This has been a big month for Wall Street. Last week, Pfizer And BioNTech Results of a Phase 3 study for their coronavirus disease 2019 (COVID-19) vaccine BNT162b2 were released, showing efficacy rates of over 90%. The effectiveness of that vaccine was pumped out of the water and gave real hope that there might be light at the end of the tunnel.
After several days of counting, Democratic Party challenger Joe Biden was elected as the 46th President of the United States. Even if Congress remains divided, with Democrats controlling the House and Senate under Republican leadership, we are bound to push at least some policy changes forward.
But there is the possibility of an expanding bull market under his presidency, way bigger than Biden’s election. Interest rates should remain exceptionally low for years to come, and the peak corporate tax rate is unlikely to rise with a divided Congress. It also doesn’t hurt that Democratic presidents have had an average annual stock market of 10.6% since 1945.
Although nothing is guaranteed in the stock market, there is a good chance that we can see the broad market index at a new height under a biden presidency. In my view, the White House should own the following five shares with Biden.
Healthcare innovation is going to take center stage in the coming years, which makes surgical systems developers Spontaneous surgical (NASDAQ: ISRG) A company you want to build yourself.
By the end of September, Sahaj Surgical had installed 5,865 of its Da Vinci surgical systems worldwide, most of which were located in the United States. This may not sound like a lot of established systems in 20 years, but it dwarfs the competition on a combined basis. The company has become clear for surgical systems, and has developed priceless synergies with hospitals and surgical centers around the country.
Of course, the best aspect of Sahaj Surgical is its razor-and-blades business model. In its early years, the company generated most of its revenue from selling its Da Vinci system. These systems generated considerable revenue, but only average margins. But with each soft tissue process, as well as the servicing of its system, the equipment and goods sold have gradually evolved into a large percentage of total sales. Since these are high-margin segments, the operating margin of Initiative Surgical should increase as the company’s established base grows.
One of the clear crosses between the Biden and Donald Trump presidencies is a renewed focus on renewable energy sources. Thankfully, electric utility stock Next energy (NYSE: NEE) Is ahead of the curve.
Although the utility industry is generally slow growing and often boring, NextEra is different. For more than a decade, Nextra’s compound annual growth rate has been in the high single digits, with the company’s large-time investment in green energy projects. No utility is generating more capacity than solar and wind power than NextEra. This means it is advancing any potential clean-energy mandate from Capitol Hill and producing the lowest cost of electricity in the country.
Additionally, do not ignore how effective the Federal Reserve’s dovish monetary policy can be for the company. NextEra often finances its green energy projects with debt. In keeping with the Fed’s efforts to keep lending rates near historic lows, NextEra is encouraged to aggressively tackle new clean energy projects and consider converting fossil-fuel-powered plants to clean energy sources is.
A bull market almost always means a steady increase in consumption, and should be very good news for a payment processing giant Visa (NYSE: V).
Buying in stocks like Visa is similar to placing a bet where the number is heavy in your favor. Visa is a cyclical company, meaning it does well when the US and the global economy are expanding. Although recessions are unavoidable, they are often measured in months, while economic expansion lasts for many years. It is a numbers game, and the “buy visa” bet has historically been the winner.
Visa is also the Kingpin payment facilitator in the United States. In 2018, it controlled more than 53% of credit card-based network purchase volume. This is a 9-percentage-point improvement from the depths of the Great Recession.
As a final note, investors should be aware that Visa is not a lender. By focusing solely on cashless transactions, the delay of the loan avoids the direct pain felt during the visa recession and economic contraction. This is why Visa’s profit margin is often 50% or more.
Palo Alto Network
Even with an effective COVID-19 vaccine, traditional office environments or consumer buying habits will not return to their pre-pandemic status. The business and retail world has got a taste of online and cloud-centric convenience, and is here to stay. This is what cyber security stocks like Palo Alto Network (NYSE: PANW) One needs only one in the Biden Bull market.
Cloud security has become a basic needs service in recent years, meaning that subscription-based providers (ie, Palo Alto) can expect consistent, transparent revenue. The membership model within cyberspace also reduces customer churn.
More specific to Palo Alto Networks, it is carrying out a business transformation that is emphasizing physical firewall products in favor of subscription security services. As you can imagine, this is expected to lead to more consistent revenue recognition and significantly better margins over the long term.
Palo Alto has also not been shy about making a bolt-on acquisition to broaden its product portfolio and appeal to more small and medium-sized businesses. It would be a smart decision to abandon very near-term margins in order to tap a larger share of the cloud-protection market.
Did I mention how important consumption is to the American economy? Coronovirus-induced recession with Biden, e-commerce juggling likely to lead to an economic rebound Adventuress (NASDAQ: AMZN) A wholly-own stock is created.
According to e-marketer, Amazon controls an estimated 38.7% of online sales in the US, keeping in mind the recurring theme on this list of market share dominance. Next year, it will expand to around 40%. For some contexts, Amazon’s share of US e-commerce is about 33 percent higher than its next-closest competitor. Despite not having much to write home about with retail margins, the company’s marketplace keeps consumers loyal to the Amazon brand. It is also signed to a major membership to over 150 million people worldwide.
As I have previously discussed, Amazon should see rapid development of its cloud-infrastructure segment, Amazon Web Services (AWS). AWS logged back-to-back quarters of 29% year-over-year sales, and has an annual run-rate of more than $ 46 billion in sales. AWS’s retail- and advertising-based revenue is significantly higher than Amazon’s. Like Spontaneous Surgical, Amazon should see more of its operating cash flow as cloud infrastructure grows at a greater percentage of total sales.