, I’d look to space.
If you haven’t already heard, ‘Space Force’ is now a very real US department. A fresh branch of the American Army that is focused on securing US interests in space. A department that will likely be expanding and growing aggressively under a renewed Trump mandate.
For that reason, Australian-based space companies could become key partners. That is if they have something of value to offer. And while the ASX may have few space-related stocks, the ones we do have are very small, very niche, and very promising.
Just look at Kleos Space SA [ASX:KSS], for example. A tiny company that has surged in recent weeks on the back of its first orbital missions and plans.
Moving on, the other sector I’d look closely at if Trump wins is healthcare. Especially locally-listed stocks with heavy exposure to the US.
I’m talking about companies like CSL Ltd [ASX:CSL] and Nanosonics Ltd [ASX:NAN]. Two established players that rely heavily on US sales.
The reason for this is simply because Trump is unlikely to meddle with healthcare in the US. Whereas under Biden, we could see the democrats make another tilt at overhauling the system and pharmaceutical industry.
Naturally, that could spell bad news for the bottom line of companies like CSL and Nanosonics. Which is why I’m sure they’re crossing their fingers for a Trump turnaround.
Sectors to watch if Biden wins
If Biden does win as is expected, I’d be looking at agriculture exporters very closely.
Earlier this year we heard rumblings that Trump may ban cattle imports. Something that has spooked our local exporters and the wider livestock industry.
But, if Trump goes then so too does the threat, most likely.
Under Biden I expect we’ll see the US embrace trade much more openly once more. A scenario that could be a huge relief for several local outfits.
Australian Agricultural Company Ltd [ASX:AAC] and Elders Ltd [ASX:ELD] are just two stocks worth keeping an eye on. Because if cattle exports to the US pick up, they could be beneficiaries.
Not to mention the broader agricultural export industry as a whole. Which may also see some strong wins under a Biden presidency.
Following on from that, I expect certain commodities to play a big role under Biden.
It’s no secret that he is all for renewable energy development across the US. A plan that will require heavy investment in new infrastructure and fuel sources. All of which revolves around the usual battery metals and more.
After all, Biden has already confirmed he will rejoin the Paris Climate Agreement if he wins. It is simply a matter of what kind of plans he intends to implement as part of the pact. Not to mention how he will get them past both the Senate and House.
Only time will tell on that front but expect renewable resources to definitely play a role. A scenario that could definitely benefit local producers.
But I don’t need to tell you all about that…
Instead, I’d urge you to read the insight of my good colleagues: Ryan Dinse and Lachlann Tierney. Both of whom have seen the coming ‘supercell’ in certain commodities.
You can read all their analysis and stock forecasts in their newest report. Check it out here.
Sectors to watch no matter who wins
Lastly, I just wanted to mention two sectors that I think are promising no matter who claims the presidency.
The first is rare earths. A collection of resources that will likely play a part in Biden’s renewables push but have been earmarked by Trump too.
For this reason, no matter who wins, rare earths are still in the box seat.
It simply depends on if/how Australia can play a part in supplying these niche metals.
And the other asset worth buying right now is Bitcoin [BTC]!
Yes, cryptocurrency is undeniably a great way to hedge against the growing US monetary situation. With the government debt and Fed’s growing influence turning the system into a jumbled mess.
It would not surprise me (or many others) if the US economy collapses under its own hubris. Not to mention the wider world, for that matter.
So, if you’re even slightly worried about a financial collapse, I would definitely look into bitcoin. Because whether it’s Trump or Biden — neither are likely to abandon the reckless spending and borrowing that has become normalised.
Let’s wait and see how the next US president decides to move forward though. Because right now, the only concern for the US is not tearing itself apart…
Editor, Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.