The race to the White House is in its final stretch, meaning the election campaigns for both Democratic presidential candidate Kamala Harris and Republican presidential nominee Donald Trump are really heating up.
Harris took the top spot on the Democratic ticket in late July when President Joe Biden unexpectedly ended his bid for a second term in the White House. He quickly endorsed Vice President Harris, who named Minnesota Governor Tim Walz as her vice-presidential running mate.
While the actual winner of the election doesn't have a direct impact on the stock market, that person's policies can affect certain sectors and industries.
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Take the Biden-Harris administration's strategy to revitalize domestic manufacturing and strengthen U.S. supply chains. This resulted in the 2022 passage of the CHIPS and Science Act that invests in the semiconductor industry and aims to "boost American semiconductor research, development, and production, ensuring U.S. leadership in the technology that forms the foundation of everything from automobiles to household appliances to defense systems."
This law includes $39 billion that's earmarked for manufacturing incentives and another $13 billion in research and development and workforce development. While the impact won't be immediate, the additional resources will likely create tailwinds for semiconductor stocks down the road.
But chipmakers aren't the only area of the market that could be impacted if Kamala Harris wins the election. Indeed, here are five stocks to buy for a Harris presidency, representing women's healthcare, infrastructure, electric vehicles (EVs), clean energy and artificial intelligence (AI).
We also looked at stocks to buy for a Trump presidency, so you have ideas for whichever way the election goes.
Organon
- Market value: $4.6 billion
- Sector: Healthcare
- Industry: Drug Manufacturers – General
- One-year total return: 15.6%
- Three-year total return (annualized): -16.3%
- Five-year total return (annualized): N/A
Organon (OGN) is a global healthcare company focused on women's health issues. Although it has three product portfolios: Women's Health, Biosimilars, and Established Brands, it is Harris' focus on women's health that could help OGN gain relevance in the U.S. market.
Currently, Organon generates 77% of its revenue outside the U.S. Its three largest markets are Europe and Canada, which made up a combined 28% of OGN's $1.61 billion in total Q2 revenue, Asia, Pacific and Japan (17%), and Latin America, Middle East, Russia and Africa (16%).
In the second quarter ended June 30, the company's Women's Health portfolio had revenue of $449 million, 3% higher than a year earlier. However, its Q2 Nexplanon revenue – a birth control implant – grew by 13% year-over-year to $242 million, or 54% of its total Women's Health revenue.
Interestingly, according to the Q2 2024 10-Q report, Organon's U.S. Nexplanon revenue accounted for 71% of the product's total revenue in the quarter. While the Supreme Court and red states will have something to say about any birth control products, a Harris presidency should provide greater protection for Nexplanon than a Trump one would.
As for its other two groups of products, Biosimilars had a healthy 22% year-over-year increase in Q2 2024 revenue to $164 million. However, while drugs like Hadlima (rheumatoid arthritis) and Ontruzant (HER2+ breast cancer) are growing nicely, they barely account for 10% of Organon's quarterly sales.
Organon's Established Brands business accounts for over half of its revenue. These drugs, in some cases years ago, lost their market exclusivity. Its drugs include Zetia, which lowers bad cholesterol levels for people with high cholesterol.
Sterling Infrastructure
- Market value: $4.9 billion
- Sector: Industrials
- Industry: Engineering & Construction
- One-year total return: 120.5%
- Three-year total return (annualized): 91.5%
- Five-year total return (annualized): 57.7%
Sterling Infrastructure (STRL) is aptly named because the Texas-based company provides infrastructure solutions in three key areas: e-infrastructure, transportation and building.
Its business once almost solely focused on heavy civil construction projects, building bridges, roadways, and other types of large-scale infrastructure. However, since 2016, it has moved to diversify its revenue streams into higher-margin infrastructure-related projects.
Its E-Infrastructure Solutions segment (48% of 2023 revenue) includes site-development services for data centers, e-commerce distribution centers, manufacturing and other uses, primarily for larger, well-established companies. In 2023, four customers accounted for 40% of the segment's total revenue.
The company's second-highest revenue generator is its Transportation Solutions division, at 32%. This is the legacy part of its business which existed before its business strategy change in 2016. Building Solutions accounts for the remaining 20% of its revenue. The segment builds residential and commercial concrete foundations for single-family and multi-family homes, parking garages and other concrete work, and plumbing services for new single-family homes.
STRL's shift in strategy appears to be working. In early August, Sterling reported Q2 results, which included a 12% year-over-year increase in revenue to $582.8 million and EBITDA (earnings before interest, taxes, depreciation and amortization) of $87.0 million, up 18% from a year ago.
And the industrial stock could see more infrastructure-related growth if Kamala Harris wins the election in November. Indeed, as part of the Biden administration, Harris supported the 2021 passage of the Bipartisan Infrastructure Law that aims to "create good-paying jobs, boost domestic manufacturing, strengthen supply chains, and grow the economy from the middle out and the bottom up."
Rivian Automotive
- Market value: $10.1 billion
- Sector: Consumer discretionary
- Industry: Auto manufacturers
- One-year total return: -44.5%
- Three-year total return (annualized): N/A
- Five-year total return (annualized): N/A
Kamala Harris appears to be following in the footsteps of several of Joe Biden's economic plans. Harris, who hails from California – the state with the highest adoption rate for electric vehicles – is a big supporter of the American EV industry.
The vice president, on behalf of the Biden administration, went to Detroit in May with a $100 million check for small- and medium-sized auto manufacturers. The funds were for these companies to upgrade their production of EVs.
"This investment will help to keep our auto supply chains here in America," said Harris at the time, as reported by ABC News. And this "strengthens America's economy overall and will keep those jobs here in Detroit."
Biden, and now Harris, back pro-electric-vehicle policies such as claiming an EV tax credit of up to $7,500 per vehicle, $1.7 billion in federal grants like the one mentioned above, and $7.5 billion paid out to states to build a national charging network.
These all favor American EV makers such as Rivian Automotive (RIVN), which currently produces the R1T pickup and R1S SUV, as well as commercial delivery vans for Amazon.com (AMZN) and others.
Analysts generally like Rivian. Of the 27 that cover the stock tracked by S&P Global Market Intelligence, 10 say it's a Strong Buy, four call it a Buy, 12 have it at Hold and one rates it at Sell. This works out to a consensus Buy recommendation.
Wedbush analyst Daniel Ives is one of those with an Outperform (Buy) rating on RIVN. The company is powering through some speed bumps at the moment, Ives wrote in an August 7 report. Earlier this year, Rivian "made some significant improvements on the R1 lineup from a production standpoint," and this "should positively impact the margin story looking forward."
Additionally, Rivian is utilizing Volkswagen's $5 billion investment in the company "to support future growth while vertically integrating its software platform and electrical architecture, achieving further cost savings and delivering improved vehicles down the line."
NextEra Energy
- Market value: $173.4 billion
- Sector: Utilities
- Industry: Utilities - Regulated Electric
- One-year total return: 63.4%
- Three-year total return (annualized): 4.0%
- Five-year total return (annualized): 10.3%
NextEra Energy (NEE) is the parent of Florida Power & Light, America's largest rate-regulated utility, with 5.9 million customer accounts, or roughly 12 million people across the Sunshine State. NEE is also the world's largest producer of clean, renewable energy.
Kamala Harris is a big supporter of clean energy. As Reuters recently reported, she continues to remind voters that Trump and the Republicans want "to surrender our fight against the climate crisis."
It's likely the policies of her 2019 campaign to be the Democratic presidential nominee, which included a $10 trillion plan to reduce greenhouse gas emissions – have likely softened.
Still, in the issues section of her website, Harris says that she and Governor Walz "will always fight for the freedom to breathe clean air, drink clean water, and live free from the pollution that fuels the climate crisis."
As such, NextEra is one of the stocks that could benefit from a Harris presidency. Shares have already outperformed in 2024, up 42% for the year to date on a total return basis (price change plus dividends) vs 24% for the S&P 500. Utility stocks have done well as investors bet that the demand for power generation will continue to rise in the years ahead.
"We believe NEE deserves to trade at a premium given above-average population growth in its Florida service territory, as well as its favorable regulatory return on capital and strong new project pipeline," wrote Argus Research analyst Marie Ferguson (Buy) in a July 25 note.
She adds that NEE "The company should also see long-term benefits from its focus on renewable energy, including higher margins and tax credits for renewable energy development under the Inflation Reduction Act."
Microsoft
- Market value: $3.10 trillion
- Sector: Technology
- Industry: Software - Infrastructure
- One-year total return: 27.6%
- Three-year total return (annualized): 11.8%
- Five-year total return (annualized): 26.1%
Kamala Harris held the role of AI czar in the Biden White House, which makes sense given her ties to California and the Bay Area. She's very interested in working with tech companies to develop AI that is both good for the economy and protects the public at large.
In November, Harris gave a speech about the future of AI at the U.S. Embassy in London.
"AI has the potential to do profound good to develop powerful new medicines to treat and even cure the diseases that have for generations plagued humanity, to dramatically improve agricultural production to help address global food insecurity, and to save countless lives in the fight against the climate crisis," Harris said.
However, the vice president was adamant that the Biden administration would work with Congress to implement laws protecting Americans from AI and privacy breaches.
Harris is primarily interested in holding corporations accountable for their actions. That trait developed over many years as the district attorney of San Francisco and California's attorney general.
However, she's also known to be willing to listen to both sides of an argument or discussion. Microsoft (MSFT) should be given a seat at the AI table in Washington and could benefit from a Harris White House if it plays by the books.
Microsoft's investments in AI are already starting to bear fruit. In its fiscal fourth-quarter results, the company said revenue jumped 15% year-over-year to $64.7 billion. Its cloud revenue, which includes AI, was 21% higher to $36.8 billion. Earnings were up 10% at $2.95 per share.
CFRA Research analyst Angelo Zino reiterated the firm's Strong Buy rating on Microsoft stock after earnings. "On the surface, we view the June quarter results as largely in line across MSFT's core businesses and believe that AI monetization is incrementally improving," Zino said.
Zino isn't alone in his bullish outlook. Of the 57 analysts following the blue chip stock tracked by S&P Global Market Intelligence, 38 say it's a Strong Buy, 14 have it at Buy and five call it a Hold. This works out to a consensus Strong Buy recommendation and makes MSFT one of the best-rated Dow Jones stocks.
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