President Obama has been previewing objectives from his State of the Union address early this year, alerting investors to new policies that could have an impact on some key sectors in 2015.
Typically an affair shrouded in mystery, the annual State of the Union address has been a president’s way to unveil new policy goals for the year in front of a national television audience. But since that audience has shrunk significantly over the past decade, the Obama administration has attempted to revitalize the tradition for the Internet era. The White House staff sent out an email blast last week to ask Americans what should be in the address; the administration has already hyped the speech’s major policy goals on sites such as LinkedIn and Twitter.
With State of the Union topics announced before the actual speech, investors can be keyed in for which industries to watch before the president stands before Congress Tuesday night. Over the past two weeks, Obama has toured the country speaking about key issues that could affect three sectors.
Consumers protected
With the hack of the Pentagon’s Twitter and YouTube accounts still fresh on the country’s minds, cybersecurity is understandably a central issue for the president in 2015. Computer-integrated systems and Internet services are two industries that could benefit from a renewed interest in this issue.
Obama hopes to focus on how the government responds to online threats and cybercrime as well as help improve data policies between companies and consumers. Nodding to data breaches at retailers such as Home Depot Inc (NYSE:HD) and Target (NYSE:TGT) last year, one proposal would require firms to inform customers of data breaches within 30 days, among other protections for consumers.
Fortinet Inc (NASDAQ:FTNT) and Zix Corporation (NASDAQ:ZIXI) are two companies in the thick of these new cyber wars and merit a look before the president mentions cybersecurity in his address. Fortinet offers network security appliances and security to business enterprises, service providers and governments worldwide and currently holds a Zacks Rank #2 (Buy). Zix, which provides email encryption services and electronic-prescription services for doctors and pharmacies, also holds a Zacks Rank #2 (Buy).
Homeowners boosted
But even if Home Depot did take a hit after its data breach, it might get some help from the president and his new housing policies.
In Phoenix, Arizona, this month, Obama announced he would take executive action to reduce the Federal Housing Agency’s mortgage insurance premiums by 0.5 percent, a move the White House estimates would save homebuyers an average of $900 a year.
The action is designed to help spur the housing market and the home-building industry. As mentioned earlier in a Zacks commentary on Obama’s proposed tax policy – another pillar of 2015 the president is expected to address – homebuilding and financial services company PulteGroup Inc would surely benefit from a revitalization of the housing market, as would Tri Pointe Homes (NYSE:TPH), a company focused on the construction of single-family homes in California. Both companies hold a Zacks Rank #2 (Buy).
Home-repair stores like Home Depot and Lowe's (NYSE:LOW) also stand see some new attention. With money saved on mortgages and lower fuel costs, consumers may be able to put that extra cash back into improving their new homes. Home Depot houses a Zacks Rank #3 (Hold) and Lowes has built a Zacks Rank #2 (Buy).
Schools threatened
Earlier this month the president detailed a plan to give Americans free access to community colleges for two years. The program would help millions of people work toward associate degrees or help them get a leg up on earning a bachelor’s degree.
The White House proposed the federal government would cover 75 percent of the $60 billion plan, with state governments shouldering the remaining costs. Such a move would save community college students $3,800 in tuition and cover about 9 million students.
While the proposal would surely make a difference in the lives of citizens looking to reach higher levels of education, it would take a huge bite out of the for-profit schools sector. If a free option for school similar to the one President Obama describes ever became a reality, these companies might find themselves competing less with each other and more with the government.
Online college providers Apollo Group Inc (NASDAQ:APOL)– proprietor of the University of Phoenix — and American Public Education Inc – which runs American Military University and American Public University – stand to lose customers if brick-and-mortar schools could offer students a free, local education. Apollo currently holds a Zacks Rank #4 (Sell) and American Public holds a Zacks Rank #3 (Hold).
Bottom line
While the State of the Union does not set legislative action in stone for the coming year, it does provide the public with an idea of where the country stands and where it might be heading. As President Obama rides the tailwinds of stronger economic data and a renewed faith in growth, these key sectors will surely be hot topics for the public – and for traders – in the days ahead.