Warren Buffet is clear:
“Stop trying to predict the direction of the stock market, the economy, or the elections.”
Making claims about who will win the 2020 election, how the market will react, and the trajectory of the economy is frivolous in most situations; however, you can make reasonable assurances of which stocks will pull ahead based on the president-elect. By analyzing the platforms of each presidential candidate, you can determine which industries will be favoured through policies, tax breaks, and government initiatives. Instead of trying to predict the future, we’re looking to draw conclusions based on the evidence put in front of us.
If Democratic candidate, Joe Biden, wins the presidential election in November, we believe that investors should be focusing on one of the most central themes of his platform: Green Energy & Renewables. Whereas the Trump administration reversed a lot of environmental policy decisions (such as pulling out of the Paris Agreement, accelerating environmental reviews of energy companies, and more), Biden has promised at least two trillion dollars for addressing environmental concerns in order to usher in a “clean energy revolution”.
As the old saying goes, “don’t fight the Fed”, and in this situation, the Fed is looking to massively incentivize green energy. For that reason, we’re looking to allocate a part of our portfolio to the players in this space that have proven success, even under the Trump administration.
Read on for an introduction to our top 3 stocks for a Biden win:
NextEra Energy (NYSE: NEE)
NextEra is a giant in the utility space and the largest utility company in Florida, enjoying the consistent, regulated returns from government contracts. Their place in utilities isn’t the exciting part of this business, though, as their renewable assets are going to be receiving massive support in the near future.
NextEra is a solar/wind farm developer that is already one of the largest wind-energy producers in the US, actively searching for acquisition targets. With Biden notoriously in favour of wind-energy, we expect this stock to benefit from new incentives put forth by his administration, should he win the election.
TPI Composites (NASDAQ: TPIC)
TPI Composites is a “pickaxe” play, as they are a producer of materials for wind turbines and, recently, electric vehicles. In 2019 their wind blade production accounted for approximately 18% of all blades sold in the US, with 2020 outperforming this figure. Their composite material has wide-reaching implications for their future, as sturdy, light material is a necessity for many renewables.
Their recent endeavour into producing materials for EVs is the part of this company that we find most exciting, as we’ve seen how demand for emission-free vehicles has risen dramatically in recent years. With Tesla recently highlighting their focus on the widespread adoption of its vehicles through more affordable models, we expect the industry to continue its exponential trajectory.
With TPIC, we get exposure to electric vehicles and wind-energy, effectively creating two tracks for success.
Ameresco (NYSE: AMRC)
Ameresco’s mission is simple: help institutions improve their energy efficiency… and get paid. As an energy performance company, Ameresco approaches large institutions such as government, companies, and more to help them improve their efficiency and better follow strict environmental regulations, with a performance-based profit-sharing agreement. If they help a company reduce its energy cost by $30M and this earns them $10M in government subsidies, Ameresco earns part of those subsidies.
AMRC has stated before that their growth is directly correlated to government subsidies and regulations; with a successful track record under the Trump administration, which massively de-emphasized environmental regulation, AMRC has proven that they’re incredibly adept at what they do. As tighter regulations come into play and subsidies increase for companies that meet and exceed them, we anticipate Ameresco’s usefulness and performance will take off.