Stocks, ETFs that could thrive under Biden

One week before President-elect Joe Biden takes the oath of office, Gerber Kawasaki CEO Ross Gerber tells Reuters' Fred Katayama which sectors, stocks, and ETFs stand to gain the most under a new administration.

Video Transcript

FRED KATAYAMA: Stocks on Wall Street making modest gains Wednesday, as the House gets set to vote on the impeachment of President Donald Trump. Let's take a quick look at that but also look ahead at what sectors' stocks may do well under a Biden administration. And for that, we go to Santa Monica, California, where we're joined by Ross Gerber, CEO of Gerber Kawasaki. A belated happy new year to you, Ross, and welcome back.

ROSS GERBER: Thank you.

FRED KATAYAMA: Well, Ross, reflation stocks taking a bit of a break, but stocks overall modestly rising on Wall Street. Why this reaction when the House is getting set to vote on impeachment? We saw sort of Wall Street shrug off the insurrection on Capitol Hill last week.

ROSS GERBER: Well, it's pretty amazing. You know, we've seen much lower volatility in such a high-volatility time. But I think the market's really looking forward, and this is the low. I mean, could it really get worse in America? We're in the middle of a coup and 4,500 people dying a day. So I think what the market's saying is in six months, with the Biden administration taking over, an effective vaccine distribution and stimulus, that we'll be in a much better place. And I have to agree with that.

FRED KATAYAMA: Well, Ross, then, let's look ahead. What sectors do you anticipate will do well under a Biden administration?

ROSS GERBER: Well, I think the first thing Biden's going to roll out is, obviously, a clean energy, environmental bill, and that's going to be a huge, huge positive for the sectors we're heavily invested in, which is solar energy and EVs. And we feel that the refocus on climate will be a huge positive for these industries, as well as jobs in America. So we know that Biden is very progressive with energy, and it's literally the opposite policy that Trump has had in place. So we're very bullish on those sectors.

And then secondly, we think a lot of things are going to become legal, like cannabis. Online gambling is already legal but now being legalized in the states. So we're very bullish on the legalization of things like cannabis and, you know, ultimately expunging records and having some equitable solution for people who have been affected by the war on drugs. So we see that as a priority in the administration, and we're seeing that with cannabis stocks.

As well as I think small companies and mid-cap companies will do better than the large-cap companies, as we start to rebuild the economy, hopefully from Main Street up. Because certainly, the Wall-Street-type firms have done quite well in this world so far, but the small businesses are what we really need to focus on. And so I see that also seeing benefits towards small and medium-sized businesses.

FRED KATAYAMA: And Ross, on energy and on cannabis, are there any particular stocks in those sectors that you like? I know, in past shows, you've talked about, for example, NIO, the Chinese EV maker. I know you're a big bull on Tesla, as well. But are there any particular energy or cannabis stocks that you think are worth looking at?

ROSS GERBER: We've rotated sort of from the EV players, although we're still very long Tesla, into battery technology, which the best way to do it is we're doing it through an ETF, the symbol LIT, which is a lithium and battery technology ETF. And it has exposure to all the major cell manufacturers-- CATL in China, Panasonic in Japan, and LG Chem in Korea. We love this area of the market.

So the suppliers of the EV companies are the ones that I think are really going to benefit, as all the second-tier EV players sort of battle it out. So that's one area. And then the second is companies like NextEra Energy, which is big in renewable energy, which we have a position in. So we expect solar players, like SolarEdge, Enphase, which have had amazing runs, to continue. And you can get exposure through an ETF, TAN, that gives you exposure to the solar stocks as well. So we're very, very bullish on this area.

FRED KATAYAMA: And on cannabis?

ROSS GERBER: Cannabis is about to begin a period of time very similar to after prohibition had ended. So if you look at the opportunity to invest in, let's say, Coors or Heineken, you know, 50 years ago, when these were growing industries, and look at the wealth that alcohol has created over the last 50 or 100 years, this is a unique opportunity like no other because it's a product that everybody already uses and now is, all of a sudden, legal. And once the federal government legalizes cannabis-- we expect them to do that right away-- these stocks will have access to markets, much lower costs to operate businesses, and clearly, a much better operating environment than the current ridiculous state of state versus federal law, you know, contradiction. So we're very bullish there, and we're seeing these stocks really rally.

FRED KATAYAMA: All right, well, thank you, Ross, for those sector and stock selections. Appreciate it.

ROSS GERBER: Thank you.

FRED KATAYAMA: Our thanks to Ross Gerber of Gerber Kawasaki. I'm Fred Katayama in New York. This is "Reuters."