Stocks for an Obama Election Victory
Alexander is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Whatever your political position, it is important to recognize the effects government policies may have on your investments. That being said, this article is not meant to promote a particular candidate or take sides with respect to certain "hot button" issues. Rather it is meant to provide insight into which investments could post gains IF Obama wins in November.
Quotes in the article that form the different sections are directly from the Obama campaign's official website and not from the "liberal media" or "conservative talk radio." This article is also being published along with another article on a similar topic, Stocks for a Romney Election Victory, which lays out a prediction for a Romney victory instead. For the purposes of both articles only companies directly impacted are mentioned since there is so much debate over how the policies would affect the economy as a whole. To maintain a non-partisan look at these investments, both articles' first two paragraphs are nearly identical.
"The President has announced the opening of public lands for investments in clean energy, and he has committed his administration to approve projects by the end of 2012 that will increase renewable generation capacity to power 3 million homes."
In the modern political system the Democratic Party has become the party more closely associated with environmental protection and hence clean energy. (There are, of course, exceptions. Some Democrats support expanding coal mining and some Republicans support environmental action.) Because of this, clean energy producers stand to benefit from political gains by the Democrats, especially in the presidency.
As one of the largest American solar panel producing companies, First Solar (NASDAQ: FSLR) would be one of the primary corporate beneficiaries of a second Obama term. The approval of solar projects should strengthen demand for photovoltaic panels helping First Solar to recover some of the value it has lost over the past few years.
The benefits of clean energy investment will help more than just First Solar though. A sea of start-up solar companies are trying to develop industry changing technologies. While most trade as penny stocks on the Pink Sheets, some do demonstrate a promising future and could be worth an investor's while as a well-researched speculative play. While many have received some form of government funding (through tax breaks, logistical help or even direct loans), the best of them may not need future government funding, although the continuing availability of such funding should help them in their stability.
"Because of the new law, 34 million more Americans will gain coverage—many who will be able to afford insurance for the first time."
Most people probably took a look at that quote and immediately recognized it as Obamacare. Whether you believe the Affordable Care Act is a triumph for the middle class, part of a socialist plot, or somewhere in between, the fact that it will have an impact on the American healthcare system is clear.
In most cases, regulation of an industry tends to constrain its profits for the reason of benefiting society as a whole (many exceptions do exist though for both profit constraint and society benefiting). However, the healthcare act should be a long-term gain for the health insurance industry since over 30 million new customers will be entering it in the next few years. Many of the people entering are also the young who are relatively cheap to insure and government subsidies for lower income people should help to benefit the industry as well.
Humana (NYSE: HUM) is expected to take a hit in the short term but will benefit from a larger customer base in the long term. One of Humana's problems has been shrinking enrollment, which has forced them to cut over a thousand jobs according to WDRB, a news organization from Humana's native Louisville, Kentucky. The company had voluntarily agreed to keep many of the popular provisions of the Affordable Care Act regardless of the Supreme Court's ruling, which suggests that these provisions will not be too harmful to the bottom line. Other companies, including United Healthcare and Aetna, have also voluntarily agreed to keep the provisions signaling these requirements will not hurt the industry as much as the market thinks.
But the market is based on short-term thinking for these companies. In the short term this looks like more regulations and standards to comply with but in the long run it brings in a whole new group of customers. So healthcare insurance company stocks may decline in the days and weeks following Obama's reelection, if he is reelected, but should see gains long term as a new infusion of revenue comes through the door.
Investing 2012
No matter whether you are a Democrat, a Republican, or one of those extremely valuable independents, political changes could affect many of your investments. Regulations, incentives, and general policy all have their positive and negative effects on different sectors. After all, an informed voter is a better voter and an informed investor is a better investor.
Alexander MacLennan owns shares of a Natcore Technology, start-up solar technology company. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
