The Investing Diaries - Jan 20, 2021

Today I am thinking about the Inauguration, a new administration coming into the White House and all that brings along with it. The new administration, along with primarily Blue support, will likely be able to get a few things done that we haven’t seen in a bit of time. It has been awhile since we have seen substantial tax increases, something that I assume will happen in the near future to deal with the deficit (or so they will say). I also, along with many investors, believe that there will be a substantial push towards science and a large platform on climate change. Where then do we look to leverage these situations?

The simple answer for me: It’s not that simple.

We’ve been watching the EV stocks such as Tesla (TSLA), Nikola (NKLA), Nio (NIO), and even General Motors (GM) begin to pick up steam again as the market looks towards the push that may be coming from the administration for EVs to take over (TSLA and GM also had some other big news). Does that mean that I am going to go out and load up EVs? As Lee Corso would say, “Not so fast”.

Companies that I add to my portfolio still have to be solid cash producers that I believe have solid future growth or have to have game changing technology or systems. The companies mentioned above don’t quite fit into these little boxes. Also since I am looking to multiply my money by as much as possible, I need to look for smaller market caps that have the ability to increase by five or ten times.

So what then am I looking at? I can’t just write about negativity and give no answers. There are enough of these people on social media already.

The answer in my opinion, is to take a look at the relative guarantees of the administration. One of these is to give stimulus (print more money) and the other is to not pressure the Fed (assumed here) which means that interest rates are going to stay low until we actually see some significant rates of inflation and an economy that will be turning around. Thus we need to look at companies that have a potential to thrive in this environment.

One company that I will continue to dig into is Peloton Interactive (PTON). I own a Peloton myself and love it, but the financials are pointing in the opposite direction right now. There has been some downgrades recently, and competition that is entering the sector, but is the competition real? When PTON bought the company that manufactured their bikes I thought it was a big deal. The thing I was missing while reading this news was all of the content that they were continuing to build. They said they wanted to be the Netflix (NFLX) of fitness and currently they are working hard at that. I’m not sure they are at a place where I am ready to buy, but it is worth my further research.

Another company that I will continue to look to add is CVS. This company is a significant cash flow producer that will likely be unaffected by any of the “negatives” of the administration and should be looked at as a positive player in the distribution of the vaccine. Let’s not be fooled either that this is a company that will only thrive in pandemic times, it is part of a virtual duopoly in the remaining drug store game. I envision a continued march towards e-commerce here, something that they really haven’t pushed yet.

Finally let me end on a potential ten bagger that I think will be uneffected or positively effected by the new administration. That company is Desktop Metal (DM). This is a 3D printing company that has some solid leadership and investors behind it. I won’t go on forever here, as there are many risks and a lot to work through, but I encourage you to check it out and research on your own.

Until next time, happy investing!