Obama victory? Watch Trina Solar (TSL) and Health Net (HNT)
Today's Financial News - Posted November 4, 2008
Election day is finally here. In less than 24 hours, we will know who will run the country for at least the next four years. Companies like Trina Solar (NYSE:TSL) and Health Net (NYSE:HNT) are making moves in anticipation of the new leadership.
By Andrew Snyder
Baltimore – (TFN): We have finally made it to the big day. With any bit of luck, we will finally know who the next president of the United States will be. And just as importantly, we will know just how many Democratic seats will be added in Congress. It is going to be a monumental day in the history of the country.
According to the multitude of polls strewn across the media over the past several months, this is Obama’s election to lose. Knowing that, Wall Street has made some pretty interesting moves this week.
It is becoming quite obvious which industries are likely to benefit and are likely to lose from a government overrun by liberals. So far, the coal industry, even after Obama’s “bankruptcy” controversy, has not made it to either list. In fact, my coal pick from last week, James River Coal Company (NYSE:JRCC) remains a winner. We are still up by more than 30% on the play.
Da Bulls
If today’s trading action is an accurate indication, the solar industry should see a significant boost from an Obama administration. Companies like Trina Solar (NYSE:TSL), Suntech Power (NYSE:STP) and Yingli Green Energy (NYSE:YGE) are all making double-digit jumps today. Some of the surge is due to stronger-than-expected earnings reports throughout the industry, but the majority can be attributed to the forecast of a strong Obama victory.
Now, I know what you are thinking. Is this the time to be buying these companies?
No.
Smart traders will wait to buy on the dips. You should never follow the herd and invest when shares are already soaring. They will retrace their steps and give you increased profit potential.
If the solar companies are worth buying on the dips, I will let you know. But realize I am far from convinced Obama will find the necessary funding or support to get the solar industry flying once again. Remember, Washington just spent a trillion dollars on a bailout. Money is a tad bit tight, even for the liberals.
Da Bears
As I mentioned above, a lot of investors expect the coal industry to make a plunge on an Obama victory. After all, the nation’s right wing is forcefully telling us how Obama intends to bankrupt coal power plants.
Fortunately, Wall Street is treating Obama’s promise the same way it treats the man’s other statements… like pure hyperbole.
No matter how many Democrats are added to Capitol Hill, the coal industry will prevail. We all know Big Business always wins in Washington.
The healthcare industry, on the other hand, is not as happy. Rising costs are already hurting the nation’s hospitals and care providers. An Obama victory will only add to the pain as their ability to increase margins will be reduced.
All you have to do is look at Health Net Inc (NYSE:HNT) to see what I mean. Its share price is down by over 20% today on news that it is having serious difficulty overcoming its increased costs.
As Obama forces the nation’s health providers to give free healthcare to those who cannot afford it, margins will shrink even further. Pain will be felt across the entire industry. In fact, the healthcare industry may just be the next bubble investors have to worry about.
The good news is, in less than 12 hours, we will know who is the next president. The bad news is we have no idea what is in store for the next four years.
Let’s hope there is not too much change.
Next Article: The Fed hired who?
One Response to “Obama victory? Watch Trina Solar (TSL) and Health Net (HNT)”
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November 5th, 2008 at 10:50 pm
I'm not an Obama supporter, but I think it is incorrect for Mr. Snyder to say Obama will be forcing health care providers to give free health care to those who cannot afford to pay.
The fact is that Obama was saying he will provide health insurance to those who cannot afford it. That creates a whole different kind of economic problem, but it is not a direct problem for health care providers.
In fact, providing health care insurance to more people would expand the customer base for health care providers. And by extension, generate more revenues and more profits for health care providers.