In this article, we discuss the 10 best stocks that will benefit from Biden’s $6 trillion plan. If you want to skip our detailed analysis of these companies, go directly to the 5 Best Stocks that will Benefit from Biden’s $6 Trillion Plan.
United States President Joe Biden recently unveiled an ambitious $6 trillion budget proposal that includes the previously announced American Jobs Plan and American Families Plan that the White House hopes will get approved by legislators on both sides of the aisle in the coming weeks. The budget proposes over $5 trillion in federal spending on infrastructure, defense, education, housing, and health care. The $6 trillion plan is an improvement on the $4.8 trillion budget for 2020 and almost double the $3.6 trillion federal budget in 2009.
Economic experts have raised concerns around the proposed new tax hikes and increased spending in the plan that are likely to further widen the overall deficit, arguing that the proposal envisions spending that would not be made up in taxes for years to come. Giving in to some of these demands, Biden has over the last week signaled that he would be willing to roll back some of his plans in order to get the broader proposal approved by Congress. This includes a rollback of a massive hike in capital gains tax that has met fierce criticism.
Some of the stocks that would benefit if the budget is approved include Verizon Communications Inc. (NYSE: VZ), the telecom firm based in New York, Lockheed Martin Corporation (NYSE: LMT), the defense contractor based in Maryland, and NVIDIA Corporation (NASDAQ: NVDA), the California-based technology firm. All three are widely accepted as industry leaders in their respective markets, with the proposal envisioning government incentives for American manufacturers so they can compete in international markets.
More than $100 billion have been set aside for the development of communications networks, including 5G, across the United States over the next five years. Verizon Communications Inc. (NYSE: VZ), which is one of the largest telecom firms in the country, would benefit hugely from this improved infrastructure. Verizon Communications Inc. (NYSE: VZ) recently became the 5G partner of fifteen teams that play in the National Basketball Association (NBA) and announced that it had installed 5G antennas in fourteen additional basketball arenas across the US.
The Biden administration has also allocated more than $750 billion for defense spending, most of which will be rolled out to American defense contractors like Lockheed Martin Corporation (NYSE: LMT) to improve the overall capabilities of the US forces. On June 4, Lockheed Martin Corporation (NYSE: LMT) announced that it had entered into talks with the government for a total of 169 F-135 aircraft deliveries and production rates for 2022. The company hopes to deliver over 130 jets this year after a disappointing 2020 because of the COVID-19 pandemic.
The improvement of 5G coverage and increased spending on housing and healthcare are expected to bring much-needed relief to the American middle class, freeing up some of their savings that could be spent on electronic devices and video games developed with the help of NVIDIA Corporation (NASDAQ: NVDA). The company recently crushed earnings estimates and put out improved guidance numbers, prompting investment firms to upgrade NVIDIA Corporation (NASDAQ: NVDA) stock ratings and raise price targets.
It remains to be seen whether the $6 trillion plan will be approved and the modifications that will have to be made for the proposal to become law. Meanwhile, the post-pandemic stock market continues to baffle financial experts. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 best stocks that will benefit from Biden’s $6 trillion plan.
Best Stocks That Will Benefit from Biden’s $6 Trillion Plan
10. Caterpillar Inc. (NYSE: CAT)
Number of Hedge Fund Holders: 53
Caterpillar Inc. (NYSE: CAT) is an Illinois-based firm that makes and sells construction equipment. It was founded in 1925 and is placed tenth on our list of 10 best stocks that will benefit from Biden’s $6 trillion plan. The company’s shares have returned more than 80% to investors over the past twelve months. A significant portion of the $6 trillion plan is dedicated to the improvement of infrastructure, and Caterpillar, as one of the largest construction equipment manufacturers, has a lot to gain from this increased spending in the sector.
In quarterly earnings posted on April 29, Caterpillar Inc. (NYSE: CAT) reported earnings per share of $2.87 for the first three months of 2021, beating market estimates by $0.93. On June 4, investment advisory Deutsche Bank maintained a Buy rating on the stock with a price target of $273, up from $259 previously.
Out of the hedge funds being tracked by Insider Monkey, Washington-based firm Bill & Melinda Gates Foundation Trust is a leading shareholder in Caterpillar Inc. (NYSE: CAT) with 10 million shares worth more than $2.3 billion.
9. The Boeing Company (NYSE: BA)
Number of Hedge Fund Holders: 59
The Boeing Company (NYSE: BA) is an Illinois-based firm that has stakes in the defense, aviation, and communications industries. It was founded in 1916 and is ranked ninth on our list of 10 best stocks that will benefit from Biden’s $6 trillion plan. The stock has offered investors returns exceeding 16% over the past year. Some of the products that the company makes and sells include airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles, among others.
On June 3, market analysts at investment advisory Baird projected that The Boeing Company (NYSE: BA) would miss delivery targets for the second quarter by 20% versus the consensus predictions, but said the overall outlook on the firm was constructive on the back of the Boeing 737 MAX recovery.
At the end of the first quarter of 2021, 59 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in The Boeing Company (NYSE: BA), up from 55 in the preceding quarter worth $1 billion.
Just like Verizon Communications Inc. (NYSE: VZ), Lockheed Martin Corporation (NYSE: LMT), and NVIDIA Corporation (NASDAQ: NVDA), The Boeing Company (NYSE: BA) is one of the best stocks that will benefit from Biden’s $6 trillion plan.
In its Q1 2020 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The Boeing Company (NYSE: BA) was one of them. Here is what the fund said:
“We’ve known Boeing for a long time. It’s always been a high quality company that’s traded for a premium valuation owing to its position as a global duopoly. We’d looked at it recently after weakness due to its highly publicized Max 737 issues, but it never got cheap enough for us to pull the trigger. After the pandemic, the stock went into freefall as its customer bases’ business dried up and people worried about its liquidity. The stock fell from $338 on February 19th when the S&P hit its high to a low of $89. We bought the stock after the new CEO Dave Calhoun said publicly that it would not take government capital if it required equity dilution because it had many other options. Our average price is just above $120 where it was trading for less than 7x what it earned in 2018. It will likely take a while to normalize to those earnings levels, but this business will survive and ultimately we will own a leader in a global duopoly. Even on depressed forecasts, the company currently has about a 10-15% free cash flow yield. If and when the economy normalizes, we think Boeing could be worth more than double its current price.”
8. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is a California-based company that primarily makes and sells electric vehicles but has stakes in the clean energy business as well. It was founded in 2003 and is placed eighth on our list of 10 best stocks that will benefit from Biden’s $6 trillion plan. The stock has returned 238% to investors in the past few months. The $6 trillion plan by President Biden, which includes tax break extensions and other incentives for companies working on electric and new energy vehicles, gives Tesla shares increased upside potential.
On June 4, media reports claimed that Tesla, Inc. (NASDAQ: TSLA) was looking to launch in India by the end of the year with initial plans seeking a sales and marketing setup to be followed by showrooms in the megacities of Mumbai, Bangalore, and capital New Delhi.
At the end of the first quarter of 2021, 62 hedge funds in the database of Insider Monkey held stakes worth $10 billion in Tesla, Inc. (NASDAQ: TSLA), down from 68 in the preceding quarter worth $12 billion.
Just like Verizon Communications Inc. (NYSE: VZ), Lockheed Martin Corporation (NYSE: LMT), and NVIDIA Corporation (NASDAQ: NVDA), Tesla, Inc. (NASDAQ: TSLA) is one of the best stocks that will benefit from Biden’s $6 trillion plan.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ: TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
7. Plug Power Inc. (NASDAQ: PLUG)
Number of Hedge Fund Holders: 25
Plug Power Inc. (NASDAQ: PLUG) is a New York-based company that makes and sells hydrogen fuel cell systems. It was founded in 1997 and is ranked seventh on our list of 10 best stocks that will benefit from Biden’s $6 trillion plan. The company’s shares have offered investors returns exceeding 526% in the past twelve months. The firm is aiming to reduce the reliance on fossil fuels by marketing hydrogen as an alternative energy source. The company will gain from the incentives offered to clean energy firms in the $6 trillion plan.
On May 28, investment advisory BTIG initiated coverage on Plug Power Inc. (NASDAQ: PLUG) stock with a Buy rating and a price target of $40, backing the firm to succeed as the momentum around green hydrogen, an industry still in infancy, builds rapidly.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Plug Power Inc. (NASDAQ: PLUG) with 12 million shares worth more than $433 million.
Just like Verizon Communications Inc. (NYSE: VZ), Lockheed Martin Corporation (NYSE: LMT), and NVIDIA Corporation (NASDAQ: NVDA), Plug Power Inc. (NASDAQ: PLUG) is one of the best stocks that will benefit from Biden’s $6 trillion plan.
In its Q2 2020 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Plug Power Inc. (NASDAQ: PLUG) was one of them. Here is what the fund said:
“We also closed our short position in Plug Power this quarter as the market was subsumed with enthusiasm over their recent acquisitions, resulting in an almost 80% rally in the stock over ten trading days. Our decision to exit was painful at the time as we were forced to reconcile with a collective exuberance that was (and is, in our opinion) not grounded reality. In hindsight, it was the correct decision as we avoided most of its recent vertical trajectory.”
6. The Goldman Sachs Group, Inc. (NYSE: GS)
Number of Hedge Fund Holders: 77
The Goldman Sachs Group, Inc. (NYSE: GS) is a New York-based financial services company. It was founded in 1869 and is placed sixth on our list of 10 best stocks that will benefit from Biden’s $6 trillion plan. The company’s shares have returned more than 79% to investors in the past twelve months. Most of the business dealings of the investment bank revolve around mergers, acquisitions, divestitures, restructurings, and spin-offs, among others.
The Goldman Sachs Group, Inc. (NYSE: GS) recently voiced disapproval at a proposed clause of the $6 trillion plan that would hike up the capital gains tax. Earlier this week, President Biden appeared to heed the advice and signaled that he would be willing to compromise on this provided some of his other proposals were accepted.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Greenhaven Associates is a leading shareholder in The Goldman Sachs Group, Inc. (NYSE: GS) with 2.6 million shares worth more than $872 million.
Just like Tesla, Inc. (NASDAQ: TSLA), Verizon Communications Inc. (NYSE: VZ), Lockheed Martin Corporation (NYSE: LMT), and NVIDIA Corporation (NASDAQ: NVDA), The Goldman Sachs Group, Inc. (NYSE: GS) is one of the best stocks that will benefit from Biden’s $6 trillion plan.
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Disclosure: None. 10 Best Stocks That Will Benefit from Biden’s $6 Trillion Plan is originally published on Insider Monkey.
