President Joe Biden and world economy

On 20th January 2021, Joseph “Joe” Biden Jr. will become the 46th US president, initiating reforms and policies that pundits forecast will have wide-ranging impact. The American landscape we’ve become familiar with over the past 4 years will undergo a nearly 360-degree transformation.

From tariff wars and tax hikes to climate change and US foreign policy, Biden’s decisions will be watched with bated breath.

The question on everyone’s minds is this: How will the Biden Era affect the world economy?

The taxman cometh

Biden has pledged to raise the corporate tax rate to 28%, higher than the current 21%. He also plans to impose a 15% minimum tax on income to ensure each company pays its dues – but this is lower than what it was before Trump took office. 

He also plans to eliminate tax loopholes that allow billion-dollar companies like Amazon to pay zero dollars in federal taxes. We estimate that this could raise federal revenues by $2.5 to 3 trillion over the next decade. This should give Biden enough of a buffer to spend on the infrastructure plans he has outlined many times.  

Overall, this should also benefit the world economy. The trend of capital flying out of BRICS countries and the Middle East – among others – because of Trump’s ‘America First’ stance is expected to reverse under Biden. However, one worry is that Biden may struggle to realize his plans without control of the Senate.

Going green 

Biden is also serious about climate change, promising that America will rejoin the ParisClimate Agreement when he takes over. He plans to increase US carbon emission cuts by 2030 to achieve net zero emissions by 2050. This will be a huge boost for green companies – those working to make the planet a better place – from renewable energy firms and electrical vehicle (EV) manufacturers to plant-based meat companies.

This signals a paradigm shift in value-creating economic forces: outmoded business models will be pushed back to favor innovative strategies positioned to better satisfy customer needs while also benefiting the environment. These new companies will capture market share from legacy firms and increase their share of the pie, creating headroom for sustainable growth.

The era of peace?

The shift in the US’ stance towards China is, doubtless, one of the major legacies of the Trump administration’s foreign policy, alongside a renewed peace process in the Middle East. Under Biden, we expect a deceleration in tension – not just in US-China relations but also US-Europe.  

If this happens, it will provide a much-needed peaceful environment for the global economy. Hopefully, the term “trade wars” will become obsolete, and the US and China will reap the benefits of a stronger union. This will benefit not only their respective economies, but also the world as a whole.

We, like everyone else, are biding – or should we say ‘biden’? – our time to see what will unfold.  

US Election

Year 2020 so far has been roller coaster ride. From the start of the year with Trump’s impeachment to one of the worst pandemic Covid-19 followed by US-China tension. This year has kept us on toes from time to time. And now we are one month away of much anticipated US election. By many means this Election is important. As per public survey a record 83% of respondents are saying that it matters. This makes us believe that it will be historic Election with probably highest on record of voter turnout.

Trump VS Biden. It is not just election between two parties or two people. But it is between two different thought process. Higher Taxes Vs Lower Taxes and many more points. But the biggest question right now is what will happen to market if Trump losses and Biden wins or vice versa.

Well to find that answer we dived into history to understand the market impacts of Elections. Hype created by Republican party that if they do not get elected again, market corrections is false. Historically market has performed well under both the parties. For example, the S&P 500 index has returned over 200% under both Clinton and Obama administrations. Since 1957 irrespective Democratic or

Republican President market has done well over period.

                      If Trump gets reelected than he will continue with his agenda of America first protectionism. His major focus will be on onshoring manufacturing back to the US and reducing the trade deficit with trading partners. Sectors like Auto and Financial will be the biggest beneficiaries of it. His tariff plans and lower taxes will make this sector even more attractive. Lower corporate taxes will be making market cheaper on forward multiples. This will make US as one of the favorite investment destinations. And What happens if Joe Biden wins?

Let us discuss the possibility and impact on sectors if Biden Wins. Biden stand representing as democratic nominee and we see some positive and negative if Biden wins the election.

There is going to be tremendous policy uncertainty. And we think there are going to be winners and losers. And this is likely to lead to an outcome, the most dispersed outcome within financial markets. So, let us talk about the negatives first and then the positives second.

Negative side, there could be a higher corporate tax rate. Certainly, higher taxes for higher income earning individuals and he has talked about restricting, if not banning, fracking on public lands. And there is a risk that you are going to see much more of regulation within financial services.

On the positive side, from a market perspective, there is going to be big infrastructure spends. He has talked about decarbonizing the electric grid by 2035. Now that is probably a bit ambitious. And he has mentioned about major investments in green energy industries. And so, companies that have gearing or exposure that do very, very well.

On the health care front, there is two phases. There is an expansion of ACA (Affordable Care Act). That is probably good for health care providers. However, if he goes to “health care for all or Medicare for All”, which some of the progressive wing of the Democratic party wants, it would be quite negative.

And finally, we think pharma needs to be being watched as limits on drug pricing could come in, which would be negative for pharma companies.

This election can leave us with different outcome for markets. Tons of uncertainty could drag on for weeks. In 2000, the markets sold off 8% when that happened. There is possibility of 5% to 15% selloff if the markets tried to deal with uncertainty with either candidate conceding.

For more updates and news kindly logon to our website www.vtrades.net

China- A perfect Investment Destination

Covid-19 has changed the world in 360 degree. It has brought not just healthcare crisis, along with that it has brought Financial crisis as well. Lockdown and social distancing are new normal for the most part of the world. But it is not the same case for China which is Second largest economy in the world by GDP. Matter of fact Covid-19 is not just past for China; they are the only Economy in the world which are growing even in the year 2020.

Historically it is evident that money flies from uncertain environment to certain, predictable and stable Environment. Currently China is the only major country in the world which is offering that. 

“China is, even at lower levels of growth, going to be the dominant, the super majority driver of growth (over the) next 10 years.”

Justin Leverenz

SENIOR PORTFOLIO MANAGER AT INVESCO

Statement itself say that gives the opportunities that Chinese Economy is providing, and one can take advantage of it via investing in Chinese stocks.

We think that China has potential to become the biggest economy in the world, When we look at history investors are structurally underweight China. Because of historical access issues and liquidity issues, most benchmarks do not include as much China as they should. That tends to render A shares, or domestic Chinese stocks, “generally undervalued. This provide opportunities to create substantial Alpha.

China had its V-shaped recovery complete by Q2 this year and it is the only country we think will be back on track to its 2019 levels by year-end or latest by first quarter of 2021.

Now one may argue that upcoming US presidential election poses some risk to Chinese economy because of Trade war issues but important point to understand is that China has shifted to being a self-reliant economy. Over 50% of their GDP comes from consumption within China. It becomes less reliant on the rest of the world and that makes it more interesting in long term because correlations could remain extremely low for China and you have still got these higher growth rates to be expected.

If Biden wins the 2020 Election than US-Chinese tension will decelerate and that will be the big positive trigger for china. That is the biggest reason why we believe one should have Chinese stocks or the stocks which will benefits from growth in Chinese Economy.

Till now we have discussed about the general idea why to Invest in China, now let’s dive deep as which specific sectors in China we like and have strong growth in coming years.

As I mentioned earlier that 50% GDP is coming from their own consumption. Let us elaborate that point in detail. Every year almost 20-25 million Passenger Vehicle are sold in China. As we know world is moving towards EV and there is huge potential to grow. We like Xpeng Inc. (Pure Chinese EV play). Xpeng Motors more than doubled September and third-quarter sales. In September, Xpeng delivered 3,478 electric vehicles, up 31% from August and up 145% year over year. For the full third quarter, Xpeng delivered 8,578 electric cars, up 266%.   

Opportunity for the Next Decade (Plant Based Meat)

Every Bull market produces new leaders and opportunities to create tremendous wealth. Like end of 1999-2000 was period of Telecom stocks, 2008 was Energy and Financial stocks and currently it is all about Technology stocks. Apple crossing 2 Trillion valuation mark followed by Microsoft and Amazon with 1.5 trillion is just another example of that. Serious wealth has been already created by Tech space and we believe that there is not enough room left. But important question is that which Sector has potential and create Substantial Alpha.

Value Migration from Animal based meat to Plant based is pretty much evident and it has just begun. Following are the reasons which I think are crucial drivers behind the Consumer shift from Animal based meat to Plan based meat

  1. Environment Friendly – As per one report, if the world went vegan, it could save 8 million human lives by 2050, reduce greenhouse gas emissions by two thirds and lead to healthcare-related savings and avoided climate damages of $1.5 trillion.
  2. Health Friendly – According to the National Institute of Health, an estimated 300,000 deaths occur every year due to overweight and obesity.  Obesity can lead to various health issues like increased risk of heart disease and diabetes; increase the death risk, increased risk of cancer and foodborne illness. Additionally, excess consumption of meat causes an imbalance in the ecosystem as a higher number of animals are killed for human consumption.
  3. Shift in Consumer behaviour is also one of the Key factors. In the Asia Pacific region, 1/4th of India’s population believes in reincarnation and non-violence and has adopted a vegetarian diet. Thus, the demand for a plant-based diet is in high demand in this country.
  4. Veganism – Interest in ‘veganism’ increased seven-fold in the five years between 2014 and 2019, according to Google trends. It now gets almost four times more interest than vegetarian and gluten free searches. 

“This is why I think people are increasingly aware plant-based products are going to completely replace the animal-based products in the food world within the next 15 years,” Impossible Foods founder and CEO Pat Brown said in a June interview. “That’s our mission. That transformation is inevitable.”

Forecast for the Plant based Industry

Source: Markets and Markets Analysis

As of now globally meat Industry size is 2 Trillion $. Just imaging 10% market share of Animal based meat will produce opportunities of 200 Billion $ and 25% will be 500 Billion$ for Plant based meat producers. Currently Plant based meat size is merely 10$. So, one can assume the amount wealth will be generated in future by Plant based companies.

Enough information about the Sector, now let’s discuss about Stocks which will do well, and which has all the ingredients to become a multi-bagger.

In our Universe BYND (Beyond Meat) is our preferred pick. Beyond Meat Inc. develops plant-based protein food products. The Company offers burgers, sausage, crumbles, strips, and other related products. Following points will give you more clarity.

  1. Market leader with innovative products
  2. Penetration rate plant-based meat for US household is less than 5% 
  3. Tailwind provided by Covid-19, Sales grew more than 100% on quarterly basis
  4. Growing CAGR of 50%+ is sustainable
  5. Companies does not require monopoly to grow the business because there is enough pie for all the companies before market gets saturated
  6. Industry bare minimum will grow for 15% for next decade, which means good companies will enjoy 25-35% CAGR for sustainable period
  7. It has potential to become TESLA of Plant based meat companies
  8. Veganism trend is here to stay.

Healthcare sector stock prices have increased more than 5-10%

Novel Coronavirus is the most disaster than any virus in history. It has not only impacted human life but also shrinks economy growth. Major economies like US, China, Russia etc. are all affected.

Stock Market has fall off damaging major sectors like Airlines, hotel, tourism etc. Virus spread has left businesses around the world counting costs and wondering what recovery could look like.

The information flow about the coronavirus pandemic is truly electrifying, with big public market swings in the pharma industry.  The healthcare sector is at the epicenter of this unprecedented global pandemic challenge and the private sector has risen to the occasion, by offering to the government all the support it needs, be it testing support, preparing isolation beds for the treatment of Covid-19 positive patients or deploying equipment.

Investors should pay special attention to the varieties of healthcare stocks. During Pandemic, healthcare stock price has increased more than 5-10% in 2 quarters of 2020 and with ongoing and even post pandemic there will be a significant scope of improvement in this sector.

Below are the few healthcare stocks which are best valued in 2020-21

Few fast-growing stocks in healthcare sector

Few Healthcare stocks with the most momentum.

All the above stocks are part of healthcare industries for research and development. Hundreds of new hospitals are constructed and post pandemic technology will play major role in improvising the healthcare sector. When the pandemic is under control, it is unlikely we will pick up where we left off. Health systems will be faced with majority of choices for how to best move forward.

The future of our healthcare system would include virtual reality, 3D printing and prosthetics, augmented reality, and even robotic healthcare workers. Like Frontline healthcare and few other companies workers have been on their toes working on these technologies by doing online assessment and providing solutions over phone.

Pharmaceuticals will also play major role in developing and supplying medicines in large quantity during pandemic. In ongoing finding of antidote major companies stock are increased by more than 6%.

Medical experts and senior scientists are already looking at major changes that are guaranteed to become healthcare and technology’s future. For any Country health sector will be next national security to overcome such situation.

Based on technical and fundamental analysis here are few healthcare stocks which grow post Pandemic.

  1. Perrigo Co. PLC
  2. Amedisys Inc.
  3. Encompass Health Corp.
  4. LHC Group Inc.
  5. Centene Corp.
  6. Cerner Corp.
  7. Teladoc Health Inc.
  8. Dexcom Inc.
  9. Hologic Inc.
  10. Bio-Rad Laboratories Inc.
  11. Danaher Corp.
  12. Thermo Fisher Scientific Inc

Enphase Energy, Inc Market Cap: $ 8 Bill

Enphase Energy, Inc., together with its subsidiaries, designs, develops, manufactures, and sells home energy solutions for the solar photovoltaic industry in the United States and internationally. The company offers semiconductor-based microinverter, which converts energy at the individual solar module level, and combines with its proprietary networking and software technologies to provide energy monitoring and control services. It also offers AC battery storage systems; Envoy communications gateway; and Enlighten cloud-based monitoring service, as well as other accessories. The company sells its solutions to solar distributors; and directly to large installers, original equipment manufacturers, strategic partners, and homeowners, as well as directly to the homeowners and the do-it-yourself market through its legacy product upgrade program or online store. In addition, it offers online and inperson training resources for solar and storage installers, and Enphase system owners through its Enphase University. Enphase Energy, Inc. was founded in 2006 and is headquartered in Fremont, California.

Important points:

• ENPH’s revenue has grown 110.7% over the past 12 months

• ENPH has reported earnings growth of 1,668.64% in past 12 months

• ENPH’s revenue has grown 110.7% over the past 12 months

The company’s debt burden, as measured by earnings divided by interest payments, is 16.84 — which is good for besting 79.29% of its peer stocks (US stocks in the Technology sector with positive cash flow).

Enphase Energy was teaming up with SunPower Corporation to create a new solar module incorporating SunPower solar panels and Enphase microinverters helped push up Enphase stock 3.7 and similar deal — this time between Enphase and Australia’s REA Solar. The company also partners with Tesla, utilizing that company’s Powerwall batteries for solar energy storage.

The Boeing Co. one of the largest aerospace manufacturers which is still down more than 50% YTD

Stock: Boeing Co (BA) Ticker: BA Market Cap: $ 100 Bill The Boeing Co. one of the largest aerospace manufacturers which is still down more than 50% YTD, Prices are expected to rely on news and new orders heavily. We believe bad news are over for BA and next year should be positive all the way as we expect MAX 737 will be in air by end of this year. Boeing is producing nearly 43% of commercial aircraft of the world but for US Govt “Department of Défense is one of the biggest customers of Boeing which will keep company afloat. For last three years Boeing is second biggest supplier for DOD after Lockheed Martin apart from that Boeing has nearly 4000 aircraft orders which will keep them busy for years Out of100% revenue nearly 42% comes from commercial ,34% from Défense and Security and 24% from global services. After 737 Max trouble and COVID 19 commercial revenue will take and has taken big dive but defence supplies will be as usual . Boeing has resumed 737 Max production but is waiting for regulatory approval to begin deliveries and stock prices are very much depend on that but there is good chance regulatory will approve 737.

Boeing announced at the end of May that it had resumed production of the 737 Max after extensive inquiries by U.S. and global aviation authorities.8 The company had built up its inventory of 737 Max airplanes in storage to approximately 400 in December 2019 when it made the decision to suspend production the following month.9 Boeing said in its Q1 earnings report that it expects to receive regulatory approval to resume deliveries of the 737 Max sometime during the third quarter of 2020.1 0

Earnings and Sales forecasts:

Boeing prices are heavily depend on Air traffic and 737 Max : As positive news coming regarding COVID 19 vaccine which will help overall air traffic to get back ( though no where to normal ) which will absolutely help Boeing and US FAA regulators last week began testing 737 MAX jetliner’s revised flight-control systems, laying the groundwork for the plane’s possible return to service later this year. The tests concluded an important milestone in assessing the grounded aircraft’s safety, the Federal Aviation Administration said in a statement. Getting 737 back in Air will get Boeing stock flying as well and that’s what we are counting on.

Technical :

How to invest in Growth Stocks ?

Investors have several strategies that they can use to make money in the stock market. Like Value Investing, High dividend yield investing, Active investing, Passive investing, Top to down or bottom to up approach, but one investing which has grown over years and proved worth practicing is investing in Growth Stocks.  

What is a Growth Stock?

 A company which has potential to grow faster or above-average rate compared to the market or competitors in the industry in general. A growth company typically has some sort of competitive advantage like a new innovative product, breakthrough patent or some overseas expansion which provides them wing to grow at much faster rate for sustainable period.

Private Equity Investing Style?

Normally Growth companies are smaller in size and initial years they do not generate profits, in fact they make losses but their topline keeps improving at healthy rate. One of the best and Successful example of Growth investing has been Tesla Inc. Company has single handedly changed the functioning of Automobile industry with clean energy approach. Till now Tesla Inc is not making any profit after tax annually, infact company is burning a lot of cash but still it is most expensive Car company in the world in terms of market capitalization. From small company to Automobile giant in terms of market cap, Tesla has been classic case study and example of how the wealth has been created by investing Growth stocks. But not every company which grows rapidly is growth stock. Strict screening criteria are needed to identify Growth company and below are the few of criteria we use at Vtrade Capital before investing the clients’ fund.    

  • Value Migration

Value migration is nothing but the shift of value-creating forces. Value migrates from outmoded (old style or outdated) business models to the business (innovative and updated) which are better able to satisfy customers need and wants. New business models (Companies) not only capture the market share of old companies but also increase the pie of the market which opens a lot of head room for sustainable growth.

  • Shift in consumer behavior

As per our study of growth stocks we have found Consumer behavior particularly important aspect to become a successful growth story. Clean energy and Environment friendly option compare to Petrol and Diesel base Environment unfriendly option was bigger driver and Tesla Inc was ready with need and change of consumer wants. Currently Animal based meat to Plan based meat (Vegan trend which also eco-friendly) is ongoing value migration which we believe has just started and it has potential to go long way. Substantial wealth can be created by investing in Plant based meat companies.

  • Bigger Picture

While doing valuation on Growth stocks, Terminal value approach works beautifully. We try to calculate future growth of industry, size of the company and then discount it back to current value based on the expected cash flows. This approach helps you to understand the size of company and industry.   

Conclusion

As per the pecking order we believe Value migration is at heart of our philosophy of Growth stock investing followed by getting vital clues from shift in consumer behavior while keeping bigger picture in mind. As per one report Telehealth industry has potential market size of $165 Billion. Teladoc Inc is leader in that space and we have covered that stock for our clients to get more details one can visit the below link

Abbott Laboratories: Technical Analysis at work!

Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a range of healthcare products. The Company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Its Established Pharmaceutical Products include a range of branded generic pharmaceuticals manufactured around the world and marketed and sold outside the United States. Its Diagnostic Products include a range of diagnostic systems and tests. Its Nutritional Products include a range of pediatric and adult nutritional products. Its Company’s Vascular Products include a range of coronary, endovascular, vessel closure and structural heart devices for the treatment of vascular disease. The Company, through St. Jude Medical, Inc., also offers products, such as rhythm management products, electrophysiology products, heart failure related products, vascular products, structural heart products and neuromodulation products.

Key Statistics –

 Market Cap – $160 Billion

P/E Ratio – 45

Dividend Yield – 1.6%

Abbott Laboratories daily price chart,

As shown in Daily chart, prices are forming a Flag pattern. This pattern normally we observe in shorter time phrame. It is normally characterized by a sharp countertrend (the flag) succeeding a short lived trend (the flag pole).  It is by nature bullish continuous pattern. Rising and falling volume also gives vital clues to identify the same. 200 period daily moving average is placed near 85 level which will act as strong support.

In nutshell, Abbott Laboratories’s trend look firmly bullish. Any dips towards 85 level can be utilized as a strong buying opportunity and we can expect the levels of 100 followed by 110 in short to medium term.

Disclaimer

Views are strictly personal.This Interim Financial Results & News posts or updates includes forecasts, projections and other predictive statements that represent Vtrade’s assumptions and expectations in light of currently available information. These forecasts, etc., are based on industry trends, circumstances involving companies and other factors, and they involve risks, variables and uncertainties. The Group’s actual performance results may differ from those projected in these Interim Financial Results. Consequently, no guarantee is presented or implied as to the accuracy of specific forecasts, projections or predictive statements contained herein.

Telehealth Services is next big Opportunity?

Covid-19 has turned many businesses upside down. Most of the industries have been hit hard. For instance, like Tourism, Hotel, Auto. There is a big list of companies that are going out of business or letting go of most of their employees. Survival has been their biggest concern. But the same Covid-19 has flourished many industries and Social distancing has been a blessing for them. The telehealth industry has been among them. We believe this industry has all essential ingredients to become the next multi-bagger over the long term.

Teladoc Health Inc

About Company-

Teladoc Health, Inc. provides virtual healthcare services. The Company provides virtual access to care with a portfolio of services and solutions, which includes various medical subspecialties from non-urgent, episodic needs, such as flu and upper respiratory infections, to chronic, complicated medical conditions, such as cancer and congestive heart failure. It provides virtual healthcare services on a business-to-business (B2B) basis to its clients and provides services to consumers directly and through channel partners. The Company’s consumer brands, including Teladoc, Advance Medical, Best Doctors, BetterHelp and HealthiestYou, provides access to advice and resolution to a range of healthcare needs. Its technology enables consumers to manage their own electronic medical records. It also provides access to a message center, provider finder, image upload capability and enables real-time sharing capabilities with providers that include visit scheduling.

Business Model-

Teladoc Health broadly divides its services into six categories: platform and program services, guidance and support, expert medical services, mental health services, telehealth, and integrated virtual care. As a software company, Company is also involved with artificial intelligence, analytics, and licensable platform services. The company primarily uses telephone and videoconferencing software to provide on-demand remote medical care with patients able to log on to the service at any time and be connected with a board-certified, state-licensed physician within several minutes which makes them in a sweet spot in a current busy world.

The company’s physicians treat non-emergencies such as the flu, pink eye, infections, sinus issues, mental health issues, and dermatological conditions, among others. The company has an expert network of 55,000 involved in 450 medical subspecialties. While medication can be prescribed remotely,

Contracting largely with insurers and large employers, Teladoc Health generates revenue through a yearly or monthly fee charged per subscriber, as well as a fee for individual consults. Some companies waive or subsidize the consult fee for their employees. Teladoc Health has around 3,100 licensed physicians and nurses and services offered in about 30 languages.

Insurance Play-

Teladoc generates revenue in two ways. First, the company charges per-visit fees for customers who use its services. Second, Teladoc charges fees to insurance companies that offer telehealth services to their clients as part of their policies. The more insurance companies Teladoc can get on board, the better will be the profitability.

Key Stastics-

Marekt Cap – $ 13.16B

Revenue CAGR – 76% for last 5 year

Paid Members – 22.8 Million unique U.S paid member

Located – 130 Countries / Language – 30

Employer Clients include 40% of Fortune 500 companies

Teladoc Inc daily chart,

The year 2020 has been a blessing for Teladoc Inc as Social distancing has pushed people to find alternatives to visit doctors personally. Telehealth Industry is firing all cylinders. Being a leader Teladoc has shown best quarter growth and we believe that momentum will continue for the coming quarters as well. Price has outperformed major indices and almost doubled since the beginning of 2020. But we believe that this is just beginning of the long bull market of Telehealth industry. A shift in consumer behavior and alternative option to Social distancing has opened new doors for the company.

In short, telehealth industry is on the cusp of a major bull markets. A shift in consumer attitude towards telehealth industry and easy as well as convenient options to access the services has the potential to create a significant size of the market of their own. We believe that Teledoc Inc is in a perfect place to capitalize on the opportunity and windfall gains are yet to be make!