Despite a very recent pullback in equities, the table is set for stocks to thrive under the new administration. Federal Reserve Chairman Jerome Powell has pledged to keep interest rates at or near historic lows through 2023, all while pumping in liquidity via monthly Treasury bond purchases. At the same time, Capitol Hill is…
working on another round of fiscal stimulus that could total as much as $1.9 trillion. This comes atop the more than $3 trillion in fiscal stimulus passed last year in the wake of the coronavirus disease 2019 (COVID-19) pandemic.
Long story short, there’s ample access to cheap liquidity and a clear three-year outlook from the Fed. That’s a recipe for the stock market to thrive with Joe Biden in the White House.
If you’re looking to take advantage of this utopian growth scenario, the following five stocks look like no-brainer buys in a Biden bull market.
Although I’ll get no points for originality, e-commerce giant Amazon (NASDAQ:AMZN) has proven to be one of those companies that’s a no-brainer buy in any economic environment.
Most people are likely familiar with Amazon for its seller ecosystem. According to eMarketer, Amazon’s share of U.S. online sales is expected to grow from 38.7% in 2020 to 39.7% in 2021. To put this into some context, roughly $0.40 of every $1 spent online in the U.S. is routing through Amazon. Even with retail margins as slim as they are, this is an incredible figure.
Amazon has also been able to use its prowess as the king of e-commerce to sign up well over 150 million people to Prime worldwide. The fees Amazon collects from Prime help it undercut brick-and-mortar retailers on price. It certainly doesn’t hurt that paying members have added incentive to spend more and stay within Amazon’s ecosystem of products and services.
Throughout the Biden presidency, we’re liable to see Amazon’s cloud infrastructure operations play a big role in its growth prospects. Amazon Web Services (AWS) delivered 30% sales growth in 2020 during the worst economic downturn in decades. With margins that trounce retail, AWS has the potential to triple Amazon’s operating cash flow by 2024.
If there’s one issue I’m fairly certain will be swept under the rug, yet again, its brand-name drug pricing reforms. That’s an open invitation for profitable drug developers and innovators to thrive with Biden in the White House, which is precisely why AstraZeneca (NASDAQ:AZN) is a no-brainer buy.
Having moved well beyond the patent cliff that constrained AstraZeneca’s growth prospects for so long, the company is now a successful cancer- and cardiovascular-drug developer. Last year, its trio of cancer blockbusters — Tagrisso, Imfinzi, and Lynparza — grew between 36% to 49% on a constant-currency basis, with type 2 diabetes drug Farxiga delivering 30% constant-currency growth. These are indications with growing patient pools and increasing duration of use, which should lead to consistent growth in the company’s oncology and cardiovascular segments.
AstraZeneca is also in the process of buying specialty drugmaker Alexion Pharmaceuticals (NASDAQ:ALXN) for $39 billion in a cash-and-stock deal. Alexion specializes in ultra-rare diseases, meaning its therapies often face little or no competition.
The great thing about this buyout is that Alexion covered its cash flow by…
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