3 Sectors that were called out during Joe Biden’s Presidential Election Campaign

With much clarity on the election, we can assume that in the long term, the stock market will continue to rise on the back of positive economic sentiments and economic growth. However, in the short run, stocks in certain industries, especially US companies could offer a potential upside given the policies highlighted from Biden’s election campaign. 

Up next, it will take us some time to look at how the SG listed companies will reap the benefits from the upside of such US companies. But first, here are the 3 sectors:

Renewable Energy Sector

In Joe Biden’s Presidential election campaign, he has advocated for a spending plan of up to US$2 trillion over the next 4 years on clean energy, with the objective of moving US closer into a carbon-free future. With this spending plan, Biden hopes to allow US’s power sector to be carbon pollution-free by 2035, with net-zero emissions throughout the economy by 2050.

One possible counter that could benefit from this potential spending plan will be First Solar Inc. (FSLR.NQ). First Solar, Inc. engages in designing, manufacturing, marketing, and distribution of photovoltaic solar power systems and solar modules. It operates through the Modules and Systems segments.

The Modules segment is involved in the design, manufacture, and sale of cadmium telluride solar modules, which convert sunlight into electricity. The Systems segment offers development, construction, operation, and maintenance of photovoltaic solar power systems.

Revenue & Net Profit

First Solar’s trailing 12-month revenue has risen by 48% year-on-year to US$3.5 billion as a result of higher international sales contribution in Ishikawa, Miyagi, and Anamizu projects in Japan, and an increase in the volume of modules sold to third parties.

With an expansion in gross profit margin in the modules segment and a lower operating cost, First Solar’s profit before tax grew by more than 700% year-on-year and its profit attributable to Shareholders has managed to turnaround from a loss to a profit of US$223.2 million in the period.

Technology Sector

With the US daily COVID-19 cases hitting a record high, Joe Biden has been in favour of COVID-19 related restrictions, in hope to reduce the number of cases and control the overall worsening pandemic situation in the US. If this happens to be the reality in the next few months, technology companies might expect to see further upside as more Americans are dependent on the firm’s technology platform in their daily lives.

One possible counter that could potentially benefit from this trend is Microsoft Corporation (MSFT.NQ). Microsoft Corp. engages in the development and support of software, services, devices, and solutions. Some of their business segments include:

• Business Processes segment, which comprises products and services in the portfolio of productivity, communication, and information services,

• Intelligent cloud segment that serves products and cloud services which can power modern business,

• More Personal Computing segment which comprises an operating system, software development tools, cross-device productivity applications; server applications; business solution applications, video games, personal computers, tablets, gaming and entertainment consoles.

Revenue & Net Profit

Microsoft’s trailing 12-month revenue has achieved a 13.5% year-on-year growth to US$147.1 billion on the back of strong growth from its cloud computing segment and the growth in sales of surface tablet and Xbox content and services revenue.

In line with the growth in revenue, Microsoft’s Profit Attributable to Shareholders grew by 15.5% year-on-year to US$47.5 billion.

Healthcare Sector

During Joe Biden’s campaign trail, he called out for the reform of healthcare in the US and has championed the idea of a revamp of the Affordable Care Act. Some of the reform includes providing subsidised health insurance to American Citizen to ensure that they could receive healthcare treatment at subsidised rates.

One possible counter that could benefit from this potential healthcare reform will be UnitedHealth Group Incorporation (UNH.NY). UnitedHealth Group engages in the provision of health care coverage, software, and data consultancy services and operates through the following segments:

• UnitedHealthcare segment, which utilizes Optum's capabilities to help coordinate patient care, improve the affordability of medical care, analyze cost trends and manage pharmacy benefits,

• OptumHealth segment provides health services business serving the broad health care marketplace, including payers, care providers, employers, government, life sciences companies, and consumers,

• OptumInsight segment focuses on data and analytics, technology, and information to help major participants in the health care industry.

Revenue & Net Profit

UnitedHealth Group’s trailing 12-month revenue has seen a modest gain of 5.4% year-on-year to US$252.5 billion. The gain in revenue can be seen from Optum and the UnitedHealthcare public-sector and senior benefits businesses. However, the revenue growth was being partially offset by direct COVID-19 care and testing costs and broader economic effects.

Despite the slower growth in revenue, United Healthcare Group has registered a 25.4% year-on-year increase in Profit Attributable to Shareholders to S$16.7 billion as a result of better cost management within the Group.

Conclusion

The above 3 sectors could potentially benefit from a Joe Biden’s Presidency, as seen from the policies that he advocated during the campaign trail. However, the actual implementation might be a difficult route as any major law/policies changes will have to pass through the US senate.

Based on the current trend, the Republicans are expected to retain control of the US senate and Joe Biden will likely face strong obstacles and resistance in terms of the policies that he presents to the senate. Let’s keep a close watch on Joe’s Biden 1st 100 days, starting January 2021.