This very miserable year is almost over, and like most people, I say well! Between political tension, social unrest and a global pandemic, 2020 will easily be forgotten as a year to forget. Surprisingly, the stock market was one of the few bright spots. The S&P 500 ‘s ended the year with 14%.
However, do not misunderstand. Although the world economy may be in a recovery mode, it is recovering in a different kind of business environment. Consumer-oriented businesses now have to offer online shopping options. Disinfection is a stand-alone industry. Streaming has become the preferred form of entertainment. And this is just a sampling. Much more has changed.
With these evolutions in mind, here is an overview of my top five stocks for the so-called “new normal” we will see in 2021.
It is technically the largest retailer in the world, but as of this year Walmart (NYSE: WMT) is no longer merely a retailer. It has become a lifestyle business by finding ways to integrate themselves with the way people live their lives.
The unveiling of Walmart + is one example of this paradigm shift, more or less a reflection AmazonPrime subscription service, which offers free, fast delivery to its members.
However, it’s not just Walmart +. The retailer is building its own network of surprisingly complete health clinics, not to mention its new health insurance business. The company is also experimenting with technological consulting and installation services similar to Best buy‘s Geek Squad is simultaneously expanding in – store directions and technology that turns a buyer’s smartphone into a digital tour guide.
Walmart has even updated its private label wine collection to include lower-cost options, while adding more premium beverages to its product mix.
None of these initiatives lead to more sales. However, everyone is making it easier for Walmart to attract a crowd to the pandemic.
It may be old at this point, but Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is still a delicacy. This is because she Google remains an eternal cash cow.
GlobalStats data puts things in perspective. As of November, Google has handled 92% of the world’s Internet searches, a part that has been around for more than a decade. The amount of revenue it collects each time a person clicks on one of its ads may shrink, but the company compensates for this more than increasing click volume. If we did not take into account the impact the coronavirus had on its business in the second quarter of this year, Alphabet’s revenue declined in 2006 in just one quarter.
At the same time, despite the progress appeal made on this front, Alphabet is also still the king of the market for mobile operating systems. GlobalStats numbers indicate that its Android operating system still has more than 70% of the world’s smartphones.
The point of this is that Google is still the biggest toll booth on the web.
Drugmaker Merck (NYSE: MRK) was not yet a major player in the race to create a COVID-19 vaccine. The MK-7110 treatment may be approved for patients with serious infections, but the current agreement with the US government has only been translated into revenue of about $ 350 million.
Merck was also a modest Modern shareholder, but sold its stake in early December to earn the big profit that Moderna shares recorded this year. And the V591 vaccine, first developed by Themis, became part of the Merck family when it acquired Themis in June. But its use as a COVID-19 treatment is not expected to be confirmed until 2022. It may not be necessary then. Ditto for its V590 and MK-4482 vaccines.
Don’t let Merck’s lack of participation in the COVID-19 vaccine distract you this year from the fact that it continues to play a key role in more enduring arenas such as diabetes and the $ 100 billion oncology market that is unlikely to ever disappear. . The company’s diabetes medicine Januvia and the recombinant human papillomavirus vaccine, Gardasil, are both still crucial, while cancer therapy Keytruda continues to expand its list of approved uses.
Unlike Walmart, Great Lots (NYSE: BIG) does not fully develop into what can be considered a complete lifestyle business. It just does not have the resources or physical footprint to do so. It uses its smaller size to its advantage, although it exerts more direct competitors such as Dollar General and Dollarboom. Big Lots, for example, was the first (and still the only) major discount / dollar store to call the pickup at its stores as soon as the pandemic arrived in the United States. In July, it announced a partnership that would facilitate same-day online delivery in nearby stores.
These are initiatives you should not expect from a chain with only 1400 stores. In terms of perspective, Dollar General operates more than 17,000 locations, while Dollar Tree has more than 15,000 stores between its Family Dollar and Dollar Tree brands.
On the other hand, investors who know Big Lots well will not be terribly surprised that the company is willing to embark on such projects. It has gone so far as to name the profile of its most important customer and then build everything it does around this 30-year-old busy mom named Jennifer, who is valuable as well as mobile-savvy. This kind of simple focus leads Big Lots to all sorts of smart decisions.
Finally, the three-digit price-to-earnings ratio (in the past and in the foreseeable future) will certainly not win any value awards, but Square (NYSE: SQ) still earned a place on my list with a good deal of conviction over the course of 2021. Investors will simply have to resign themselves because they will have to pay a hefty premium to participate in this story.
And the story is surely a good story.
The pandemic has created a huge demand for contactless ways to buy and sell. Its third-quarter transaction revenue increased 13%, and service revenue increased 60% year-on-year. Square’s recent implementation of new bitcoin initiatives also boosted the top and bottom line of the third quarter, with the latter growing by more than 50% from the previous year.
However, Square is not just about credit card readers and transactions. Like Walmart, it was developing its platform into a complete ecosystem even before the pandemic, and that evolution would continue after the pandemic in a world that praised simple one-stop solutions. The company offers restaurant-specific tools, payment solutions and even facilitates loans, in addition to the established role as payment processor.
As Square’s portfolio as well as the small business fiscal management market are still mature, analysts believe that there is still room for this company’s revenue to grow by almost 40% by 2021, with earnings per share expected to rise by almost 50% will improve.