5 Stocks for 2021
As the market is rebalancing. Some of my favorite picks for 2021 and some of my highest earners that I suggest to slowly come in on (a percent or two every red day) have been (in no particular order):
1. Coca Cola — This I think is a buy any time and a slam dunk. Coca Cola is essentially a restaurant and services ETF in one stock. Eventually sports arenas, schools, concerts, theme parks, restaurants, bars, etc. will all open up. It may be a slow opening, but they will get there. Coca Cola essentially tracks those sectors and as they recover so will Coca Cola. It is a fairly priced stock and is even a value stock right now without being a value trap. They own beverages in all drink categories and have the distribution to ramp up whenever the services industry is ready. Buy this anytime.
2. Roku — Movie theaters will never be what they used to and entertainment is moving to a digital streaming first model. The two major players in the TV OS market are Roku and Amazon. Roku is the better value stock here. At Amazon’s current market cap there is a limit to how fast the company can grow. Roku’s platform many consider (myself included as well as CNET and Techradar) is simpler to use and in many respects superior to its competitor. Also, Roku recently acquired Quibi. The company plans to be releasing its own content on their Roku platform. Amazon Prime is already priced into Amazon’s stock. Roku has more opportunity to grow once the stock finds its proper valuation and fundamental investors start piling in. Buy slowly as it’s coming down.
3. Square — Millennials have more money in digital wallets like Square, Apple, Starbucks, Robinhood, Coinbase, etc. than they do in banks. Square’s cash app is one of the bigger players in the digital wallet space. Their point of sale transaction business is consistently ranked the best or near top in the market. And, the trend moving to e-payments is only getting stronger. Also, the company is branching out into crypto wallets and with their recent deals with Tidal could be looking into NFT (non fungible token) wallets as well. The company is again a much better value proposition when compared to buying Apple stock for there Apple Pay considering Apple is a slow growth company. And, again as the rebalancing continues Square will look more and more enticing to buy slowly on the way down.
4. Teladoc — This is the first year that telemedicine has become part of standard care across most major company sponsored insurance packages. This is Zoom for doctors. Teladoc is the clear and by far market leader in telemedicine. Many doctor visits are repetitive and simple procedures (ex. flu season, common cold, throat infections, etc.). By off loading these repetitive visits online it frees doctors to see patients with more serious afflictions. And, seeing a doctor online is cheaper and faster to process for the insurance companies than seeing one in person. Teladoc also acquired Betterhelp and is offering therapy through their digital platform. This one I think is also a buy slowly as it’s evaluation is coming down.
5. Rocket Companies — Rocket mortgage is a current market leader. They are the largest provider of mortgages in the United States by volume and this was pre-covid metrics as well. The rising inflation has the issue of eroding their interest earned on mortgage loans. Also, because of the mortgage and renters forgiveness there is a lot of real estate inventory locked up that hasn’t hit the market. When the mortgage and renters forgiveness ends there will be a surge of foreclosures and locked up inventory hitting the real estate market for sale. Rocket Mortgage with their digital platform processes mortgages on average 1/3rd faster than traditional banks. If it takes a bank 3 months to process a mortgage, Rocket can do it in 2 months. This high turnover rate and upcoming real estate inventory flood should be a boost for Rocket mortgage who is already a market leader pre pandemic and even more so post pandemic. They had an extremely good recent earnings report. And, as the economy opens up and real estate comes back they should continue to have them. The FED has already agreed they will not be increasing interest rates until unemployment is back to normal (currently double digit 10’s percent) not to mention the debt issues. Interest rates will not be going up for a while. I think buy this stock anytime below $30 and wait for the real estate market on the sellers side to unlock and meet the pent up demand while interest rates stay low.
~Michael Zhang
