Top Stock Trends for 2021
Key themes to consider when rebalancing your portfolio for the year ahead
About this time each year, I take time to reflect on how my stocks portfolio has performed and what I’d like to do differently in the coming year. I also take time to understand new and emerging themes to position myself accordingly. Let’s just say, I do a horizon scan of the world ahead and in light of the view, I determine the shape of my portfolio so I can ride the waves and whether storms.
The Pandemic
Speaking of storms, like the rest of us, when planning at the end of 2019, neither the pandemic nor its impact featured in my plans. But resilience did. Given everything that I’ve witnessed in 2020, I can assure you that though my plan needed alterations, just having a plan was critical to my wellbeing.
For example, at the start of 2020, there were moments when my portfolio showed eye-watering losses. It was in those moments of market panic that my plan gave me peace of mind. My only strategy was to never react and stick to the plan. Eventually over the period following initial panic, I updated the plan in light of new developments and repositioned myself.
So the key thing here is that no matter what happens, you need to have a plan.
What Does 2021 Hold?
Whether you’re a new investor or a seasoned one, you’re probably wondering how best to position your portfolio for 2021, especially given the ongoing uncertainty.
Whilst a lot is known — such as the distribution of vaccines, the pace and shape of recovery remains unclear. While we know who the US President will be and that there’ll be some easing of US/Sino relations, we don’t exactly how the country and its markets will react to new leadership. While battered sectors such as travel and leisure will regain, we don’t exactly know how and when each one will recover. While tail winds will continue for some, we don’t exactly know which themes will continue to grow even after stay-at-home themes are less prominent.
So all in all, despite the plenty that we do know, a lot remains unknown.
But then isn’t that what investing is all about — having an informed opinion and acting on it despite uncertainty. If we were all born with crystal balls, there’d be no markets. Even it there were, there’s be no opportunities.
So if like me, you’re keen on building and maintaining a strong yet diverse and resilient portfolio well into 2021, then here below are some of my views.
An Era of Optimism
Not all worries will cease to exist as the clock strikes 12! I get that.
But while the turning of a page on the calendar may mean nothing to a virus, for us humans, it‘s of immense significance. For a race collectively exhausted of pandemic fatigue, we simply cannot wait to kick-off with new zest. The start of 2021 will definitely spell a change in narrative — one of fresh beginnings and positive outlook. Just as governments inject support into the economy, I’d like to believe that for 2021, it’ll be us injecting new intentions!
As far as markets are concerned, with several firms operating well below their capacity and all time highs, markets will match this optimism. Chief U.S. Equity Strategist, Mike Wilson, expects the S&P to reach 3900 by the end of 2021.
And frankly, even if nothing at all was to change, it’s still a good idea to give your portfolio a good scrub from time to time. So here below are some key themes.
Space Travel
This has to be the single biggest theme that I can see on the horizon. Considering we’re talking about space, it’s a distant one, but that doesn’t make it any less attractive.
If you’re keen on space, then here’s a piece I wrote on some key names to watch including Bezos’ Blue Origin, Musk’s SpaceX and Branson’s Virgin Galactic.
While the first two aren’t available for investors such as you and me, if you’re interested in investing in space travel, then Virgin Galactic (NASDAQ:SPCE) might be a good place to begin your ride into space.
Tip: A stock that you possibly didn’t connect with space is Nokia (HEL: NOKIA). Believe it or not, Nokia Corp plans to set up the first cellular service on the moon. Quoting from Nokia’s website, ‘Espoo, Finland — Nokia has announced further details after being named by NASA as a partner to advance “Tipping Point” technologies for the Moon, deploying the first LTE/4G communications system in space and helping pave the way towards sustainable human presence on the lunar surface.’
Electric Vehicles
When speaking of electric vehicles, perhaps the first thing you think of is a Tesla (NASDAQ:TSLA). But trading at an all time high of $661 at the time of writing this, it’s not for the faint hearted.
With regards to the theme overall, the future is electric. Sure, it will take time for the world to transition because a lot comes down to factors such as practicality and affordability but like all other transitions, the writing is on the wall.
So if you’re keen on this theme then some other options for you to consider include more traditional firms such as General Motors (NYSE:GM). With GM’s commitment to 30 new all electric vehicles by 2025, this is not one to overlook. Other key names include Workhorse (NASDAQ: WKHS), a Cincinnati based company focussed on electrically powered delivery and utility vehicles and Aptiv, (NYSE:APTV) which is focussed on architecture as opposed to manufacturing the vehicles themselves.
Tip: Similar to space travel, it pays to keep an open mind. Who know if one of the more traditional firms reposition themselves by investing in charging stations and the like. Oh and if you’re keen on the Asian market, then please look up Nio (NYSE:NIO).
Travel and leisure
Finally, travel and leisure.
Needless to say, travel and leisure stocks have been the hardest hit by the pandemic — but there’s light at the end of this tunnel and things are starting to look up. With so many of us looking forward to travel with or to our loved ones in 2021, this sector is bound to make a recovery and the only question is when.
Although the sector has already begun its recovery, many of these stocks are yet to come back to their old highs. For example, hotel brands such as Intercontinental Hotels Group which fell by more than 50%, have recovered significantly but are yet to reach their pandemic levels. The same goes for , Choice Hotels (NYSE: CHH), Hilton Hotels (NYSE: HLT) and Marriott International Inc (NASDAQ: MAR) all seem to be showing the same V shape recovery.
I’d also done a piece on cruise stocks earlier this year stating that ‘Stocks such as Carnival Corporation & Plc (CCL), Norwegian Cruise Line Holdings Limited (NYSE: NCL), Royal Caribbean Cruises Ltd (NYSE:RCL), have dropped significantly in comparison to their prices at the start of the 2020.’
These stocks have recovered significantly since the time of writing.
Tip: If you’re keen on recovery over all but want to remain agnostic of any one mode, then you might like to consider booking systems such as Expedia and Booking Hotels.
Conclusion
I really could go on as my brain is buzzing at there are so many more opportunities to consider such as those driven by changes in healthcare, the move towards cloud, 5G advancement beside other things. All of these present some tremendous opportunities which I’d be happy to write about in future articles. But these three themes listed here should give you some really good ideas to plan for the year to come.
I understand that markets have been on a bull run and if you’ve made some good returns, it might feel like you’re okay to be as you are. Just remember though that there’s no room for complacency and it pays to move in early.
Also, like many others, if you’re worried about the very high valuations going into 2021, then you might want to wait for some profit taking and a subsequent pull pack.
Finally, if you’ve like this piece, here below are some other investment ideas that I’ve explored which might be of interest. I also share investment ideas and growth tips on YouTube from time to time, so do take a look here if you prefer a video format.
Have a great 2021!
Disclaimer: Please remember that this isn’t advise and I’m certainly no investment advisor. I’m keen on personal finance and share my thoughts. Investments fall as well as rise in value and so you may get back less than what you invest. Past performance also does not guarantee future performance.
