Since the November election, Wall Street has been looking for investments that are likely to benefit from President Biden’s policies. But of course, this has meant that it is tough to find cheap stocks!
Yet the rally has been uneven. And yes, there are some interesting stocks to buy that are at reasonable valuations.
For Wall Street, the focus is on the proposed $2.3 trillion infrastructure plan. The biggest part of it is for the U.S. transportation system, which sorely needs an upgrade. The Biden plan intends to spend a hefty $621 billion on this.
Another big item will be for manufacturing — at about $300 billion. Then there will be $213 billion for affordable housing.
Given the razor-thin majority the Democrats have in Congress, it will be tough for Biden to get everything he wants. But even if the infrastructure plan is smaller, it will still likely have a big impact on many companies.
But infrastructure is not the only area that will benefit from his plans. No doubt, Biden will push for broader investments in areas like healthcare.
So, then, what are the cheap stocks to buy? Well, let’s take a look at seven:
Cheap Stocks To Buy: Oscar Health (OSCR)
Oscar Health, which is a healthcare insurance operator, came public in early March. But the reception was frosty, as the shares plunged by 11% on the debut. Yet this was not been the end of the losses. Note that OSCR stock has since fallen by roughly 36%.
But this actually looks like an opportunity. Given that President Biden was instrumental in creating the Affordable Care Act, he will certainly find ways to bolster the law — which will definitely benefit Oscar Health.
However, the company is not a typical insurance company either. Founded in 2012, the founders have focused on leveraging sophisticated digital technologies. It offers a highly popular mobile app. Then there has been the use of advanced analytics to help improve the customer experience.
The result is that Oscar has become a robust platform. The member base is 529,000 and the company serves 291 counties across 18 states. In terms of the policies, they include individual/family, small group and Medicare Advantage plans.
Of course, the market opportunity is enormous. According to the company’s own estimates, spending in this sector is at about $123 billion.
Jacobs Engineering Group (J)
Founded in 1947, Jacobs Engineering Group is one of the world’s top engineering services companies. The employee base is roughly 55,000 people and the company has projects across the globe.
Over the past few years, Jacobs has been focused on a major restructuring. This has included several divestures as well as acquisitions, such as for CH2M Hill Companies, The KeyW Holding Corporation and John Wood Group’s nuclear business.
The deals have allowed Jacobs to enter lucrative growth markets. They include areas like nuclear services, combat systems, command & control, and surveillance.
Such high-tech capabilities will definitely be critical in snagging contracts from the Biden plan. Infrastructure is much more than just brick and mortar.
As for the valuation on J stock, it is a fairly cheap stock — at least compared to other engineering companies — trading at a forward price-to-earnings multiple of 22x.
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