12 Stocks in Focus for the Obama Era

By Mike Conlon

In case you haven’t heard by now, Obama’s first 100 days have come and gone and despite what you may have been led to believe, you are still here. You’ve persevered through the bank stress tests, you’ve outlasted the dreaded swine flu, and you’ve overcome all of the failed policies of every president ever to not be named Barack Obama. Now what?

As I look at my measly 401K balance, I’m trying to get a handle on where my investment dollars should be allocated going forward (for a less tongue-in-cheek answer click here). A natural tendency would be to just do the opposite of what I did last year in some Costanza-like paradigm shift for my investing strategy. But this time it’s different. Gone are the days of free-market capitalism; say hello to direct government participation!

We already know that Obama likes to moon-light as a stock market guru, but can we be sure that his policies and rhetoric will be good for private business? Well that all depends. Look no further than the proposed budget and the stimulus program. The devil is in the details, as they say.

There’s plenty of talk about which sectors of the economy might do well and which might not. Let’s take a look at a few of them:

First the GOOD (companies that should benefit the most):

Alternative energy. A mainstay of Obama’s platform, green energy companies stand to receive a large portion of the stimulus package. In fact, some folks claim that clean energy stocks will be to this decade what internet stocks were to the late 1990s. Don’t believe me? Check out First Solar (FSLR).

Basic materials. These stocks will benefit from all of the new construction initiatives that have been put forth. Caterpillar (CAT) and US Steel (X) could do well.

Now the BAD (companies that may benefit, although it's too early to tell):

Healthcare. There’s been a lot of talk recently about the universal healthcare program and whether or not it will be good for healthcare stocks, particularly the insurers. These companies have already agreed to price-cuts which could affect profitability. Not to mention that the details of how the plan is going to work have not been released yet. Aetna (AET) and United Healthcare (UNH) could be in play.

Financials. A necessary evil. Obama has not hid his disdain for this group, and they have received a lot of TARP money. Whether or not they can return to profitability remains to be seen. Keep an eye on Citigroup (C), Wells Fargo (WFC), and Bank of America (BAC).

And the UGLY (companies that must defy the odds to do well):

Big Oil. The only group hated as much as the financial sector. The antithesis to green energy stocks. They have already had tax considerations reduced, are getting no stimulus money, and have been publicly castigated. Look out Exxon (XOM) and Chevron (CVX).

Defense. The biggest cuts in the Obama Budget have been in defense and military spending. This could make it a challenging environment for defense contractors General Dynamics (GD) and Raytheon (RTN).

These are just a few of the domestic themes which have yet to be played out here in the US. But does this mean that the “good” sectors should be bought, and the “ugly” should be sold?

Not necessarily. There are many different factors that go into choosing an investment besides what the President of the United States likes best. The overall investing climate is affected by factors such as inflation, taxes, interest rates, employment and so forth. That is why it is so important, especially in today’s investing environment, to learn about the different relationships and factors that affect your investments.

Original article

Comments

[PastTense:]

"Basic materials. These stocks will benefit from all of the new construction initiatives that have been put forth. Caterpillar (CAT) and US Steel (X) could do well."

However private construction is bigger than public construction. And what does everyone expect in the way of new office buildings, for example ? A massive decline.


"Healthcare.. These companies have already agreed to price-cuts which could affect profitability."

Nonsense; it was simply some trade associations making meaningless PR statements.


"Big Oil. Look out Exxon (XOM) and Chevron (CVX)."

Oil is an international market. Peak oil is happening and the Chinese all want to get a car. While it will take a couple years for oil to recover, after that prices will explode.

May 16 08:56 PM

[Peter Cooper:]

Marc Faber is still hot on commodities but he thinks President Obama is a disaster for the US, hear the latest comments from this brilliant commentator on this post:
arabianmoney.net/2009/.../

May 17 01:06 AM

[searcher:]

"..besides what the President of the United States likes best." No kidding. I'm not letting my currently affronted ideological leanings be leveraged by some of the Chicken Littles out there in the economic and political barnyard. Don't let the posturing of those whose bread and butter is the marketing of an 'attitude' sway cool investment judgement. Investment is intended to generate a return and not to make a 'statement'.

May 17 12:17 PM

[Windsun33:]

I put almost zero faith in any of the "Obama stock" hype. Despite massive amounts of money flowing to .. hmm to where? Does anyone really know?

Few, if any, of the so-called infrastructure projects will really result in any much spending on any capital equipment (such as CAT) - there is so much idle equipment lying around right now.

Alternative energy stocks are way too overhyped, and only a very small amount of that stimulous money will actually hit the ground anytime soon. The credit crunch is the biggest detriment right now to any expansion in that area, and I don't see anything that Obama is doing that will help that.

In fact, I guess you would call me an "Obama Contratian" - I am buying or ready to buy a lot of the stocks being bashed by the current populist administration rhetoric.

May 17 02:27 PM

[Windsun33:]

I think it is actually about 70% congress and 30% Obama that is the disaster, but that is hard to pin down. If Obama actually showed some guts and stood up to congress and the Pelosi spendwagon, I might have more faith. But right now I am spending a lot of time researching what might be good when high inflation hits.


On May 17 01:06 AM Peter Cooper wrote:

> Marc Faber is still hot on commodities but he thinks President Obama is a disaster for the US...

May 17 02:31 PM

[tessant:]

its gonna all be about the solar. load em up!

May 17 03:09 PM

[Shotei:]

If your going to play solar watch it every day never take your eyes off of it. If your lucky you'll catch a spike and make some money. I think it will be like the internet run up, here today gone tomorrow.
80% of the wind turbines sold in the U.S. are made here. Obama doesn't want us to buy from them he's pushing a turbine company in Spain.

May 17 03:52 PM

[YoYoMama:]

You're kidding, right?

OMG, 4 deaths from swine flu so far. Geez, compare that to 16,000 deaths in the U.S. related to good old standard flu every year, and what is more of a health concern?

The media has moved on because there just isn't much of a story yet. When swine flu kills more people than the common flu, THEN we'll have a story.

15,997 to go...

On May 16 11:30 PM Freya wrote:

> The progress of the Swine Flu has accelerated.
>
> Not only has it mutated by the first of its kind to go from people
> to Swine but now there is a new strain called AH1N1. Travelers coming
> FROM the USA are spreading it to other countries with a total of
> 38 now listed with confirmed cases of both H1N1 varieties.
>
> Say it spreads into our Prison System, As It has in Rikers Island
> . Worldwide so far Over 8,000 confirmed and rising by about 1,000
> a day, 72 dead so far, 4 in the USA with over 1/2 of the "confirmed
> infected" here.
>
> You are another of many that doesn't realize that the Media Here
> has shut down what's going on. More mutations are expected.
>
> As far as the rest of your article is concerned, it will depend entirely
> on how the "World outlasts the dreaded Swine Flu".
>
> How will your picks fare if the USA is quarantined? Or if the WHO's
> 2 Billion plus expected infections comes to pass?
>
> As far as the Financials are concerned. I use Cash flow to determine
> whether a given Bank will be able to survive Obama's grasping attempt
> to take control of the Banking system. BAC had annual Revenues north
> of $73 Billion last year. (with a full year of MER...I make the assumption,
> they will be higher) $35 Billion, chicken feed.
>

May 17 07:40 PM

[HALFTRACK:]

OBAMA WENT TO SCHOOL IN A SOVIET RUSSIAN COMMUNISTIC atmosphere 19 years ago from africa where he was born ,so he was well prepared to face any opposition in his 'thinking' along socialistic lines ! HE learned from other russian theologists on how to persuade anybody who gets in his way toward his goals to accept his terms or face 'idealogical disgrace' ! The only way to counter his thinking is to undermine his approach at the begining with lots of legalities and constitutional backups aimed at his supporting groups!!

May 17 08:21 PM

[HALFTRACK:]

TO READ THE TRUTH ABOUT OBAMA PICK UP A COPY OF "THE AMERICAN FREE PRESS =WHICH IS PUBLISHED IN WASHINGTON DC

May 17 08:24 PM

[one eye:]

YoMama: If the Pandemic gets to the stage you are talking about, you may as well kiss your behind goodbye. It will mean that we can't stop its spread even in the USA with its high medical standards.

This is not a Computer Virus. There Is no Vaccine. All thats available is the hope that all of these "vaccines" can stop You from spreading it If You catch it. Whether you survive is irrelevent.

The Buzzword is Mutations. We know it can go into swine will it travel back? If it goes into Birds, You can Kiss your Hot Wings goodbye also.

May 18 01:42 AM

[FloridaBoy2:]

The financials brought much of this on themselves by building a house of cards. We need to ensure this does not happen again.
Stress tests? We will most likely never know the truth about the condition of the banks. The government has to stay involved for now but I do not see socialism on the horizon.

Alternative energy sources are needed but I see few investment opportunities. Interest in alternatives waxes and wanes with the price of oil. Short sighted but true.

Healthcare costs are out of control and it is in everyone's interest to
address this.

May 18 06:43 AM

[Graham and ...:]

See my instablog, :"Peacenik Presidsents Are Good For Defense Stocks." One of the best Presidents for these was Jimmy Carter, who later won the Nobel PEACE prize. Obama may well do the same (on both counts).

May 18 10:24 AM

[Windsun33:]

There is also a mistaken belief that renewable energy is somehow tied to oil, when in fact it is much more tied to LNG and coal. All the wind energy in the world won't put much gas in your tank.


On May 18 06:43 AM FloridaBoy2 wrote:

> Alternative energy sources are needed but I see few investment opportunities.
> Interest in alternatives waxes and wanes with the price of oil. Short
> sighted but true.
>

May 18 11:36 AM

[guymar:]

All the vision of your garden-variety mole. Does this article contribute to anything but providing opportunities to some seekingalpha trolls?

May 18 11:37 AM