Big changes lie ahead for the U.S. economy. Last week, the first emergency use authorization-approved coronavirus disease 2019 (COVID-19) vaccine was administered to millions of frontline workers. Based on strong clinical efficacy from a couple of late-stage vaccine candidates, an end to the pandemic is now within sight.
Further, President-elect Joe Biden will be inaugurated exactly one month from today. Biden is expected to push for fiscal stimulus, while the Federal Reserve will likely maintain its extremely dovish monetary policy through at least 2023.
In other words, the table is set for a major bull market to take shape with Biden in office.
Not every stock is going to thrive, but the following four stocks have good chances of tripling in value in a Biden bull market.
No matter which political party controls the White House or Congress, one trend that never seems to slow is spending on companion animals. According to data from the American Pet Products Association, year-over-year U.S. pet expenditures haven't declined for a quarter of a century. Since 1988, the number of U.S. households that own a companion animal has increased by 11 percentage points to 67%. That's nearly 85 million homes in the U.S. with a pet. All this adds up to an incredible opportunity for Trupanion (TRUP 1.40%).
For the past two decades, Trupanion has provided health insurance for companion animals (i.e., cats and dogs). Over that time, it's penetrated between 1% and 2% of the North American market. While this is a disappointingly low figure, it also implies just how much upside the company has if it can continue to sign up new pet owners. Trupanion has consistently been growing its total enrolled pets and subscription revenue by a double-digit percentage. I see no reason why this wouldn't continue during the entirety of Biden's presidential term. Keep in mind that subscription revenue tends to be high margin and very predictable.
Trupanion's two decades of offering pet health insurance have also allowed the company to build up rapport with veterinarians and clinic staff. Even with competition in the companion animal insurance space expected to pick up, the relationship Trupanion has within the veterinary community is priceless.
The COVID-19 pandemic completely disrupted the traditional work and retail environments. However, the push toward e-commerce and cloud-based solutions for enterprises isn't going to stop even after the pandemic has ended. That means high-flying edge cloud company Fastly (FSLY 2.55%) has a real shot to triple in value with Biden in the White House.
Fastly's solutions ensure that content reaches the end user as quickly and securely as possible. Its services clearly resonate with its clients. Total customer count, average revenue per enterprise customer, dollar-based net expansion rate, and adjusted gross margin have all continued to rise throughout one of the most challenging years on record for the U.S. economy in decades.
Additionally, investors learned in the latest quarter that Fastly is powered by much more than just TikTok. In October, the company modestly revised its third-quarter revenue forecast downward to reflect ByteDance (TikTok's parent company) pulling most of its data from Fastly's network. This coincided with the Trump administration threatening to ban downloads of TikTok stateside. During the first half of 2020, TikTok accounted for 12% of Fastly's revenue. Yet, even without significant revenue from TikTok, Fastly's Q3 sales jumped 42% from the prior-year period, with substantial expansion in spending from existing clients.
It's a cornerstone growth stock for long-term investors.
U.S. marijuana stocks can also grow like weeds with Biden in office, though not for the reason you might be thinking. Biden has pledged to decriminalize and potentially reschedule cannabis. That's not the same as making it legal at the federal level. State-level legalizations, organic growth within legalized states, and federal noninterference are the bigger catalysts for the industry, and more specifically for Cresco Labs (CRLBF -1.64%).
The Cresco operating model has two pathways to deliver some of the strongest growth in the cannabis industry over the next four years. First, it has a somewhat small but burgeoning retail presence. Cresco holds 29 total dispensary licenses, with 19 operational locations. Of these 19 open stores, roughly half are located in Illinois. The Land of Lincoln is a limited-license state, which is just a fancy way of saying that it'll limit the number of total licenses it approves. This should give Cresco plenty of opportunity to claim its share of what should be north of $1 billion in annual weed sales in Illinois by 2024.
An even more exciting growth opportunity is Cresco's wholesale segment. Its acquisition of Origin House in January 2020 gave it access to Origin's cannabis distribution license in California. Only a handful of companies possess a distribution license in the most lucrative marijuana market in the world. As a result of this buyout, Cresco is able to place products into over 575 dispensaries throughout California. Look for this wholesale segment to push Cresco solidly into the profit column in 2021 (and beyond).
To get the obvious out of the way: Etsy has indeed benefitted from the COVID-19 pandemic. Approximately 11% of the company's third-quarter sales were derived from face masks. Further, consumers are choosing to stay home and buy online to avoid going into brick-and-mortar retail stores.
But like Cresco, Etsy has two key growth drivers that'll continue to be strong well after the pandemic ends. First, Etsy has its marketplace, which is responsible for the lion's share of revenue. What's really notable about 2020 is that existing customers have significantly upped their spending. Etsy's focus on small businesses and its personalization of the buying process are resonating with return shoppers.
Etsy's other double-digit growth driver is services. Etsy can collect fees from businesses wishing to promote their products on the company's platform. It's also in the process of testing listing videos to promote consumer engagement and, presumably, collect high-margin fees.
It wouldn't be surprising in the least if Etsy sales and share price triple over the coming four years.