This miserable year is almost over and, like most people, I say: good trip! Between political tensions, social unrest and a global pandemic, 2020 will easily pass as a year to forget. Surprisingly, the stock market has been one of its few positive points. O S&P 500 ‘will close the year up 14%.
Do not misunderstand. While the global economy may be in recovery mode, it is recovering in a different type of business environment. Consumer-oriented companies should offer online shopping options now. Disinfection is an autonomous industry. Streaming has become the preferred form of entertainment. And these are just a sample. Much more has changed.
With these developments in mind, here is a summary of my top five stock choices for the so-called “new normal” that we will see firmly in 2021.
Image source: Getty Images.
Walmart
It may be technically the largest retailer in the world, but starting this year, Walmart (NYSE: WMT) it is no longer just a retailer. It has become a lifestyle company by finding ways to integrate with the way people live their lives.
The opening of Walmart + is an example of this paradigm shift, more or less mirroring AmazonPrime’s subscription service, which offers fast and free deliveries to its members.
However, it is 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 technology consultancy and installation services similar to Best buyAt the same time, the Geek Squad is launching signage and technology in the store that transform the consumer’s smartphone into a digital tour guide.
Walmart even updated its selection of private label wines to include lower cost options, while adding more premium liquors to its product mix.
None of these initiatives directly drives more sales. All of them, however, make it easier for Walmart to attract a post-pandemic crowd.
Alphabet
It may be old at this point, but Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) it’s still a goodie. That’s because your Google remains a perpetual dairy cow.
GlobalStats data puts things in perspective. In November, Google controlled 92% of web searches worldwide, a proportion that has existed for more than a decade. The amount of revenue she collects every time someone clicks on one of your ads may be decreasing, but the company more than makes up for the increase in click volume. Not to mention the impact that the coronavirus had on its business in the second quarter of this year, in just one quarter since 2006 Alphabet’s revenue fell year after year.
At the same time, despite the progress Apple did on that front, Alphabet is still the king of the mobile operating systems market too. GlobalStats figures indicate that its Android operating system still powers more than 70% of the world’s smartphones.
The point is that Google is still the biggest toll on the web.
Merck
Pharmaceutical Merck (NYSE: MRK) has not played an important role in the race to create a COVID-19 vaccine. His MK-7110 treatment can be approved for patients with severe infections, but even so, his current deal with the United States government has translated into just about $ 350 million in revenue.
Merck was also a modest Modern shareholder, but sold its stake in early December to profit from the huge gain that Moderna’s shares recorded this year. And her V591 vaccine, developed by Themis, became part of the Merck family when she acquired Themis in June. But its use as a COVID-19 treatment should not be confirmed until 2022. It may not be necessary then. Ditto for the V590 and MK-4482 vaccines.
Don’t let Merck’s lack of participation in this year’s COVID-19 vaccine derby distract you from the fact that it’s still a key player in more enduring arenas like diabetes and the $ 100 billion oncology market that probably never will. will disappear. The company’s diabetes drug, Januvia, and its recombinant human papillomavirus vaccine Gardasil are still blockbusters, while its cancer therapy, Keytruda, continues to expand its list of approved uses.
Large batches
Unlike Walmart, Large batches (NYSE: BIG) it is not evolving much into what could be considered a complete lifestyle company. He just doesn’t have the resources or the physical foundation to do this. It’s using its smaller size to its advantage, however, outperforming more direct competitors like Dollar General and Dollar Tree. For example, Big Lots was the first (and still the only) large discount / dollar store to launch sidewalk collection in its stores as soon as the pandemic arrived in the United States. In July, it announced a partnership that would facilitate same-day delivery of online orders served at nearby stores.
These are initiatives that you cannot expect from a chain with only 1,400 stores. For one perspective, Dollar General operates more than 17,000 locations, while Dollar Tree boasts more than 15,000 stores between its Family Dollar and Dollar Tree brands.
On the other hand, investors who know the big lots well will not be terribly surprised that the company is willing and able to carry out such projects. He went so far as to name the profile of his most important client and then build everything he does around this busy 30-something mom named Jennifer, who has a vision of value and also a mobile experience. That kind of singular focus directs Big Lots to all kinds of smart decisions.
Square
Finally, your three-digit price / earnings ratio (past and projected) will certainly not win any value awards, but Square (NYSE: SQ) it still won a place on my high-stakes list as we move into 2021. Investors will simply need to resign themselves to the fact that they will have to pay a high premium to participate in this story.
And the story is good, for sure.
The pandemic created a wave of demand for contactless forms of buying and selling. Its third quarter transaction revenue grew 13%, and service revenue grew 60% year over year. Square’s recent implementation of new bitcoin initiatives has also provided a boost to third quarter financial and top results, with the latter growing more than 50% over the previous year.
Square is not just about credit card readers and transactions. Like Walmart, it was already evolving its platform into a complete ecosystem before the pandemic, and that evolution will continue after the pandemic in a world that values simple and complete solutions. The company offers specific tools for restaurants, payroll solutions and even facilitates loans, in addition to its established role as a payment processor.
Given how Square’s portfolio, as well as the small business tax management market, are still maturing, analysts believe there is still room for that company’s revenue to grow by almost 40% in 2021, with earnings per share projected to improve by almost 50%.