Business Brief: Biden or Trump? There’s a stock for that

One of Canada’s biggest pension funds is selling LifeLabs, the country’s largest medical-testing company, to U.S.-based Quest. Today, we run a quick diagnostic on that sale, sift through the stocks whose fortunes are most closely tied to the outcome of the U.S. election, and chart oil’s climb ahead of road-trip season.

In the news:

• First Nation in Yukon calls for halt of mining on its traditional territory after Eagle gold mine accident
• OpenText cuts 1,200 jobs as part of what it calls business optimization plan
• Hydro-Québec announces mega wind farm in partnership with Indigenous communities, regional government

Up top

OMERS sells LifeLabs to U.S. company

Canada’s largest medical testing company has been sold to U.S.-based Quest Diagnostics Inc. for $1.35-billion including debt, James Bradshaw reports.

The Ontario Municipal Employees Retirement System, which owned LifeLabs Medical Laboratory Services for more than 17 years, put the company up for sale in January. The Globe and Mail reported the pension fund pitched the lab-testing provider as an “infrastructure sector investment” with dependable revenues from providing medical services to an aging population.

The two leading contenders in the six months that followed were Quest and Vaughan, Ont.-based Andlauer Healthcare Group, which runs a medical logistics business that delivers drugs to pharmacies and hospitals. The company appeared to represent the best chance for LifeLabs to stay Canadian-owned. In May, Andrew Willis reported Quest had emerged as the front-runner, outbidding Andlauer by $100-million.

The sale comes as influential business leaders are calling on the federal government to mandate Canada’s largest pension funds to invest more in the country.

The deal makes Canada’s highly concentrated market for lab testing even further controlled by U.S. owners, Bradshaw notes. The company’s major domestic rival, Dynacare, is owned by one of the largest U.S. medical-testing companies, Laboratory Corp. of America Holdings – commonly known as Labcorp.

Spotlight

Taking stock in the race for the White House

The first U.S. presidential debate saw Joe Biden and Donald Trump presenting differing views on, well, most everything. But for some publicly traded companies more than others, it’s where the two candidates deviate on the economy that matters most.

At this point, Dylan Smith of Rosenberg Research writes, it’s difficult to parse where either of them stand on fiscal policy in a race being run predominantly on personality, but we can expect “stable but disappointing price moves” under Biden and higher volatility on a Trump win.

Regardless of who comes to power, Reuters reports, some stocks are more exposed than others.

Divided energy: Continued support for electrification and blue and green hydrogen production under a Biden administration could boost stocks such as Air Products and Chemicals Inc., Eaton, Quanta Services and Tesla, according to UBS.

Existing incentives from the present government would continue driving advantages for energy-efficient product manufacturers such as Johnson Controls and Trane Technologies, as well as waste-management companies with recycling infrastructure such as Waste Management Inc. and Republic Services Inc.

But increased oil and natural gas investment, more drilling activity and higher natural gas exports could benefit producers such as Exxon Mobil, Cheniere Energy and ConocoPhillips under Trump 2.0.

Solar power(ed?): JPMorgan analysts believe opposition to the green revolution by Trump and other Republicans could pose a risk to investments in clean energy manufacturing, facilitated by the tax incentives in the Inflation Reduction Act of 2022.

UBS sees a second Biden government keeping those incentives intact for solar manufacturers such as First Solar, NextEra Energy and Sunrun.

Banks benefit: UBS accounts for the prospect of less stringent capital and liquidity rules and easing financial regulation under a second Trump administration.

The brokerage sees benefits for big banks such as JPMorgan & Chase, Bank of America, Wells Fargo and smaller lenders including Discover Financial, KeyCorp and Synchrony Financial.

Manufacturing content: A second Trump administration is expected to be much more protectionist in terms of import tariffs. “The consumer discretionary sector is exposed in that environment,” UBS analysts say.

U.S. tariffs on Chinese imports could help domestic manufacturers, namely legacy carmakers Ford and General Motors and steel producers such as Nucor and Steel Dynamics, UBS analysts say.

Prison for profit: U.S. prison operators such as Geo Group and CoreCivic are potential beneficiaries of a second Trump administration, on promises of a crackdown on illegal immigration and restrictions on legal immigration by the Republican candidate, which could boost demand for detention centres.

Drug deal: UBS sees a lower risk of drug price cuts and an inclination toward Medicare Advantage in a Republican-dominated government, which could help drugmakers Eli Lilly and Company and Merck, as well as health insurers such as Humana and UnitedHealth.

Charted

Road trip!

Oil prices climbed to their highest peak in the better part of two months as U.S. crude inventories shrank and investors fret over the elections in Britain and France. Refineries are also gearing up for the summer: AAA is forecasting almost 71 million people are expected to hit the road on the Independence Day long weekend – an 8-per-cent increase over the pre-pandemic levels of 2019.

On our radar

In the news: Ontario is mandating a quarter of government ads to news organizations

On the rack: Saks Fifth Avenue is buying rival Neiman Marcus with help from Amazon.

On the clock: Greece is moving to a six-day work week. This story asks: Could it be a model for others? I’m not personally qualified to weigh in, but I do know it could be a model of Betteridge’s law of headlines.

Online: Meta’s Threads has reached 175 million users, Mark Zuckerberg announced on the social-media app yesterday. A shame that Canadian media outlets can’t link to the good news on Threads.

Markets this morning

World stocks climbed as traders awaited results from the U.K. election.

TSX futures pointed up. U.S. markets were closed for the Independence Day holiday.

The pan-European STOXX 600 was up 0.55 per cent in early afternoon trading. Britain’s FTSE 100 gained 0.81 per cent, Germany’s DAX increased 0.32 per cent and France’s CAC 40 climbed 0.76 per cent.

In Asia, Japan’s Nikkei closed 0.82 per cent higher at 40,913.65, surpassing its record high on a rally led by technology stocks. Hong Kong’s Hang Seng was up 0.28 per cent at the close.

The Canadian dollar traded at 73.4 1 U.S. cents.