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We’ve entered another election year, with President Biden likely to face off once more against former President Trump. The polls currently show a tight race, though Biden’s approval ratings have slipped since his victory in 2020. There’s ample time for that to change before November 2024 – if the economy stays strong under Democratic policies, Biden could regain his edge.
I’m not here to make election predictions. But it’s wise for investors looking to make strategic investments to game out various scenarios. If the Democrats pull off another win, what stocks should be on your shopping list? Which companies and sectors stand to benefit from four more years of Biden’s plans and priorities? I’ll share seven stocks worth snatching up if you think Team Blue will hold the White House.
Of course, I’ll have another article soon for investors betting on a potential Republican win. These stocks will highlight companies aligned with former president Trump and the GOP’s tax-cutting, deregulatory vision. Let’s focus today on Democrat-friendly stocks and start building a portfolio to prosper if Biden manages to repeat his 2020 feat. Even if Biden’s prospects look murky, savvy investors should plan multiple moves ahead. The Justice Department is throwing sand in Trump’s gear, so nothing is crystal clear yet.
Electric Vehicle (EV) Stocks: Tesla (TSLA)
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If you are a long-time Tesla (NASDAQ:TSLA) investor, the company’s latest earnings report was likely a disappointment for you. Revenue missed estimates, and the company’s quarterly net profits declined sequentially due to production and delivery challenges. However, I believe too many investors are overly pessimistic about Tesla’s future prospects.
It’s true that rising interest rates have dampened demand for big-ticket items like EVs. Tesla also faces intensifying competition, especially in China. Yet, with just 1% EV adoption in the massive U.S. auto market, Tesla retains tremendous room for growth in its home territory over the long-run. Once interest rates decline and macro conditions improve, pent-up demand for Tesla vehicles could drive surging sales.
Currently, being able to buy TSLA stock under $200 per share seems like a bargain to me. This is a revolutionary company leading the sustainability revolution. Even with near-term headwinds, few can match Tesla’s brand power, vertically-integrated structure, and software/AI expertise. Tesla holds the technology to eventually offer an autonomous ride-hailing network that is far more profitable than selling vehicles.
I’m also bullish because Democrats overtly favor EVs and clean energy incentives. So, policy tailwinds could strengthen considerably if a Democrat retakes the Presidency in 2024. Betting against Tesla has proven foolish time and again. I believe investors with a five-to-ten-year horizon will be rewarded handsomely buying TSLA stock at today’s depressed valuations.
Renewable Energy Stocks: First Solar (FSLR)
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Like Tesla, First Solar (NASDAQ:FSLR) has faced demand issues thanks to rising interest rates and the chilling macro environment. Its stock has plunged over 32% from its highs. Yet, I spy a golden buying opportunity for solar stocks, and FSLR stock is one I’m including in this bunch.
As mentioned already, Democrat administrations strongly back renewable energy development, with solar and wind at the forefront. If a Democrat retakes the White House in 2024, expansive climate incentives could supercharge solar adoption. Even under divided governance, ongoing cost efficiencies will continue, making solar ever more cost-competitive for households and businesses.
In the company’s third quarter, First Solar delivered 27.4% revenue growth. Analysts forecast 33% revenue growth for all of 2023, with strong profitability to follow. The company’s superb 33.5% net profit margin is due partly to generous government solar subsidies, and I think those subsidies are unlikely to disappear anytime soon. With a forward price-earnings ratio of 12-times based on 2024 earnings estimates, FSLR stock seems like a bargain relative to its earnings growth potential.
Clean Energy Solutions: Enphase Energy (ENPH)
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Enphase Energy (NASDAQ:ENPH) is an American energy tech innovator specializing in advanced solar solutions like microinverters. Its systems are gaining share by maximizing solar efficiency in residential and commercial markets.
Like its peers, Enphase faces demand uncertainty in today’s macro environment. Its stock slid 60% from peak levels as part of the broader selloff in equities and higher-multiple tech names. Yet, with ENPH stock having cratered, the company’s risk/reward now looks far more positively-skewed.
Assuming Democrats regain power in 2024, Enphase is set to benefit enormously, given the Biden administration’s generous stance toward renewable energy credits and incentives. Even more impactful could be the passage of a nationwide clean electricity standard accelerating the shift from fossil fuels. Regardless of policy shifts, U.S. solar capacity will likely increase by 38% this year.
Enphase aims to keep gross margins near 40% in 2024 while reversing its sales downturn. Its systems will be integral as more households, businesses, and utilities adopt solar plus storage solutions. Enphase’s depressed valuation prices in an overly bearish future. Thus, I think this beaten-down clean energy stock appears primed for upside once growth visibility improves.
Electric Vehicle Charging Infrastructure: ChargePoint (CHPT)
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ChargePoint (NYSE:CHPT) has not had the prettiest stock chart recently. This EV charging company still operates at a loss and relies heavily on government funding to finance growth. This has led to dilution for current shareholders, and a stock price that has plummeted nearly 96% from its 2021 peak.
However, the pace of decline has slowed recently, after a very tough 2022/2023. CHPT stock has been trading relatively flat since last November, and I don’t anticipate it breaking below the $2 level soon, barring an economic black swan. With $367 million in cash reserves available, the company is well out of immediate financial jeopardy. Even though it will need the help of Congress and the infrastructure plan to keep building, it is in a unique position as an independent operator in a very fragmented space.
