Wolfspeed and 4 More Stocks That Could Get a Government Boost If Trump Keeps Investing

computer chip (Dreamstime)

Key Points

• The U.S. government has acquired equity stakes in four public companies and made deals with others, signaling a shift in its approach to strategic industries.
• Evercore ISI identifies “National Champions” as companies deeply intertwined with the state, receiving government support to advance economic and security interests.
• Evercore analysts identified Wolfspeed, Amkor Technology, Centrus Energy, Albemarle, and Ioneer as top candidates for future government partnerships.

The U.S. government is taking stakes in a number of companies and the market is enamored of the idea. Buying into stocks that might be next on President Donald Trump’s list could be a good way to see gains.

The Trump Administration has already taken equity stakes via warrants in four publicly traded companies: MP Materials , Intel, Lithium Americas , and Trilogy. Similar deals have been inked with an Alcoa Gallium project in Australia, where the government will receive gallium output in proportion to its capital contribution, and a Cameco/ Brookfield partnership to develop nuclear energy. It also announced a partnership with American Resources’s Corporation subsidiary ReElement Technologies, and a private company, Vulcan Elements.

It’s a big departure from modern administrations, which have limited government equity stakes mostly to essential services or periods of crisis, notes Evercore ISI’s Julian Emanuel. However, the market is looking favorably on the change, assuming that companies on the receiving end will see other government-related benefits, like smoother regulatory and permitting approvals, favorable contracts, and protection from foreign competition.

“The chosen companies may ultimately come to represent America’s new ‘National Champions’– a selected set of firms in strategic sectors that are deeply intertwined with the state and receive favorable government support to safeguard and advance national economic and security interests,” he writes. “Among the recent deals, perhaps the clearest example of this is Intel, where the government’s intervention appears intended to ensure there will continue to be an indigenous leading-edge semiconductor manufacturer amidst fierce foreign competition.”

While no two agreements are alike, Emanuel notes there are some common factors. While most deals have focused on critical minerals, that’s started to broaden, with semiconductors, nuclear facilities, quantum computing and pharmaceuticals as other areas of interest for the current administration. Defense production is another key factor, and companies that already have relationships with the government through grants or loans may also be more likely to be chosen. With these factors in mind, Evercore screened for potential partners, scoring companies on five factors, in descending order: strategic alignment, geoeconomic and supply chain relevance, policy triggers, market position and scale, and balance sheet strength and operational readiness. Analysts then narrowed the list down to their five most promising candidates.

First is Wolfspeed , a semiconductor company specializing in silicon carbide (SiC) technology. It is formerly known as Cree, but changed its name in 2021. It filed for Chapter 11 bankruptcy protection this summer before resuming trading at the end of September. The company controls its entire supply chain from start to finish–one of the few of its peers–meaning it would reduce U.S. dependence on foreign suppliers, and it already had $1.5 billion in CHIPS Act funding.

Next is Amkor Technology , a high-performance chip maker that would bolster the administration’s reshoring efforts and alleviate concerns about the supply chain bottleneck in advanced semiconductor packaging, an area currently dominated by companies. It too received support from the CHIPs Act.

Centrus Energy is third. China and Russia dominate the current uranium enrichment supply chain, which creates bottlenecks and geopolitical risks. Centrus can bolster the U.S.’s nuclear energy positioning, as its Piketon, Ohio, facility is the only site with a Nuclear Regulatory Commission  producing high-assay low-enriched uranium (HALEU).

Albemarle , a global lithium producer, is fourth on the list, given this mineral’s importance to U.S. national security and the economy. It not only has domestic operations but it also has projects in countries like Australia and Chile it is helping to secure diversified lithium sourcing.

Finally Ioneer benefits from executive orders mandating increased domestic production of boron. In particular, the company’s Rhyolite Ridge Lithium-Boron Project in Nevada can alleviate U.S. vulnerabilities in those minerals’ supply chains, by establishing a major domestic source with innovative low-cost, low-impact extraction methods.

Write to Teresa Rivas at teresa.rivas@barrons.com