4 Stocks Riding a Trillion-Dollar Government Spending Spree VIEW IN BROWSER Tom Yeung here with your Sunday Digest. Imagine the government came knocking at your door and offered you $10 billion. You’d be pretty skeptical, right? After all, why would anyone give away free money… especially taxpayer dollars? Yet, that’s precisely what the United States does every several decades… - During the 1930s, America’s New Deal era gave rise to dozens of programs, including the Agricultural Adjustment Act (AAA). These acts enabled the federal government to purchase livestock from farmers, provide subsidies, issue farm loans, and more.
- The 1950s saw the introduction of the Defense Production Act, which allowed the president to label specific goods as “critical and strategic,” and let the government buy them at any necessary price.
- The 1970s saw the establishment of the United States' Strategic Petroleum Reserve to counter the effects of OPEC’s oil shocks. By the 2010s, the stockpile had grown to 700 million barrels – enough to fill 44,500 Olympic pools.
These programs were worth billions of dollars in today’s money. Today, the government is at it again. In August 2022, the Biden administration passed the Inflation Reduction Act, a law that authorized $783 billion of spending on energy and climate change, among others. The same month saw the passage of the CHIPS Act, which earmarked $280 billion for the U.S. semiconductor industry. The Trump administration has continued this spending spree. In July, the Department of Defense announced a $400 million investment in MP Materials Corp. (MP) to secure access to rare earth materials. Shares of the mining startup doubled on the news. The following month, the Trump administration announced it would purchase 10% of Intel Corp. (INTC) using a combination of money from the CHIPS Act and the Secure Enclave program. Shares of the chipmaker have since surged 50%. We see this as only the start. Over the next several years, legendary investor Louis Navellier believes trillions more government dollars will flow into private businesses to help offset the rise of Chinese competition. Industries from chipmaking to national defense will find the government at their doorstep, offering billions of dollars in grants and loans. It’s all written in a little-known directive known as Executive Order #14196. To make sense of this all, Louis has published a series of special reports that examine the companies being fast-tracked by President Trump. In it, he explains why it’s so important to get in before the U.S. government does, and then recommends several companies he believes are next on the feds’ “Buy” list. To illustrate this opportunity, I’d like to highlight four stocks from three industries that are also set to receive this surge in funding… and thus get turbocharged by this “new” New Deal. | Recommended Link | | | | Rate cuts could be a welcome boost for the market. But the Fed’s moves are not where the real story is unfolding… The bigger shift is coming from Washington. President Trump signed Executive Order #14196 that I believe it could go down as one of the most important policy moves of our time. In my view, it sets the stage for a revival of American economic dominance. Click here to watch my urgent briefing now. |  | | Artificial Intelligence There are many potential winners from the Trump administration’s push for AI dominance. Cloud computing firms from Oracle Corp. (ORCL) to Alphabet Inc. (GOOGL) are already reaping the rewards of lower regulation. AI chip designers, like Nvidia Corp. (NVDA) and Advanced Micro Devices Inc. (AMD), have become the new golden geese of the AI economy. Yet, these companies are not receiving significant sums from the government. In fact, many are getting hamstrung; Nvidia recently wrote off $4.5 billion in H20 chip inventory bound for China, while Alphabet is fending off multiple antitrust lawsuits. Instead, only one major AI company is receiving federal cash in addition to regulatory preference: Intel Corp. (INTC). Intel is America’s last-remaining producer of advanced semiconductors. In fact, it’s the only one of two major firms besides Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) capable of producing next-generation “18A node” chips. That makes Intel a national security play. Consider what would happen if Nvidia suddenly vanished. AMD would quickly step into the void with competitive products. And if Alphabet or Oracle folded, then business would swiftly shift to other American cloud computing firms. Advanced chipmaking offers no such choice. If Intel disappears, no American “fab” could step in as a replacement. They have all gone the way of GlobalFoundries Inc. (GFS), which now produces only low-end chips. Even Nvidia realizes how dangerously reliant it’s become on foreign high-end chipmaking. Earlier this week, Nvidia announced it would invest $5 billion in Intel and co-create bespoke AI chips. That gives Intel a much-needed lifeline. So, even though Intel remains a speculative play, shares could continue rising higher as more people ask themselves, “If not Intel, then who?” Energy A similar dynamic is playing out in energy – an industry that the Trump administration promised to “unleash.” Since January, the government has offered billions in financial support for the fossil fuel industry; some estimates peg that figure as high as $17.9 billion over a decade. An equally large prize lies in uranium, the fuel for nuclear reactors. The U.S. currently has just two commercial enrichment facilities, and the government’s strategic reserve of uranium covers only 1% of annual reactor needs. That looks set to change. On September 15, U.S. Energy Secretary Chris Wright said that the government is now “furiously at work” to remake domestic nuclear-fuel supply chains, which includes bulking up its strategic reserve of uranium. This should send shares of American uranium firms on a new growth spurt. Two firms stand out. - Uranium Energy Corp. (UEC). The $5 billion startup has spent the past decade acquiring mining sites and conversion facilities. It has since become America’s largest uranium company by estimated resources, licensed production, and processing capacity, even though much of this is not yet online.
- Energy Fuels Inc. (UUUU). The $3 billion firm owns the only operating conventional uranium mill in the U.S. and has produced two-thirds of all U.S. uranium since 2017. It also has a small rare-earths division, another industry favored by the U.S. government.
These companies remain risky bets and are not “official” recommendations. They are relatively early-stage and operate in an industry that resembles OPEC; Canadian and Kazakh rivals have far better pricing power. However, the U.S. government wants to change that. And President Trump plans to rain money down on American uranium startups, then these companies are almost certainly worth a second look. National Defense Finally, national defense companies will receive the largest share of government dollars. The segment already consumes 27% of the federal budget, and that figure is set to rise over the coming years. In addition, the Congressional Budget Office notes that America’s “Golden Dome” project could cost as much as $831 billion over two decades – eclipsing the roughly $720 billion (in today’s dollars) that the American interstate system consumed. If completed, the Golden Dome project will add a multilayer defense system to protect America from aerial threats. That should prove a windfall for Ondas Holdings Inc. (ONDS), a hypergrowth firm I recently recommended here. Ondas is a fast-growing provider of industrial wireless networks and commercial drones. It was the first company to receive certification by the Federal Aviation Administration for an automated aerial security drone, and it launched a “drone-in-a-box” system in 2023 designed to hunt other drones. Here’s how the company describes the product: Launched from a designated pod, the intercepting drone flies autonomously towards targets under radar guidance, then identifies and “locks on” to the target using proprietary computer vision and artificial intelligence (AI) capabilities. The intercepting drone follows the target, then incapacitates and captures it and using a ballistic net and a parachute to safely lower it to the ground. That means Ondas will likely become an essential component of America’s Golden Dome. Analysts expect revenues to triple this year to $27 million, and to reach $123 million by 2027. The Winners and Losers of America’s “New” New Deal Now, it’s important to note that not every company will win in this new economy. Since January, the Trump administration has cut roughly $4 billion in medical research, and reduced staffing at the Food and Drug Administration by 3,500. Shares of healthcare firms have slumped, despite earlier promises by the government to support research into cancer-beating vaccines. Crypto also remains a minefield. Some firms like Coinbase Global Inc. (COIN) are reaping the rewards of lower regulations, while others like Bakkt Holdings Inc. (BKKT) are struggling to stand out. Most crypto firms have been left to fend for themselves with little financial backing from the government. That’s why it’s so important to understand which industries are actually receiving government money, and which are merely getting promises. To help you navigate this “new” New Deal, Louis Navellier has published a series of essential special reports highlighting companies positioned to thrive under Trump’s administration during the current AI and manufacturing boom. In a recent presentation, Louis dives deeper into the president’s fast-track approach to government projects and outlines his investment strategy for the companies he believes will benefit the most. Click here to watch the replay. Until next week, Thomas Yeung, CFA
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