Battery technology and fuel cells are related commodities that will be developed in order to accommodate clean technology and should be considered by investors, Little said.
“People should think about thematic investing,” Little said. “There are subsegments to each sector” that will be boosted by upcoming changes.
For instance, a massive push for infrastructure construction will boost the U.S. steel industry and rental companies for construction equipment, Little said.
While investors are talking about building carbon neutral facilities, the need for carbon capture technology is often overlooked, Little added. Development of hydrogen technologies often suffers from the same fate of being overlooked by investors.
“All of this is popular because it will help make us more competitive with other countries,” he said. “These investment areas have sound growth expectations.”
Biden’s expected emphasis on the environment should accelerate asset growth and subsequent earnings, cash flow and dividend growth in the medium and longer terms, including such areas as renewable energy targets, gas to electricity switching in residential as well as commercial sectors, the build-out of electric vehicle charging infrastructure and the need to build grid resilience against increasingly destructive weather events related to climate change, Langley explained.
Biden will look to ensure clean, safe drinking water, which will accelerate the assimilation of smaller water networks into larger ones, a process called tuck-ins, capable of funding the capital expenditures needed for the upgrades and creating investment opportunities in these larger companies, he said. ClearBridge expects double-digit earnings growth across the sector, Langley said.
In addition, railroads, already considered the “greener mode” of long-haul transport, will probably become more electrified under Biden, resulting in lower operating ratios and higher profitability over the medium term, he added.
Another opportunity is developing in wireless towers because of Biden’s promise to expand broadband and wireless technology to every American. This will accelerate the build-out of the wireless tower networks and implementation of 5G technology, requiring additional tower sites and leased slots on existing wireless tower infrastructure. “The result is the likely expansion of the mid-single-digit revenue growth to high-single-digit growth of the sector,” ClearBridge said.
On the health-care front, Morningstar’s Szapiro said, “We believe the new administration will draft new rules on short-term health plans, raise non-appropriated funds to restore advertising and other support for federally run exchanges, and use waivers to expand eligibility for coverage, such as in the Medicaid program,” all of which could open new investment opportunities in the health-care sector.