Blue wave stock selection

17/07/2020

Blue wave stock selection

The US election is approaching! While the outcome is not certain, one can already prepare the allocation by considering the relative winners in a blue wave scenario. A Democrat administration will most likely focus on re-enforced regulation, especially on climate change (positive for tech infrastructure spending) and on higher taxes (gradual).

Company	Ticker	Investment Case
Steel Dynamics	STLD	Steel Dynamics is a US steel manufacturer and metal recycler and should benefit from proposed plans for infrastructure investment.
American Tower	AMT	American Tower is a leading independent owner, operator, and developer of wireless and broadcast communications real estate. As the eventual migration to 5G takes place, the company should benefit from the administration’s positive stance on 5G adoption.
American Electric Power	AEP	American Electric Power distributes and generates electricity and should benefit from increased transmission investment to deliver renewable power.
NextEra Energy	NEE	NextEra Energy is the largest wind and solar developer in the US and is well positioned for increasing renewable power development.
Adobe Systems Inc.	ADBE	With strong recurring revenues, a solid leadership position, and superior execution, Adobe deserves a premium valuation, in our view, as the company is a key technology enabler for many digital businesses.
Amazon Inc.	AMZN	Amazon is a leading e-commerce platform and cloud infrastructure player.
Juniper Networks	JNPR	Juniper provides data switching and routing products and services and should benefit from government incentives to deploy 5G infrastructure.
Nokia	NOK	Nokia provides 5G network solutions and should benefit from government incentives to deploy 5G infrastructure.
Albermarle	ALB	Albemarle produces specialty chemicals and should benefit from increasing electric vehicle demand due to their lithium exposure.
Eastman Chemical	EMN	Eastman Chemical engages in the production and distribution of a range of advanced materials, chemicals and fibers. The company should benefit from reduced trade tensions.
Medtronic	MDT	Medtronic is a medical technology company. The company is domiciled outside the US and, in our view, would be relatively less impacted by higher US corporate tax rates.
Thermo Fischer Scientific	TMO	Thermo Fisher engages in the provision of analytical instruments, equipment, reagents and consumables, software and services for research, analysis, discovery, and diagnostics. The company is expected to benefit from greater funding for National Institutes of Health research.
Zimmer Biomet Holdings	ZBH	Zimmer Biomet is a leading orthopedic equipment supplier and would be expected to benefit from expanded Medicare age eligibility.
ABB	ABBN	ABB produces a variety of technological solutions to promote automation and energy efficiency, as well as electric vehicle charging infrastructure. We believe the company would benefit from plans to improve energy efficiency and promote electric vehicles.
Honeywell	HON	Honeywell is a diverse industrial conglomerate with exposure to energy efficiency systems and should benefit from plans to reduce emissions through greater energy efficiency.
Stanley Black & Decker	SWK	Stanley Black & Decker is a provider of hand tools, power tools, and security solutions. The company should benefit from a reduction in trade tensions.
United Rentals	URI	United Rentals provides equipment rental services for construction and industrial companies as well as utilities and government entities. The company should benefit from infrastructure spending.
Accenture	ACN	Accenture is a leading professional and IT services company. The company is domiciled outside the US and should be relatively less impacted by higher US corporate tax rates. Accenture is a diversified technology services company interacting with several governments, corporations, and privately held companies. ACN is, among others, advising their clients on how to deploy the most modern disruptive technologies.
Apple	AAPL	Apple should benefit indirectly from the deployment of 5G through new product launches. Apple is the well-known maker of the iPhone, iPad, Mac PCs, wearables, and other products and services in the iOS and Mac OS ecosystem. The company should benefit from reduced trade tensions. With steady growth in its core iPhone units and solid growth in its services and wearables, Apple offers a good reward supported by its strong cash distribution.
Cisco Systems	CSCO	Cisco provides data switching and routing products and services and should benefit from government incentives to deploy 5G infrastructure. Initially, Cisco was slow to react to the challenge of software-defined networking (SDN, a technology that sought to disrupt networking). However, the combination of an SDN market that was slower to develop than expected and Cisco’s large incumbency has allowedit to reposition its strategy and product portfolio. We note that COVID-19 presents increased near-term uncertainty.
ASML	ASML	ASML is a leading semiconductor equipment manufacturer exposed to the critical lithography segment
Nvidia Corp.	NVDA	The market is underestimating NVIDIA’s long-term growth opportunities;higher demand for end-user video apps and data center related activities are translating into an above-average growth opportunity.
PayPal Holdings Inc.	PYPL	PayPal is a leading payment wallet provider. We believe it has strong market share upside potential.
Qualcomm Inc.	QCOM	Qualcomm is leading the competition in the field of emerging technologies like 5G and Internet of Things. This drives strong near-term growth; key catalysts include the 5G upgrade cycle.
Visa Inc.	V	Visa is well-positioned to capitalize on the ongoing secular shift in payments from checks and cash to plastic and digital. Visa’s volume growth should also benefit from expanding merchant adoption, growing mobile usage, and greater prepaid and commercial activity.