These 5 Stocks Could Be Your Royal Flush This Year!
Yeah – I know, it sounds pretty cocky right? Making bold predictions on which stocks might be this year’s hottest. Especially after what we witnessed throughout 2020. Most especially in light of the recent Redditor run on Wall Street and all of the insanity that ensued.
So, I’m going to start with my first prediction – and confession – all rolled up into one:
The reality is, none of us know what’s going to happen this year. But, we can still make some pretty accurate and educated guesses.
And start by remembering this sage piece of investing advice:
“The four most dangerous words in investing are, it’s different this time.” — Sir John Templeton
So, knowing that, we’re going to take a careful look at the history and trends we do know, as well as the insights we’re gaining about what “the new normal” is going to look like and use that data to identify sectors that should see a lot of traction.
Then you can dig in and find the individual stocks in those sectors that show a lot of promise and a whole lot of upside.
And while it certainly is that simple, it’s not exactly that easy.
That’s why we went ahead and did the work for you…
So, What Will Be The Top 5 Sectors In 2021?
Without gazing at crystal balls or having my cards read, I didn’t have to dig into a whole lot of research before a pattern began to emerge. Five immediately stood out as having a ton of potential heading into both a new year and a new administration.
But there was one other sector that kept coming up, too. So, nice guy that I am, I’m going to share not only a sixth sector to keep on your radar, but a sixth potential top stock for the year ahead in that sector.
Since I know that you’re busy (I mean, who isn’t right now?) I won’t waste time beating around the bush. I won’t even give the proverbial drumroll. These are the six sectors that are on the top of my watchlist in 2021:
- Consumer staples – this sector is probably the safest bet of them all – especially if we suddenly find ourselves in a recession. During the financial crisis of 2008, consumer staples outperformed all other 10 sectors and the overall market. But guess what – consumer staples ALSO benefit when the economy grows. So, it’s pretty much a win/win.
- Consumer discretionary – Unlike some of the other sectors, discretionary spending on things like cars or clothes has actually gone up during the pandemic. I mean, with everything locked down, what else are you going to spend money on right now? This sector isn’t quite as “cyclical” as it used to be. And if stimulus starts pouring out of DC, watch out buddy. This could get hot!
- Technology – Not only is technology the most popular sector by far, it’s also been the best performing sector on the S&P since 2005. And they’ve more than doubled in the last two years. However, investor popularity aside, Tech is facing a lot more scrutiny and regulation. And that means more risk. Plus, they’re typically expensive. But it still makes sense for 2021’s more aggressive investors who can stomach those drawbacks.
- Industrials – The industrials sector is massive. So massive that it’s further broken down into another 14 industries. The two largest of those are Aerospace & Defense and Engineering. While many investors write off industrials as “boom or bust” investments, they’re actually a lot more balanced than you’d think. Industrials are attractive because they often pay pretty generous dividends and can be much less volatile than other dividend-paying alternatives. It’s great news this year because the Fed has promised to keep short-term interest rates close to zero through at least 2023 to help give spending an extra boost in the pandemic.
- Communication services – If there’s one thing we don’t know about this pandemic, it’s when it will end. Which means that a number of businesses will continue to struggle against lockdowns and restrictions while trying to somehow stay open. We learned in 2020 that communication is the key to making that happen. And a ton of communication services stocks were rewarded for stepping up and helping us fill those gaps. But the show isn’t over, and innovation is popping up in some unexpected places and ways. There’s still a lot of potential in this sector. Plus there are the sexier parts of the sector Like media, entertainment, and interactive media & services companies. Netflix Inc. and Walt Disney Co. are two big players that fall in this category.
- Energy – Energy has been kind of a double-edged sword. While energy outperformed all other sectors in 2005, 2007 and 2016, it’s been the worst-performing sector out of them all since 2005. They’ve produced an appalling 59% total return versus the market’s 328% since then. But even though 2020 took this sector to its knees, that same crippling pressure has brought down prices, making it more attractive for investors despite the increased risk. That’s why this “outlier” still managed to make it on our list.
So, now that we know what sectors we’ve set our sights on, let’s unveil the six stocks (one in each sector) that we think could help you level up your portfolio’s power.
Oh, and here’s the best part – right now, as I’m writing this, every single one of my personal picks for you is trading under $50.00 per share.
So, yeah, you’re gonna wanna check these out…
MGP Ingredients | (MGPI)
For me, this was the clear winner in the consumer staples sector. I started with a list of about fifteen hot contenders, but at the end of the day, this is where I’d put my money – even though Hostess and Albertsons were quite a bit cheaper. MGP Ingredients may not be a household name, but it sure is a staple in a lot of them that America loves. And has loved a lot more since the pandemic set in.
They specialize in wheat and food starches. Sounds pretty boring, huh? But take a guess at who thinks that’s pretty sexy – distilleries. You know, the companies cranking out all of the booze we’ve been drinking during lockdown. Their beverage alcohol line makes up about three quarters of their revenues.
But it turns out, that’s not all they do. They have another pretty popular line. One that may give you a clue why this one was a winner: a robust industrial alcohols business that is in high demand right now. You know – hand and other sanitizers.
Since there are still a lot of unanswered questions about the virus, vaccines and how long we’ll have to keep up all of these protective measures, I don’t see any of that trending down anytime soon.
If this isn’t already in your portfolio or on your watchlist, put it there, now.
Ford Motor Co. | (F)
As I mentioned earlier, cars fall under the consumer discretionary sector. Cars are obviously a pretty big category, but it does include one of the hottest items on every investor’s radar right now: electric vehicles. And while you might first think of the Tesla’s in the world, Ford Motor Company is making leaps and bounds in their exploration and execution in the EV world.
And since Biden is out there promising to convert the entire federal fleet to electric and they already do a whole lot of business with Ford, I have a feeling things could continue trending up on this bargain buy. After all, right now it’s still trading under $10.00. Oh yeah, and can we just say dividends?
Whether or not it ultimately prevails as one of this year’s top five stocks, you’d be silly not to get some skin in this game (if you don’t already have some.)
Lattice Semiconductor | (LSCC)
I’ll be 100% honest – finding a hot tech stock with room for growth and trading under $50.00 right now isn’t easy. Heck, finding good ones under $100.00 is pretty tough. But, somehow, I messed around and found two that were an absolute toss up (and are currently trading just two cents apart!) While I’ll probably scoop them both up, if I had to recommend just one of them as a top 2021 contender in this sector, it would have to be Lattice Semiconductor.
If you’ve never heard of it, that’s no big deal. A lot of people hadn’t until Jim Anderson, the former CEO of Advanced Micro Devices rode in on his white horse and saved the day to the tune of a 500% explosion in value. And there’s plenty more room for growth. They’re pretty small for their sector at just $6 billion. But size certainly didn’t matter when Lattice Semiconductor won the 2020 award for “most respected public semiconductor company” from the Global Semiconductor Alliance.
Despite supply chain challenges like everyone has faced, it hasn’t slowed their revenue roll one little bit. And here’s the very best part – it won’t be long before these guys get scooped up in a juicy takeover that could send their stock absolutely soaring. It could make 500% look like small potatoes. We’ll just have to wait and see if 2021 is the big year. If not, it’ll still be worth hanging onto until that magic moment arrives.
Virgin Galactic | (SPCE)
Sure – 2020 was rough on the industrial sector. But analysts everywhere are predicting we should see some good things in store here for 2021. And this was another sector where my self-imposed $50.00 or less pricing strategy tried to give me a hard time. My personal favorite in this one is Generac, but it’s currently trading at over $220.00.
Now, I don’t know about the rest of you, but when I first thought of the industrial sector, the first thing that came to mind was space. Full confession – I’m an Elon Musk and SpaceX fan and proud of it. So, when I wanted to make my industrial prediction, I was shooting for the stars. And settled on Virgin Galactic.
I have no doubt that this company is going to make history – and will see a huge amount of demand even at insane prices. Because we’re bored. And it’s space. And billionaires have to do something with all of that money, so why not space tourism – right? Heck, with what Big Tech’s up to, all of those regulatory committees may have them contemplating a permanent seat on one of those bad boys.
In January of this year (when the stock was trading at just $25.00) 61% of Benzinga readers surveyed expect it to break $50.00 by 2022. I dug in, but couldn’t see how many saw it going even higher.
I might just be one of them. You should be, too.
AT&T | (T)
You can trace AT&T’s links to communication all of the way back to Alexander Graham Bell and his very first telephone. So, it shouldn’t surprise you that it’s still a top contender today. But it might surprise you that AT&T is a great value stock, despite their illustrious history as the OG of communications. Right now, it’s trading below $30.00.
The company had a rough go of things in 2020, but that cloud has a 2021 silver lining. Morningstar analyst Michael Hodel thinks the stock is actually worth about $37.00. So, for all you bargain hunters out there, this is a no-brainer.
But it gets better.
Because AT&T is also winning big in the American 5G race. It’s like the competition just can’t, well, compete! Mix in a little hot dividend action and it isn’t hard to see why this is my communication favorite for 2021.
Now, let’s take a look at what I predict will be the wild card stock of the wild card sector for 2021…
Golar LNG Limited | (GLNG)
There’s no way to sugarcoat it – Joe Biden has already given hell to the energy sector in his first few weeks in office. I doubt he’s going to let up anytime soon. To me, that makes a lot of what’s out there in the energy sector a bit riskier than it was say, 3 months ago. Which is why this was only included as an extra bonus – not part of the main course. I’m willing to bet we’ll see a number of surprises in energy.
I have about six energy stocks on my personal watchlist, but right now (especially looking further into the 2021 crystal ball) I’d have to place my chips on Golar LNG Limited.
While the energy sector isn’t the sexiest, this company was smokin’ hot to me.
Golar LNG Limited is in the energy shipping business, with a total of twelve carriers in their fleet. At least for now, the United States is the largest energy producer in the world, and somebody’s got to get it all from here to there.
Right now, the company is operating at a loss, but analysts expect to see them return to profits in 2021. They’re also busy working behind the scenes to research and develop new ways for their energy stock to remain relevant in a sustainable global economy over the long-term.
Oh yeah, and it’s another one that’s currently trading under $10.00.
Now that you know my top recommendations for the year, let’s talk about something going on that could throw all of these predictions right out the window…
But what might all of that look like in the event of a Second Wave?
Nobody was out there predicting the arrival of the pandemic. But still it came.
Now, I don’t mean to mislead you – this Second Wave I’m referring to doesn’t have anything to do with this pandemic.
In fact, when it hits, it could hit harder than the pandemic did.
It’s all about the stock market, what’s been happening in Washington and five of America’s favorite tech favorites that could fall, and fall HARD.
Suffice it to say it will have massive implications. And whether you realize it or not, your future is right in its crosshairs.
My little stock picks will look like a distant memory if this goes down. Which is good, because this could make everything go up in smoke anyway.
There’s a lot to go over here in a simple report conclusion, so I’m going to send you a copy of the Second Wave expose and survival guide. In fact, it’s probably already in your inbox right now. If not, expect it to show up shortly.
Whatever you do, take a minute to check it out. It could spell the difference between surviving or being swept away by the Second Wave.