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Stocks to watch if Kamala Harris wins the US election
As the 5 November US presidential election approaches, the stock market is abuzz with speculation about how a tight race between vice president Kamala Harris and former president Donald Trump will unfold.
Investors are particularly focused on how differing policy approaches to climate, energy, and taxation could shape market dynamics. Harris would likely continue many of the Biden administration's policies, influencing sectors differently.
With the race for the White House heating up, these stocks are set to benefit if Harris claims victory.
Renewables
Harris’s track record on climate policy suggests that a victory for her could bolster the renewable energy sector. Her pivotal role in passing the Inflation Reduction Act indicates a commitment to green initiatives, in stark contrast to Trump’s plans to dismantle existing climate measures, which he has labelled a “green new scam.”
“Exchange-traded fund First Trust Nasdaq Clean Edge Green Energy (QCLN) might be one to watch if Harris becomes US president,” Dan Coatsworth, investment analyst at AJ Bell, said.
“88% of its assets are held in US-listed green companies ranging from renewable energy operators, semiconductor groups, electric vehicle manufacturing and battery material specialists,” he added.
Shares of First Solar (FSLR), America’s largest builder of solar panels, have dropped by almost 18% in the past month amid a backdrop of industry volatility and election uncertainty. A Harris win could present a buying opportunity for investors looking to capitalise on the recovery of renewable energy stocks.
Housing
A Harris presidency could also boost homebuilders such as DR Horton (DHI), KB Home (KBH), and Lennar (LEN-B) amid her plans to increase housing supply and affordability through tax incentives, alongside a favourable interest rate environment.
“Harris has been vocal about offering support to the housing market, in part by committing to building three million new homes, but also through other actions like incentives to new buyers,” Kathleen Brooks, founder of Minerva Analysis, said.
“As America’s largest new homebuilder by volume, Horton looks well-placed to capitalise on any federal push to increase the housing supply,” she added.
Healthcare
Healthcare has been a focal point of Harris’s campaign, with promises to cap prescription drug prices, including insulin.
While this may squeeze profit margins for pharmaceutical giants like Eli Lilly (LLY) and Merck (MRK), healthcare insurers such as Humana (HUM) and UnitedHealth Group (UNH) could see benefits from expanded coverage initiatives under a Harris administration.
“A Kamala Harris win could prove a tailwind for UHG,” Robert Farago, head of strategic asset allocation, at Hargreaves Lansdown, said.
“Harris is keen on making healthcare more accessible and affordable, particularly by strengthening support for low-income health programs and expanding Medicare (a health insurance program for older people). This aligns well with UHG’s business, which could benefit from more people being covered by government-backed healthcare initiatives,” he added.
Green energy and EV manufacturers
Traders said the outlook for green energy remained promising under a Harris administration, with potential increases in incentives and regulatory support for clean energy initiatives.
Players like NextEra Energy (NEE) and hydrogen producers such as Plug Power (PLUG) are market favourites to thrive in an environment conducive to renewable growth.
"We believe NEE deserves to trade at a premium given above-average population growth in its Florida service territory, as well as its favourable regulatory return on capital and strong new project pipeline," Argus Research analyst Marie Ferguson wrote.
"The company should also see long-term benefits from its focus on renewable energy, including higher margins and tax credits for renewable energy development under the Inflation Reduction Act,” she added.
The electric vehicle (EV) sector could also benefit under a Harris administration. With Trump’s vocal support from Tesla’s (TSLA) Elon Musk, other manufacturers like Rivian (RIVN) may find themselves in a prime position to attract customers looking to move away from Tesla.
Harris’s support for government subsidies and tax credits is crucial for the EV market's growth, and should provide a competitive edge for companies looking to challenge Tesla's dominance.
Technology
Harris may also look to limit exports of key technologies to China that could put national security at risk and promote stronger artificial intelligence safety guidelines. While this could create short-term uncertainty for AI-related stocks like Nvidia (NVDA) and Palantir Tech (PLTR), most analysts agree tech is set to be a winner under Harris.
“Harris is an advocate for technological innovation which should be supportive for big tech firms despite the risk of greater regulation if she becomes president. Companies active in artificial intelligence, cybersecurity and digital infrastructure could be the winners if Harris gets in. That creates a tailwind for companies like Microsoft (MSFT) and Nvidia, names which have helped to drive strong US stock market returns over the past few years," Coatsworth said.
“Investors might want to look at Allianz Technology Trust (ATT.L) if Harris secures the keys to the White House and the investment trust’s manager Mike Seidenberg believes cybersecurity has the best runway for growth among the different parts of the technology space. The trust has considerable exposure to this area, along with AI and machine learning, he added.
As election day approaches, traders are bracing for a night of uncertainty and market volatility as results start to roll in. JPMorgan Chase (JPM) is ramping up staffing in Europe and Asia to manage the anticipated surge in overnight trading volume, while Goldman Sachs (GS) plans to deploy hundreds of its sales and trading team members on-site in New York, with many more ready to work remotely. Across the financial sector, US employees are preparing for an all-nighter.
“5 November is going to feel like a blindfolded mud-wrestle in a minefield,” said Calvin Yeoh, a portfolio manager at Blue Edge Advisors in Singapore, told Bloomberg. “The election is so close and path-dependent that it complicates trading strategies significantly.”