The good news for investors is that short-term pain is a recipe for long-term gain. You see, every stock market crash and every correction has finally been put in the mirror by a bull market rally. This makes volatility the friend of long-term investors – and it happens to be recovering.
Following the election of Democrat Joe Biden as the 46th President of the United States, there is bound to be short-term turbulence as Wall Street considers what the administrative transition might look like, as well as Biden’s success in bringing implementation of its global policy. . This can create an opportunity for long term investors to strike.
If you have $ 5,000 in cash on hand that won’t be needed to cover bills or emergencies, then I encourage you to put that money to work in the following three foolproof actions with Biden as president.
If there’s one business that investors can easily buy with Biden in the White House, it’s the e-commerce giant. Amazone (NASDAQ: AMZN).
The COVID-19 pandemic may well have permanently altered consumption habits. While we’re not going to see physical stores disappear anytime soon, the propensity to shop online is on the rise and here to stay. This is great news for the most dominant online retailer in the United States, Amazon.
An eMarketer analysis earlier this year predicted that Amazon would control 38.7% of all online retailing in 2020, with its share increasing from around 100 basis points to 39.7% in 2021. Au Total Amazon’s online sales are expected to exceed $ 300 billion. next year. Even taking into account the low margins associated with retail sales, Amazon has been able to pivot its online dominance by signing up over 150 million Prime members globally. These Prime members tend to spend significantly more than non-Prime members, and they are encouraged to stay in the world of Amazon products and services.
We’re also not going to see a slowdown in cloud-based spending under a Biden presidency. Amazon’s Amazon Web Services (AWS) infrastructure cloud platform is becoming an absolute heavyweight before our eyes. AWS has grown its sales by 29% in consecutive quarters and generates annual revenue of over $ 46 billion. More importantly, AWS has much juicier margins than what Amazon generates from its e-commerce segment, which means operating cash flow is expected to skyrocket for the business in the years to come. .
Elanco Animal Health
Another foolproof stock that can be purchased with Biden as president is Elanco Animal Health (NYSE: ELAN).
If Elanco is a company you already follow, you might roll your eyes at this statement. It was crashed last Friday after reporting weaker-than-expected third quarter operating results. In particular, its farm animals segment was negatively impacted by COVID-19 to the tune of $ 35 million. However, with a more cohesive federal COVID-19 pandemic plan being implemented once Biden takes over on January 20, there is reason to believe the coronavirus will not have an impact. long-term negative on Elanco.
The acquisition of Bayer Animal Health from Bayer. In addition to making it the No. 2 in animal health, this acquisition has significantly strengthened Elanco’s exposure to the companion animal market, which is now expected to account for around half of all sales. This buyout is also expected to yield between $ 275 million and $ 300 million in potential annual cost synergies.
Plus, pet owners have shown their willingness to spend a lot on their four-legged friends. The American Pet Products Association is forecasting spending of $ 99 billion this year for pets, with just over $ 30 billion for veterinary care and products.
The pet industry is a beast that can’t be stopped, and companies like Elanco Animal Health are expected to perform well under a Biden presidency.
When you think of sure-fire winners, a gold stock like Barrick Gold (NYSE: OR) is probably not the first thing I think of. But make no mistake, the outlook for gold stocks has never been brighter and should continue to be so under a Biden presidency.
At the macro level, the table is set for a higher spot price. The Federal Reserve has made it clear that it intends to keep interest rates at or near historically low levels until 2023. Coupled with $ 17 trillion in investment grade debt with negative returns, it this is a recipe for income seekers to stay away from bonds and instead put their money to work in gold as a store of wealth.
More specific to Barrick Gold, the company has made substantial progress on its debt. Higher realized precious metal prices, along with the company’s focus on building higher-grade mines, allowed it to reduce its net debt by 71% from the second sequential quarter to $ 417 million. . A record free cash flow of $ 1.3 billion doesn’t hurt either.
Barrick Gold appears to be on track to deliver an all-inclusive sustaining cost of just under $ 1,000 per ounce of gold equivalent (GEO) in 2020, with the real potential to bring that cost down to an AISC of 900. USD per GEO in the future. This gives the company a comfortable cash operating margin of between $ 900 and $ 1,000 per GEO, and should allow Barrick to continue to improve its financial flexibility.
Gold stocks have the potential to be pretty bright with Joe Biden in the White House.