Much has been made about the implications of the so-called Blue Wave government on global politics and economic activity. After the Democrats wrangled control of the Senate by the slimmest of margins, many investors are wondering how to reposition their portfolios to capitalize on the potential for sweeping reforms.
While the Biden administration may still struggle to enact certain legislation (and frankly who knows which campaign promises will stick), there are some industries that clearly stand to benefit. Financials, industrials, and clean energy are among the most likely winners. Here we highlight one stock in each area that looks to be in a good position to ride the Blue Wave higher over the next few years.
Can Ally Bank Stock Keep Rising?
One of the more likely scenarios is for an influx of fiscal stimulus measures. Government spending on infrastructure, education, and the beleaguered hospitality industry hold the potential to generate U.S. economic growth. This in turn could lead to increased inflationary pressures and a gradual increase in interest rates. Advantage financials—including banks, credit card companies, and insurance companies.
One of the more intriguing bank stocks is Ally Financial (NYSE:ALLY) whose $14 billion market cap makes it more limber than the big banks when it comes to growth opportunities. The online-centric bank appeals to younger generations of consumers and business owners due to its easy-to-use digital platforms and competitive loan products.
More than two-thirds of Ally’s business is derived from auto financing so a continued rebound in the auto industry will be paramount going forward. But with complementary growth businesses in insurance, mortgage, and corporate finance, a healthier U.S. interest rate and lending environment could drive some well diversified revenue growth.
Ally’s balance sheet is solid and affords it more opportunities for acquisition and shareholder friendly moves. This week it announced a stock repurchase authorization of up to $1.6 billion sending the stock to a fresh record high. Now riding a 9-month winning streak, this stock is showing no signs of slowing down. Investors should be looking for weakness in the share price to make Ally stock their friend.
Is United Rentals a Good Infrastructure Play?
Infrastructure was one the key themes of the Biden campaign—and the country’s aging roadways, bridges, electricity, and water systems certainly point to a need for spending in this area. Throw in ambitions for universal broadband and the industrial sector will likely be very busy over the next four years.
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