The Top 10 Stocks for 2021
When it comes to selecting stocks, there are many schools of thought, and nothing is certain. This is why a diversified portfolio is the best choice for limiting risk while still offering the potential for gains. However, this doesn’t mean that you shouldn’t own individual stocks. Stocks can be a great way to build wealth — you just have to do your homework before you make your investment choices.
Related: 10 Stocks That Could Bounce Back in 2021
As 2021 unfolds, there are various scenarios that would favor different types of stocks. If the coronavirus vaccines roll out rapidly and the global economy opens up, certain growth stocks may benefit, particularly those tied to leisure and entertainment industries. If, on the other hand, lockdowns continue for an extended period of time, so-called “COVID stocks,” such as food delivery companies and streaming services, may continue to outperform. Some analysts feel that small-cap stocks and value stocks that have been out of favor will come roaring back, while others feel that stocks that have done well will continue to do well, riding on their own momentum.
The bottom line is that successful stock picking is both an art and a science. To make successful investments, you’ll need to do some legwork. To get you started, here’s a list of stocks that various analysts believe will outperform in 2021.
Last updated: Jan. 7, 2021
Disney (DIS)
Price as of Jan. 6: $179.12
Disney is a global entertainment powerhouse that is literally a household name. The company is well-positioned if there’s an economic recovery due to its leisure and entertainment properties, including its cruise lines and well-known film properties.
However, the company is also poised to benefit from its hugely successful Disney+ streaming service, which is likely to thrive whether or not lockdowns continue. Disney+ has already exceeded the company’s own expectations, and a price increase coming in March 2021 could fuel further revenue gains.
Read More: Disney’s 27 Biggest Controversies
Harley-Davidson (HOG)
Price as of Jan. 6: $38.23
Harley-Davidson has suffered along with many other companies during the coronavirus pandemic, as both travel and consumer expenditures have declined. However, the company could be poised for recovery in 2021 if the economy picks up due to the distribution of the vaccine.
Harley-Davidson may have already begun its recovery, as its most recent earnings report greatly exceeded analyst expectations. If there’s any sense of a return to normalcy in 2021, consumer spending is expected to rise, which should help sales of the popular motorcycle maker.
Looking Ahead: What Experts Say 2021 Will Look Like for Your Wallet
Microsoft (MSFT)
Price as of Jan. 6: $212.25
Microsoft is the world’s largest software maker. If you use a personal computer, it’s likely that you’ve got Microsoft software embedded on your machine.
Yet, the company is really hitting its stride with its move into cloud computing services, which is now its largest source of revenue. It was stuck in the mud from 2011 to 2017, both in terms of its stock price and its earnings, but since then, company earnings have doubled. Investment research firm Value Line sees Microsoft earnings growing by 15% annually for the next five years. The company also pays an annual dividend of about 1.0%.
Find Out: How Much Is Bill Gates Worth?
Hilton (HLT)
Price as of Jan. 6: $110.77
Hilton Hotels has taken an obvious hit in 2020, as the global pandemic has all but eliminated both business and leisure travel. Hilton experienced an estimated 50% drop in revenue for 2020, along with a 64% decline in earnings. Revenue per available room, which stood at $102 in 2019, plummeted to just $47 by late 2020.
The good news is that Hilton has approximately $3.5 billion in cash to weather the storm, and travel is expected to pick up dramatically as soon as the vaccine gains hold and the pandemic retreats into the rearview mirror.
Read: Safe Hotels To Stay In for Less Than $200
ExxonMobil (XOM)
Price as of Jan. 6: $44.61
If you’re a fan of buying stocks that have had a rough time in anticipation of a bounce back, there might be no better candidate than ExxonMobil. America’s largest oil company — although it briefly lost that title to Chevron — ExxonMobil lost billions of dollars and saw its share price crater 40% in 2020. This could, in large part, be blamed on the coronavirus pandemic, which drove global demand into the ground and actually pulled oil prices negative at one point during the year.
Whether or not ExxonMobil will recover in 2021 depends in a large part on the recovery in global demand and a rise in oil prices. Although there are still risks, particularly of oversupply, easing of global travel restrictions should help return customers to ExxonMobil’s primary product.
Find Out: 25 Companies Laying Off the Most People Thanks to Coronavirus
Alphabet (GOOG)
Price as of Jan. 6: $1,735.29
Google parent company Alphabet is constantly in the news regarding anti-trust legislation and privacy concerns. While these are no doubt negatives, they speak to the immense size and power that Google wields. For stock investors, those are great things. Google has grown from the world’s largest search provider, providing a staggering 92% of worldwide search results, to an incredibly diversified tech company.
Beyond search, Alphabet owns everything from Gmail and Pixel phones to Google Cloud and self-driving cars. The company is riding the global shift toward online video via YouTube, where revenue jumped 28% year over year. Its YouTube Music and YouTube Premium platforms now have more than 30 million customers combined.
Looking Back: What 2020 Looked Like for Google
Zoom Video Communications (ZM)
Price as of Jan. 6: $344.41
Zoom Video Communications was one of the undisputed darlings of 2020. Thanks to the global pandemic, which forced workers to remain at home and shut down worldwide travel, people all across the globe resorted to video conferencing both to work and to stay in touch with friends and family.
As a result, Zoom Video Communications was the fastest-growing company of 2020, with earnings jumping an astronomical 6,500%. Since earnings drive stock prices, Zoom also saw an extraordinary movement in its share price, skyrocketing over 500%.
Going forward, Zoom will likely continue its momentum if global lockdowns and stay-at-home orders remain in place. How quickly those are lifted are anyone’s guess. However, it is true that consumers are now used to video conferences to stay in touch, and companies save money by holding meetings via video instead of via expensive travel programs, so Zoom may stay in favor either way.
Find Out: How To Interview For a Job Over Zoom
Wayfair (W)
Price as of Jan. 6: $241.88
Wayfair is an internet retailer of home goods. The company had a banner 2020, based on a combination of trends. Stay-at-home orders and store closures have translated to a dramatic rise in online shopping, and Wayfair has been a prime beneficiary. Wayfair gained 10 million active customers in 2020 versus 2019, and repeat order volume is up as well, reaching 72%.
Although the company has no doubt benefitted from the rise in online shopping, Wayfair is also well-positioned to capitalize on the existing long-term trend in retail store closures. With fewer places to shop in a physical store, more shoppers are turning toward online outlets. Deutsche Bank is one of the firms with a buy rating on the stock, anticipating a 12-month return of 35% to 40%.
Read More: 30 Major Companies Giving Back During COVID-19
Apple (AAPL)
Price as of Jan. 6: $126.60
Apple is the most valuable company in the world, and with good reason. Its products are both cutting-edge and ubiquitous, with a global fan club bordering on fanaticism. Apple continues to innovate, and its recent release of its iPhone 12 has already become the top-selling 5G smartphone in the world. Due to surging demand, the company has announced it will increase production of the iPhone 12 by 30% in the first half of 2021.
But Apple is more than the iPhone. The company expects all of its products in aggregate to grow double digits, including services. If consumer demand is uncorked even further when the coronavirus subsides, Apple is poised to benefit and continue its winning ways from 2020.
Looking Back: What 2020 Looked Like for Apple
PNC Financial (PNC)
Price as of Jan. 6: $156.51
Like many other financial services institutions, PNC Bank had a rough beginning in 2020. The spreading pandemic dropped lending to an absolute minimum, and when combined with interest rates falling to record lows, the profit engine behind banking all but evaporated.
Things look like they might turn around for banks in 2021, including PNC Financial. In the bank’s third quarter, PNC actually increased earnings by 5% year over year, and analysts expect earnings to grow over 42% in 2021. Combined with a solid 3.5% dividend, PNC Financial looks like a value play that can benefit from increasing economic activity in 2021.
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This article originally appeared on GOBankingRates.com: The Top 10 Stocks for 2021
