Election day has arrived, and Wall Street is clearly worried. Over the past week or so, stock market volatility has increased dramatically, with investors debating what will happen to the US economy over the next four years.
These concerns are largely unfounded. Although the stock market has performed better historically with a Democrat in the White House for the past 75 years, both parties have been monitoring healthy annual gains in stock valuations. Because operating income growth and not a temporary change in fiscal policy that leads to a price expansion, high-quality businesses will perform well no matter which political party wins.
With that said, here are four safe stocks that you can buy now and comfortably hold for the next four years, regardless of who is the chairman or which party controls Congress.
Lake Kirkland Gold
You might not consider gold stocks a safe investment, but considering the current state of the US economy due to the 2019 coronavirus (COVID-19) pandemic, they could skyrocket in the coming years. So Kirkland Lake Gold (NYSE: KL) should be on your buying list.
For gold stocks like Kirkland Lake, there are macro and company specific catalysts. At the macro level, physical gold prices will be driven by the Federal Reserve’s intention to keep interest rates at or near record lows until 2023. The Fed has also increased the money supply with loosening. Unlimited quantitative liquid. This will put pressure on the US dollar, which has positive implications for the price of gold as it has an inverse relationship with the dollar.
But Kirkland Lake Gold is not simply realizing the higher price of gold. The company with the best balance sheet in the entire mining industry – $ 848 million in cash without debt – has bought back nearly $ 527 million in shares this year, and its dividends have tripled. The company’s highly efficient and low-cost manufacturing assets, providing a cash operating margin of more than $ 1,100 per ounce of gold equivalent, made this possible.
It doesn’t matter whose president moves forward. Gold will thrive and Kirkland Lake has the safest balance sheet in the industry.
Another safety stock that is in great shape regardless of who is responsible is the e-commerce giant Amazon (NASDAQ: AMZN). While Biden has said that Amazon should pay a higher corporate tax rate, fiscal policy won’t hold back this absolute monster of a company.
Depending on your preferred source, Amazon controls between 38% and 44% of all US online sales. That is about 33 percentage points higher to 37 percentage points higher than its closest rival. Even taking into account its razor thin retail margins, it still has incredible value as an e-commerce destination. For example, it is possible to register over 150 million Prime members worldwide. The annual fees paid by these members help increase retail profits and ensure that Amazon sells brick-and-mortar stores on price. These membership also help keep users loyal to the company’s products and services.
There’s also the long-running Amazon star: Amazon Web Services. This high-growth cloud infrastructure segment grew 29% for the second quarter in a row and is now generating more than $ 46 billion in annual revenue. More importantly, cloud returns are substantially better than what Amazon generates from retail, meaning that as AWS grows into a larger percentage of total revenue, operating cash flow will skyrocket.
Although most biotech stocks are investments that are highly volatile, drug developer Exelixis (NASDAQ: EXEL) is a safe bet no matter who wins the election.
Exelixis’ horse is Cabometyx, an approved cancer drug for the treatment of first- and second-line renal cell carcinoma (RCC), as well as advanced HCC. By 2021, Cabometyx will record its first year as a blockbuster therapy (i.e., annual sales of $ 1 billion or more), with the drug benefiting from its strong, nimble pricing power. demand increases and brand expansion opportunities.
Speaking of label expansion opportunities, Cabometyx is currently being studied in approximately six dozen ongoing clinical trials. Interestingly, one of these studies, CheckMate 9ER, involved testing Cabometyx in conjunction with the main competitor of RCC Opdivo (developed by Bristol Myers Squibb) as a treatment for first line RCC. Stage 3 results show a loop-through combination of the previous Sutent standard care drug.
Besides the expectation that Exelixis will see additional revenue opportunities from Cabometyx, it is also amassing quite a bit of cash. The company is expected to end 2020 with $ 1.5 billion to $ 1.6 billion in cash and investments, and potentially raking in between $ 400 million and $ 500 million per year in cash flow. free. There’s certainly safety in this growing cash buffer.
Palo Alto Networks
Investors can also purchase a stake in a network security solution provider Palo Alto Networks (NYSE: PANW) without thinking about the election.
As with the Kirkland Lake Gold argument above, there are macro and firm-specific perspectives. On a broader basis, the COVID-19 pandemic has accelerated the push for businesses online and into the cloud. Even with vaccines, we could have seen a lasting change in the way businesses operate and consumers shop. This means a growing reliance on corporate data protection, especially as hackers and robots try to steal corporate data and consumers don’t take a day off.
At a specific company level, Palo Alto Networks is transitioning from lower-margin physical firewall products and towards subscription-based cloud protection solutions. The subscription model generates higher profits, provides more consistent revenue recognition, and reduces customer disruption.
Palo Alto’s success also depends on its strategy of a quick acquisition. The company is continually looking for ways to increase product offerings and reach more SMEs. A steady diet of acquisitions has been the answer.
Seek this combination of natural and conversion-based growth to propel Palo Alto to consistently low double-digit growth.