Healthcare, Energy Sectors Shouldn't Fear Obama

by: Zacks.com November 05, 2008 | about stocks: ABT / ACI / EIX / EOG / GM / HUM / XOM    

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President-Elect Obama has previously said that his top priorities are energy and healthcare. The U.S. has long needed policies that provide long-term solutions to both issues. And neither Democratic nor Republican administrations have instituted real change on either issue.

Will President-Elect Obama match the expectations of his landslide victory? Only time will tell.

In the near-term, however, there will be warnings about traditional energy companies and pharmaceutical companies. Investors would be prudent not to overreact to those warnings. Even if change is coming, it will take a long while before it gets here. And once change does arrive, the major players could likely continue to play a significant role.

Energy is reliant on infrastructure. Even if a breakthrough on renewable energy were developed tomorrow, it would take years before the country could switch. The U.S. operates on a power grid that is comprised of pipelines, wires, refineries and power plants. And everything that we use, from our cars to our iPods, is designed to work based on this power grid.

Not to mention the logistics of designing new products. Car manufacturers, such as General Motors (GM), can't simply retool their plants overnight.

Furthermore, the rest of the world operates on a combination of oil, natural gas and coal. Simply put, even with a breakthrough energy policy, many energy-related companies should be profitable for years to come, including Exxon Mobil (XOM) - drilling and distribution, EOG Resources (EOG) - natural gas, Arch Coal (ACI) - clean coal, and Edison International (EIX) - electric power.

Healthcare will be a major battle. There are too many players with high-powered lobbyists to allow true change to occur without a fight. And even if the U.S. moves towards national health care, much of the existing system could be kept in place. Switzerland has universal coverage AND powerful insurance and pharmaceutical companies.

In other words, companies like Humana (HUM) and Abbott Laboratories (ABT) are very likely to have profitable futures long after President-Elect Obama leaves the White House.

The expectations for President-Elect Obama are high and I truly hope that he lives up to them. But as an investor, I also need to be pragmatic. Change might be coming, but that doesn't mean some things won't stay the same.

Charles Rotblut, CFA is the Senior Market Analyst for Zacks.com.

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This article has 8 comments:

  •  
    Nov 05 03:15 PM
    This article says almost nothing. I talk to big pharma CEO's. They are very prepared to further accelerate offshoring just like Clininal Trial business that is now in Chindia instead of the U.S. Attempting to soothe some fears that a one party dominated Washington won't hurt your industry in an already existing landscape of 'Fascism Lite' is a waste of time.

    One could make money on pharmaceuticals if you have a buy and hold strategy that is 5-10 years out and you are not afraid of dilligence on emerging markets. Brush up on your Mandarin.
    Reply | Link to Comment
  •  
    Nov 05 03:32 PM
    What part of Left Wing Government doesn't the author of this nonsense understand?

    We are not going to have more oil but the energy producers can look forward to higher taxes. - possible some sort of excess (whatever the Leftist want to call it) profits.

    Has anyone ever heard Obama mention Free Enterprise or Law and Order?

    Face it: the Obama Administration will be Anti-business, unless the are large corporate contributors. MoveOn.org is calling the shots.
    Reply | Link to Comment
  •  
    Nov 05 06:11 PM
    stock market may not go up before jan 20tth, bias again.
    Reply | Link to Comment
  •  
    Nov 06 08:17 AM
    Why should they? He's only promised to BANKRUPT the coal industry and announced he favors SHARPLY HIGHER electric bills to combat global warming. Where were you while he was making these campaign pledges?
    Reply | Link to Comment
  •  
    Nov 06 11:07 AM
    Where were you people before the election. I thought I was the only one fighting. I must be a radical though. Obama, and his side kick said their self that they would have NO DIRTY COAL IN AMERICA, THEY WOULD DRIVE UP THE COST OF UTILITIES SKY HIGH. Their own words, and how can National Health do anything but hurt health care? I would think it would drive it to the ground, if not doing away with it all together. We all know what they do. Nancy, Harry, and the rest. Do you think they will help business? Obama said in his victory address, We can't have a thriving Wall Street, if it hurts main street. Read between the lines, listen to his, and the left real words. Scares me.
    Reply | Link to Comment
  •  
    Nov 06 11:10 AM
    Oh, after they pass the Fairness Act, we won't be saying these things either. Don't let them do this!!!!!!!!!!!!!!!
    Reply | Link to Comment
  •  
    Nov 06 01:32 PM
    Not sure if this is a landslide or not. Out of 28 elections starting in 1900 and including this one, 9 were tighter and 18 had bigger margins in the Electoral College. It depends some on how you account for third party electoral votes (5 had at least some Electoral votes) , but you get the idea.
    Reply | Link to Comment
  •  
    Nov 06 07:05 PM
    Is Obama really going to discard our number #1 natural resource, coal ? Let's discount his inane campaign remarks. Coal will remain invaluable to our energy needs.
    Coal should not be linked to oil. Yet, the herd on the street dumps coal every time oil falls. Last time I looked we still need to generate electricity. It will be an eternity before alternate power sources ; wind, solar, biofuels can even begin to make a dent in our environment. No matter how much Boone Pickens expects to reap from his wind investments, even his money won't expedite any serious changes in our energy sources.
    Obama has alot to learn abour practicality. Such as : leave the capital gains tax alone, don't stiffle the oil companies because windfall profit taxes do not work..Bama will get real. The horrendous global economy will be his instructor, not left-wing anarchists. And, big-money special interests aren't ever leaving Washington..Money rules in DC despite the promises of the Messiah, things will never change in that cesspool.
    Reply | Link to Comment
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