2020 was plagued by crisis after crisis, which took an enormous toll on our economy. The COVID-19 pandemic pushed more than 88 million Americans further below the poverty line, and small businesses were shut down.
However, as people begin to get vaccinated, 2021 is the best time to take advantage of the market's lowest prices on some domestic assets. Here’s a look at six stocks to watch, as they're well-positioned for a full return to normalcy.
1. Ulta Beauty
After several months of social distancing, people are excited to get out of the house and attend social events. The beauty industry will benefit from this alteration of 2020 through the sale of cosmetic products.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Ulta has fared well during the pandemic, and despite losing a majority of its store and salon business in March 2020, the company continued making sales through its e-commerce division. In its third-quarter earnings report for December 2020, the company recorded a 90% increase in e-commerce sales and a slight 8.9% decrease in overall sales.
Ulta Beauty (ULTA, $299.92) is among the stocks to watch for a good year in 2021. The Illinois-based cosmetic giant has started expanding into Target stores to provide exclusive in-store offerings to customers, making this a huge stock to watch.
2. US Foods Holdings
The pandemic severely hit the hospitality sector, but as normalcy resumes, people will begin to get back to their favorite restaurants. As a result, US Foods Holdings (USFD, $34.77) will benefit from the high demand for food by restaurants and hotels countrywide.
In March 2020, USFD stock prices had plummeted by nearly 50%, making it a suitable low-budget stock. However, I expect US Foods to have a strong 2021. Prices have been significantly rising, from $19.88 on July 15 to $35.59 on Jan. 14. The biggest drop was back in March when the pandemic hit. Additionally, USFD supplies food outlets such as restaurants, hospitals, clubs, military organizations and schools, all set for a full-swing reopening as we return to normalcy.
3. Alphabet
Alphabet/Google is one of the most diversified stocks. However, due to COVID-19, it saw a profound reduction in the number of online advertisements. The good news is that, with a return to normalcy, Google parent Alphabet (GOOGL, $1,892.56) has already bounced back. The low back in March was around $1,070, and currently the stock is around $1,700.
Experts expect a rebound in online advertisements as the hospitality and travel sectors enter a recovery period. Furthermore, as digital marketing techniques are quickly replacing traditional marketing, Google is expected to see a significant recovery in travel-related ads.
4. American Express
American Express (AXP, $126.14) had a tumultuous year as credit card revenue dwindled due to less spending and limited traveling in 2020. This saw a 20% decrease in revenue to $8.75 million and net income dropping by 39% to $1.07 billion in the third quarter.
Despite the decrease in consumer spending in 2020, I predict that AXP will make significant gains in 2021 with more people continuing to go out and businesses beginning to resume as normal. At the end of the third quarter of 2020, AXP had 48 fund investors, which is only 10 positions shy from its all-time highs.
The company has launched a “shop small” campaign to support small merchants in 18 countries to drive customer spending and loyalty. Additionally, AXP has expanded its services to China for the first time.
5. Diageo
With the reopening of recreational joints, including clubs and bars, the sales from alcoholic products will soar. Therefore, it is a very attractive time to pick stock positions in Diageo (DEO, $158.61).
U.K. liquor giant Diageo fared well through the pandemic, thanks to its highly diversified marketing options and business layout. According to revenue reports, DEO has over 150 production sites globally, with nine in North America. Therefore, its supply chain was marginally disrupted by the pandemic.
Furthermore, only 20% of the company's sales come from on-premises sales, and with drinking establishments closed, its attention shifted to the 80% off-premises channels, which sustained it through the pandemic.
As we return to normalcy, 18 hedge funds have already invested in DEO, which is an excellent sign of expected positive growth.
6. Walt Disney
Walt Disney (DIS, $172.78) is set for a 2021 roller coaster. The company has a market cap of over $300 billion and is set to grow as more people get vaccinated and feel free to travel.
Disney World already has some enticing offers to lure more visitors even after its holiday season ended. The possibility of an upcoming ease in social distancing regulations would enable the reopening of movie theaters, a market boost for Disney’s movie division.
As the company struggled through the COVID-19 murk, its Disney+ streaming services became a lifeline, garnering a record of 86.8 million new paid subscribers globally. The company expects to have more than 260 million paid subscribers by 2024 despite raising its subscription fee by $1 to $7.99 per month starting in March 2021.
The new year presents a gleam of hope after the introduction of various COVID-19 vaccines. However, your investment choices will significantly determine your success in 2021. Sectors that were worst hit by the pandemic present excellent market entry opportunities with a reassurance of a turnaround when normalcy returns.
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Estate Planning When You Have International AssetsEstate planning gets tricky when you have assets and/or beneficiaries outside the U.S. To avoid costly inheritance mistakes, it pays to understand the basics.
-
Three Essential Estate Planning Steps to Protect Your Nest EggAfter dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Retiring With a Pension? Four Things to KnowThe road to a secure retirement is slightly more intricate for people with pensions. Here are four key issues to consider to make the most out of yours.
-
How to Teach Your Kids About the Tax Facts of LifeTaxes are unavoidable, so it's important to teach children what to expect. Also, does your child need to file a tax return for 2024? Find out here.
-
Revocable Living Trusts: The Good, the Bad and the UglyPeople are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
