Three sectors are making the headlines in the run-up to elections: Bitcoin, electric vehicles, and hydrogen fuel cells. With the U.S. election results due on November 5, two U.S. Presidential candidates, Donald Trump and Kamala Harris, are at loggerheads on clean energy spending and crypto. This has put three stocks in the limelight:
While Harris supports clean energy and incentives for electric vehicles (EVs), Trump is against EVs, stating they strain the grid and support China’s battery boon. As for hydrogen in transport, he is unsure about its safety. Depending on the election outcome, auto and energy stocks could see significant movement on either side.
You could make the most of this volatility by investing in both sides of the stocks and cashing out the ones that win. However, you have to ensure that the rally makes up for the other side’s decline.
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The most popular stocks on the TSX
As the election nears, three stocks have gained momentum.
Ballard Power Systems stock
Ballard Power Systems (TSX: BLDP) stock suddenly surged as much as 10% on October 28 after a dip. The company makes hydrogen fuel cells for commercial vehicles. It has been receiving orders but has incurred huge losses due to the high cost of the technology and slow adoption.
Receiving orders is one thing and completing them is another as clients can delay order deliveries. A similar thing happened recently as Ballard’s $130 million order book in the previous two quarters fell to just $5 million in the second quarter, as customers began deferring new orders. The company is now considering restructuring to reduce operating costs by 30% amidst the slowdown in hydrogen infrastructure development and fuel cell adoption.
The company is torn between the United States and China. It has a joint venture with China’s Weichai Power Co., which owns a 15% stake in Ballard. The election results could significantly affect all hydrogen fuel cell stocks, including the US-based Plug Power.
In the last US Presidential election, when Joe Biden was nominated as the US President, Ballard Power Systems’ stock price surged 150% between October 30, 2020 and February 5, 2021. If Trump is elected, the stock could fall 9% to its 52-week low of $2.12. But if Harris is elected, the stock could surge more than 100%. There is more upside than downside for this stock. If you are willing to take the risk, you can buy Ballard Power Systems shares now and hold or sell the stock depending on the election outcome.
Hut 8 Corp and BitFarms stock
Trump and Harris also have slightly opposing views about cryptocurrency. Trump supports cryptocurrencies. He even proposed making Bitcoin a strategic reserve and positioning the US as a global crypto hub. This sparked optimism among crypto investors and they rushed to buy crypto ETFs and stocks. Hence, the stock price of Hut 8 Corp and BitFarms soared 16% and 12%, respectively, on October 28.
Kamal Harris promised to establish a clear regulatory framework for the crypto market, which could bring clarity and stabilize Bitcoin prices in the long term. In either scenario, Bitcoin will benefit, but it will jump by leaps and bounds in the Trump presidency.
While we avoid investing in uncertainty, the elections have created a short-term opportunistic investment that could help you make quick returns till January 2025.
How to Invest
Opportunistic trades like these should only be done with money you are willing to lose. Avoid investing more than 3–5% of your portfolio in such investments where the odds could move in either direction. Remember, this is a short-term bet. Do not get greedy and exit when the stock hits your target even if the shares seem to have more upside. Because when this bullishness fades, the stock could fall for a longer term.
