In three days, change officially comes to Washington, D.C. Following the November election, Democrat Joe Biden will be inaugurated as the 46th President of the United States.
When Biden takes office on Jan. 20, he'll be stepping into a unique situation. He'll be attempting to mitigate the economic damage caused by the coronavirus disease 2019 (COVID-19) pandemic, but will also have the potential to lead one of the most ferocious economic recoveries in history. The Federal Reserve's ongoing quantitative easing measures and dovish monetary policy, coupled with Biden's pledge for additional fiscal stimulus, could light a match under the U.S. economy and usher in a Biden bull market for equities in 2021.
The big question, as always, is where to invest your money.
Perhaps the easiest answer is to focus on high-growth, surefire trends, rather than getting too caught up in specific companies. The following five trends should be considered must-own in a Biden bull market.
Digital or cashless payments
The war on cash is very real, which means digital and cashless payments are on track to thrive during a Biden presidency.
According to a report from ResearchandMarkets.com, digital payment growth is expected to average nearly 24% annually between 2020 and 2025. This will be fueled by an aversion to physical cash tied to COVID-19, more income in the hands of millennials and Generation Z (who favor digital payments), and governments that are willing to push cashless transactions to maintain money trails and dissuade fraud.
Though it's a pricey company in the short-term, Square (NYSE:SQ) is the perfect example of a business that's benefiting from this digital revolution. Its peer-to-peer payment platform, Cash App, has seen its monthly active user count more than quadruple since the end of 2017, and its revenue has skyrocketed due to a huge increase in investment activity and bitcoin exchange.
Square also has its seller ecosystem, which predominantly supplies small businesses with the tools they need to process transactions and grow their business. Square has the look of a company that could one day be worth $1 trillion.
Don't be fooled into thinking that the U.S. healthcare system will revert to its old ways once the coronavirus pandemic ends. Telehealth has shone brightly during this crisis, and will continue to do so long after COVID-19.
Telehealth is a win-win-win situation for all involved. It's more convenient for patients and allows physicians to fit more patients into their busy schedules. Health insurers are usually billed less for virtual visits, so they'll probably push for increased telehealth use.
Yet Teladoc's virtual platform was thriving well before the pandemic struck. It averaged annual sales growth of 74% between 2013 and 2019. With the acquisition of leading applied health signals company Livongo Health complete, Teladoc could sustainably be one of the fastest-growing healthcare stocks.
Expecting a return of the traditional workplace after the pandemic is over is highly unlikely. Businesses have learned to adapt to remote work environments, with cloud-based software-as-a-service (SaaS) solutions playing a key role.
A September 2020 report from ReportLinker is forecasting global annual SaaS growth of more than 18% through 2027. On an aggregate basis, this would more than triple the SaaS market size to $220 billion by 2027.
An excellent example of a highly successful SaaS stock in action is endpoint detection and response cybersecurity company CrowdStrike Holdings (NASDAQ:CRWD). CrowdStrike's Falcon security platform was built within the cloud to detect threats. It's responsible for overseeing more than 3 trillion events each week. By leaning on artificial intelligence, the company's superior security platform becomes smarter at identifying future threats.
Over the past 14 quarters (3.5 years), CrowdStrike has seen the number of customers with at least four cloud module subscriptions increase from 9% to 61%. In other words, COVID-19 has helped increase existing customer reliance on the company's solutions, though this trend was in place well before the pandemic.
A Biden bull market also offers promise for the U.S. marijuana industry. Even if Biden sticks with his campaign pledge, which is merely to decriminalize and reschedule cannabis at the federal level, it would represent the most favorable federal stance toward marijuana by a sitting president in the modern era.
U.S. marijuana stocks don't require federal legalization to grow like a weed. Thirty-six states have given medical marijuana the green light since 1996, 15 of which also allow for the consumption or retail sale of adult-use cannabis. Between 2019 and 2025, legal weed sales in the U.S. could triple.
All of this is fantastic news to firmly established multistate operators like Trulieve Cannabis (OTC:TCNNF). Unlike many of its peers, Trulieve has predominantly focused on saturating a single state (Florida). Of the 75 dispensaries Trulieve has opened nationwide, 70 are in the medical marijuana-legal Sunshine State.
The possible passage of banking reform legislation would open the door for easier access to capital for the most nominally profitable pot stock in North America.
Pets! Pets! Pets!
Lastly, with Joe Biden bringing both of his family dogs into the White House, perhaps it's time for investors to stop overlooking one of the most consistent long-term growth trends: companion pets.
According to data from the American Pet Products Association, year-over-year U.S. pet expenditures haven't declined for more than a quarter of a century. They were estimated to have hit $99 billion in 2020. This includes over $38 billion spent on food and treats, plus $30 billion for veterinary care and other products.
Consider how unstoppable Freshpet (NASDAQ:FRPT) has been over the past couple of years. Freshpet specifically focuses on organic foods and treats for companion animals. Just as grocers took advantage of the natural foods craze in the 2000s, Freshpet is capitalizing on pet owners' willingness to spend more on higher-quality foods for their four-legged friends.
Freshpet is still in the very early stages of its growth. It has a presence in more than 22,000 retail doors in the U.S., but only recently began pushing forward with its omnichannel marketing campaign.
If a bull market takes shape with Biden in the White House, these are all rapidly growing trends that can make you richer.