Election years are always tricky for investors, but this year's brutal campaigning has put changes for everything from taxes to trade to tariffs on the table. Those are important underpinnings for the stock market, and each could look considerably different a year from now.
There are some companies, however, that should do well regardless of who's living in the White House come late January. Shareholders of Verizon (VZ -0.19%), Walmart (WMT 0.15%), Shopify (SHOP 0.39%), and PepsiCo (PEP 0.88%) have less to worry about than other investors do regarding prospective shakeups of the current market landscape. Let's take a closer look at these four stocks.
1. Verizon isn't dealing with distraction as 5G gets going
Only a few years ago, rival AT&T (T -0.93%) was lauded for its willingness to look outside its telecom lane in search of complementary opportunities. First was its acquisition of satellite-cable brand DirecTV, followed by 2018's purchase of Time Warner. The former put the company deeper into the cable television business, and the latter provided entertainment content to market however it wanted to. Now the company is reportedly entertaining bids for DirecTV that are a fraction of what it paid, and while HBO Max is a creative use of Warner Media productions, that new service is looking to penetrate a fiercely competitive streaming market.
That's not to suggest Verizon hasn't stumbled into misguided deals of its own. The 2015 acquisition of AOL and its 2016 acquisition of Yahoo! were both essentially written off by the end of 2018. Neither of those flops cost Verizon anywhere near what AT&T paid for Warner and DirecTV though, allowing the company to put them in the past and focus solely on becoming the best telecom service provider it can be. The strategy seems to be paying off, too. Mobile market research company M Science says Verizon accounted for more than half the 5G phones sold in the U.S. through mid-July, for instance.
Verizon also now owns more 3.5 GHz spectrum -- the frequency that makes the most of 5G connectivity speeds -- than any other provider. This sets the stage for prolonged growth as 5G becomes mainstream.
2. Walmart is just too big to tackle
It's not just the country's and the world's biggest brick-and-mortar retailer, it's also the place most U.S. consumers go to get the basic things they need regardless of the economy's condition. Walmart sells more groceries than Kroger (KR 1.11%), is the country's biggest brick-and-mortar toy store, and with more than 4,700 stores peppered across the country, it's also the most accessible place to purchase school supplies, towels, shampoo, batteries, greeting cards, and a whole host of other staples people perpetually need.
The company isn't simply standing back and enjoying its sheer size, however. It's adapting to digitally minded consumers who want someone else to solve life's complicated problems. Last month it unveiled subscription-based Walmart+, offering free unlimited deliveries of online purchases (that total at least $35 in merchandise). And for several months now it's been laying the groundwork for more stand-alone health clinics that are part of a bigger healthcare push that's augmented by Walmart-sold health insurance.
The end result of all these initiatives is a lifestyle offering that always keeps its customers close.
3. Shopify was made for the next era of e-commerce
Amazon (AMZN 2.14%) has been and will continue to be the 800-pound gorilla of the e-commerce market. But its era of unfettered growth may be over. Not only are many consumers as well as third-party sellers fed up with the company's antics, but regulators and elected officials are too. Some members of the U.S. House of Representatives recently published a 449-page report suggesting Amazon was one of a handful of tech companies that have become effective monopolies. It's a microcosm of long-lived frustration with Amazon's clout that's likely nearing a head.
Enter Shopify, which poses a threat to Amazon at a time when Amazon may be distracted.
In simplest terms, Shopify allows companies of all types and sizes to develop their own e-commerce presence, capitalizing on a direct-to-consumer movement that's been under way for years. Businesses prefer Shopify's e-commerce tools specifically because they aren't as restrictive as a platform like Amazon's. Amazon's sellers are even potentially pitted against Amazon's own listings. Shopify's premise had proven marketable well before COVID-19 took hold of the world, with last year's top line up 47%. Thanks to this year's coronavirus-spurred expansion of e-commerce though, analysts are modeling even more revenue growth that should drive per-share profits of $2.44 this year, up from 2019's $0.30.
Technology market research company eMarketer expects next year's direct-to-consumer market to grow another 19% -- a rising tide Shopify is clearly ready to ride.
4. PepsiCo isn't the old-school company you might think it is
Finally, add PepsiCo to your list of stocks that will be fine regardless of what happens before and after Nov. 3.
If you think PepsiCo is just a soda name, think again. This is the same company that owns Tropicana juices, Lipton teas, and Aquafina bottled water. It's not just beverages, either. PepsiCo owns snack brands like Doritos and Lays potato chips, as well as food staples such as Quaker Oats, Rice-a-Roni, and Aunt Jemima pancake mix. Snacks, drinks, and food remain marketable in any environment.
What makes PepsiCo a real standout right now, however, is the adaptation it's also making with respect to consumerism in 2020 and beyond. In May it unveiled PantryShop.com and Snacks.com as a means of selling snack foods and breakfast food directly to consumers that want to steer clear of stores. It's a small part of a much bigger e-commerce evolution the company put into high gear last year, starting with more data analytics and most recently leading to the creation of a new chief strategy and transformation officer role that includes leading PepsiCo's "digitalization and data strategy."
Being able to use data when promoting its well-established consumer staples brands puts PepsiCo in a very enviable position.