As individual consumers, we can choose to purchase goods made in America, China, or anywhere else. However, after a recent executive order signed by President Joe Biden, most U.S. government purchases will give preference to suppliers and vendors in the United States over those abroad.
When you consider this new policy and look at where the government spends the most, you may be able to spot potential industries and businesses that could land lucrative government contracts under the new rule. Keep reading for a look at stocks that could benefit from Biden’s Buy American initiative.
What Is the Build Back Better Recovery Plan?
During his campaign for president, Biden outlined the Build Back Better economic recovery plan. The program has far-reaching goals around job creation and financial support for underserved communities. For investors, four specific areas may be most relevant:
- Manufacturing: The first economic area outlined in the plan is a focus on manufacturing and innovation. Notably, the plan addresses bringing certain areas of the manufacturing and technology supply chain to the U.S. to promote jobs and improve national security.
- Infrastructure: The plan specifically mentions roads, bridges, energy grids, schools, and universal broadband. Domestic businesses that provide the goods and services for these upgrades may see a noted uptick in revenue.
- Clean energy: Part of Biden’s infrastructure plan notes clean energy as a priority. As clean energy costs and technologies evolve, you may spot individual businesses poised to profit.
- Caregiving: The plan also focuses on the caregiving and education workforce. While education spending may primarily go to nonprofit and public job creation, caregiving is a highly profitable industry that could see a benefit.
What Companies Could Benefit From Biden’s Plan?
So what companies could benefit from Biden’s Buy American initiative? Let’s break it down.
Note: This should not be considered a recommendation to buy any specific stock or taken as financial advice. It’s best to do further research and consult with a financial professional, where appropriate, before investing.
American Manufacturing and Infrastructure Stocks
While the news may lead you to believe the manufacturing industry in the United States has been gutted, there are plenty of companies that still make goods with “Made in the USA” labels attached. These industrial giants may do well under Biden’s plan:
Short for Minnesota Mining and Manufacturing, 3M is a diverse manufacturing and technology company based in St. Paul that operates manufacturing facilities across the U.S. It works across multiple industries, including defense, materials, and manufacturing products that could be in heavy demand from government programs.
General Electric may be most famous for lightbulbs, but it doesn’t offer those lightbulbs anymore after selling off the business in 2020. Instead, it is focused on heavy equipment, energy, healthcare, and aviation. The Buy American initiative could spark sales in two or three of those four business units.
Honeywell is another diverse manufacturing company that supports a wide swath of the economy. Major product lines that could benefit from government spending include aerospace, city infrastructure, materials, industrial, safety, supply chain, and manufacturing.
Someone has to build all of those roads, and they need the right tools and machines to do it. Caterpillar is an iconic brand in construction that could see an increase in sales to support infrastructure projects.
American Clean Energy Stocks
We already mentioned companies that may earn a portion of their revenue from clean energy. The companies below have a more tight focus on the new energy economy that should only grow under current leadership:
NextEra Energy is a Florida-based utility that operates across the United States and Canada. A substantial part of its energy portfolio comes from renewable sources, including solar, solar thermal, nuclear, and battery storage. Its existing operations show a strong preference toward clean energy, a Biden administration priority.
Brookfield Renewable Partners
Brookfield Renewable Partners runs significant hydroelectric, wind, solar, distributed generation, and energy storage. Brookfield has several business lines, but you can invest directly in the renewable portfolio without investing in the rest of the company.
First Solar is a solar panel manufacturing company. First Solar supports both utility-scale generation and distributed generation PV plants. Its headquarters are in Arizona and it has a manufacturing plant in Ohio. Clean energy and domestic manufacturing make this company a potential winner under Biden’s spending plan.
TPI Composites manufactures the large wind turbine blades used in wind farms. Considering the specialization required to build the lightweight, durable blades that are often the size of an office building, this company is situated for strong demand with only a relatively short list of serious domestic competitors.
Tesla isn’t all about fast cars and Elon Musk tweets. The company offers several utility-scale storage products and is poised to be a world leader in utility battery production. The Megapack and Powerpack are already in use by utilities in the United States and Australia.
Follow the Dollars to Investment Opportunities
There are no investments that are guaranteed to pay off. After all, none of us can predict the future. Still, if you follow government spending, you may stumble upon a company or industry ripe for government contracts. If you do, you could have a winning investment on your hands.
Of course, you should still conduct a fundamental or technical analysis that fits with your investment strategy. But when the numbers line up and tell you a good story, a large government plan like Biden’s could lead to investment success.
Further Reading: How to Invest Your Money