After months of heated negotiations, Congress finally passed a new coronavirus relief bill last week with President Donald Trump signing the bill into law just last weekend.
Included in the bill was another round of $600 direct payments for Americans, which began hitting bank accounts on Tuesday.
With an extra $600 in taxpayers’ wallets, one trader said this week that recipients may use their checks to buy stocks, just as many did with the first round of stimulus checks.
One such stock Mark Tepper, president and CEO of Strategic Wealth Partners, believes could see a boost from this round of stimulus payments is Silvergate Capital (NYSE: SI).
According to Tepper, Silvergate is “a derivative play on bitcoin,” and said the company is “not your grandparents’ bank.”
Silvergate, which bills itself as “the leading bank for innovative businesses in fintech and cryptocurrency,” saw its shares rocket 367% higher in 2020, rising alongside bitcoin as it staged an epic rally to new record highs.
“You can just go to their website. It looks more like a tech company than a stodgy old bank and they serve all the clients that no other banks want to touch – fintech and digital currency companies like Coinbase and Kraken, big-time companies,” Tepper added.
“Maybe in the past, you’ve though, ‘Well, I want to invest in crypto, but I’m worried about the lack of regulation.’ Well, here’s your answer,” the trader added. “You get the best of both worlds because it is a bank.”
“With Silvergate, in my opinion, you’re getting a great company here in a brand new industry with a huge first-mover advantage,” Tepper said. “I think this thing’s got a long runway over the next few years.”
Blue Line Capital and Blue Line Futures’ Bill Baruch argued that investors may use their stimulus checks to buy more popular names that could see a boost from increased consumer spending.
“I like things that are working and going higher and making new record highs,” Baruch said, pointing specifically to Apple (NASDAQ: AAPL).
“There’s no doubt in my mind that they’re going to benefit from stimulus checks,” Baruch continued. “You get a stock split like we’ve seen here earlier this year, and it really leads the way to gains of 20-30% over the next year. And that really gets close to aligning with what my target to the upside is over a little bit of an intermediate to longer term of $170 for Apple. So, I’m going to stick with Apple.”
One other name Baruch likes is Activision Blizzard (NASDAQ: ATVI), which saw its stock soar 56% in 2020 as people stuck at home amid the coronavirus pandemic sought entertainment in video games.
Baruch argued that consumers are likely to spend more money on games with this round of stimulus checks amid continued lockdowns as COVID-19 cases continue to climb higher in the U.S.
The Blue Line Capital founder added, “On a technical basis, it is breaking out and I think we could see that stock get up to $105… in the next couple of weeks.”
Activision shares closed out the last trading day of the year at $92.85 – around 12% lower than the $105 level Baruch has his eye on.
“I’m looking for that one to really benefit and move here in the very near term,” Baruch concluded.