Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
For better or worse, political exuberance is at an all-time-high with less than one day separating us from the U.S. Presidential elections. No one can tell for sure how the outcome of the elections will impact financial markets. Nonetheless, what we can do is take a look at stocks that should not suffer an inordinate impact from society’s discomfort.
Stock Market Turbulence on the Horizon
Even before the U.S. Presidential election officially begins on November 3, we are seeing a slew of lawsuits concerning election irregularities. Extrapolating from that, we can only form an educated guess that the election results will be heavily contested by both parties. Needless to say, such uncertainty does not inspire stock market confidence.
Moreover, we are not only dealing with likely legal battles, reminiscent of the 2000 Bush/Gore election, but an increased threat of street violence as well. Within this cauldron of negative likelihoods, a market crash may transpire, whether it is minor or major. Still however, when sound fundamental analysis is applied, some potential opportunities arise.
Top Stocks in Market Turbulence
In the meantime, accounting for both turbulent U.S. elections and the ongoing economic fallout from the pandemic, count these stocks as more resilient to such disturbances.
AMD has been a long-time favorite among PC gamers and crypto miners. In recent years, its Ryzen CPU series has absolutely trounced its main competitor, Intel, in terms of performance to price ratio. Developing both GPUs (graphics processing units) and CPUs (central processing units), AMD covers multiple markets with increased competency, although it is yet to successfully counter its Nvidia rival as it has countered Intel.
In more recent news, AMD released a very positive Q3 2020 earnings report with a 56% year-over-year revenue growth and $501 million net income. On top of this outstanding news, AMD disclosed its intention to acquire Xilinx for $35 billion worth of stocks. Xilinx covers high-performance, data center-grade computing, including the growing 5G market.
With the latest Ryzen 5000 iteration, once again providing greater performance to price ratio, AMD is poised to take over at least half of the x86 CPU market. Additionally, AMD’s Milan EPYC lineup should make inroads in the server market, following the Xilinx acquisition. Lastly, AMD’s answer to Nvidia’s RTX 3000 series, in the form of RX 6000, seems to have equalized performance.
If that proves to be the case, even more customers will pair up their AMD CPUs with AMD GPUs.
The renewable energy industry is still in a precarious position. While enjoying governmental subsidies and goodwill, it still remains to be seen if its energy production outpaces its total carbon footprint. Some renewable systems, like wind turbines, may prove to cause more environmental disruption than they are worth.
However, if one wants to become energy-independent while causing the least environmental disruption, solar power is here to stay. Enphase Energy provides all-in-one systems for homeowners employing cutting-edge technology. The demand for solar power keeps growing and Enphase is proving to be a competent supplier.
ENPH’s Q3 2020 earnings report demonstrates this with a $178.5 million revenue and GAAP gross margin of 53.2%. Enphase concluded Q3 with $661.8 million in cash reserves and an increase in inventory to $37.5 million from Q2’s $31.2 million. Going into Q4, Enphase’s 50MWh is already booked, which further fortifies Enphase’s status as a full-service solar provider, from batteries to panels and everything in-between.
On top of already solid growth, Enphase is looking forward to finalizing its 640-watt and AC IQ 8D solutions for Q1 2021. With the current 20% market share of American rooftops, these solutions are setting Enphase to increase its market share even further. By 2022, the global market space for solar panels is expected to grow to $12.5 billion, which represents an almost 4x increase from the current year.
With all the talk about the Fourth Industrial Revolution and the Great Reset, it would be prudent to account for companies facilitating this transition. If the post-corona world showed us anything, it’s that corporate consolidation is becoming an unstoppable juggernaut. Orbcomm is an Internet of Things (IoT) company ensuring that these corporations run with greater efficiency.
In order words, ORBC gets rid of superfluous assets without decreasing the company’s efficacy. This may range from compacting the content/maintenance of 25 web sites into just two, reducing SKU count (stock keeping unit for inventory types) by 75%, or reducing COGS (cost of goods sold) by 30%. ORBC’s Q3 2020 earnings report demonstrates the value of its streamlining services, with revenue growth of $61.7 million, from Q2’s $56.7 million.
To further increase corporate efficiency, ORBC announced OGx service in partnership with Inmarsat, with which it holds a contract until 2035. This service will supplant the current IDP (IsatData Pro) service with a 40x faster speed while consuming less power. In addition to OGx that should come online by 2022, ORBC is expanding its monitoring systems.
The upcoming dual-mode satellite video service bodes well for ORBC’s ARPU (average revenue per user), likely increasing it from $6 to $30. Monitoring cargo with this service could end up comprising a quarter of ORBC’s sales, from the current 5%. Going into Q4, ORBC’s revenue should increase to at least $63 million, from Q3’s $61.7 million.
Do you think this presidential election is an oddity, or will future elections be shrouded within the same cloak of chaos? Let us know in the comments below.
Disclosure:Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.