US firms could make portfolios great again

The stock market stars of the year have been the Magnificent Seven, a tech titan posse made up of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.

This proof that backing American innovation and resilience tends to pay off has sparked a search for companies in other fields, based in the nation’s heartlands and poised to prosper from a green industrial revolution.

David Harrison, manager of the Rathbone Global Sustainability fund, said: ‘There are companies striving – for want of another phrase – ‘to make America great again’, exploiting the industrial policies introduced by President Biden, a Democrat.’

The Inflation Reduction Act, passed in 2022, aims to speed America’s energy transition. The legislation is powering billions of investment in manufacturing. It is also encouraging businesses to ‘onshore’ jobs from the Far East and other regions, creating employment in the US. It seems less suspicion surrounds initiatives that could be termed as ‘woke’ if they stimulate labour-intensive long-term projects.

Another historic piece of legislation, the Infrastructure Investment and Jobs Act, seeks to upgrade America’s bridges, roads and other parts of the nation’s often dilapidated infrastructure. The average water pipe is 100 years old, and probably leaking.

Goldman Sachs contends that, despite anti-woke sentiment in some circles, there will be ‘greater corporate and consumer interest’ in projects coming from the Inflation Reduction Act.

As a consequence, the policy could inspire $3.3 trillion in spending over the next decade. But, as Goldman Sachs analyst Brian Singer argues: ‘Its benefits for green businesses aren’t necessarily being priced in.’

Bank of America notes that the businesses likely to be boosted by the Inflation Reduction Act operate in a diverse range of sectors, encompassing agriculture, battery and energy storage, renewable energies and construction. They include familiar names such as the heavy digging equipment maker Caterpillar, General Electric and Honeywell, plus lesser-known business like Bloom Energy and Teledyne.

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Source of data and images: dailymail

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