Year 2020 has staged some major changes in the way we live, thanks to the coronavirus pandemic. A reinvention of everything, including work patterns, dining, shopping, studying, and ways of doing business, has been the key to the emergence of the “New Normal”.
As much as the pandemic has turned our lives, it has also changed the investment world. The markets witnessed great turbulences in 2020 as lockdowns and other government restrictions to curb the outbreak brought the economy to a standstill. Nonetheless, the resumption of economic activities, the infusion of government’s stimulus packages and slashing of interest rates to near-zero supported the U.S. economy amid the pandemic-led slowdown. This has led to strong market recovery with some of the major indices reaching all-time highs recently. Year to date, the Dow, the S&P 500 and the Nasdaq Composite have gained 6.1%, 14% and 37.1%, respectively. Trends Likely to Support Growth in 2021
Investors are looking forward to a prosperous 2021, with the continuity of the positive market trends. Some of the catalysts, which we already know can push the markets higher in 2021, are the approval of two COVID-19 vaccines by the FDA, the Federal Reserve keeping the interest rates low, and the President's approval of $900 billion for a new coronavirus-aid package.
Although the roll-out of the COVID-19 vaccine raises the chances of returning to pre-pandemic trends in 2021, some of the lifestyle changes adopted in 2020 will persist. The continuity of work-from-home, dine-at-home, home-fitness, online shopping and learn-at-home are some trends that will continue to rule our lives in 2021. The increased inclination toward technology, as companies realize the importance of boosting online presence, data-sharing and remote working, has led companies to undertake projects to evolve their business models. Investments in online shopping portals, mobile apps, artificial intelligence, cloud-based infrastructure, cybersecurity and other technology-driven advancements have taken prominence to adapt to the new normal. Another stream that has seen momentum in 2020 and is poised to witness continued growth in 2021 is healthcare services. Amid the pandemic, there has been a rise in demand for personalized healthcare services and virtual consultations with medical practitioners. Even as the vaccine is rolled out, the personal healthcare services industry will continue to remain in demand for a long time now. Consequently, we believe that it is safe to invest in those stocks, which have outpaced the market in 2020 and have the potential for greater returns in 2021. 5 Stocks to Buy
We have narrowed down our search to five stocks based on the following criteria. Firstly, these stocks have rallied more than 40% year to date. Secondly, all these stocks have strong growth potential and witnessed robust earnings estimate revisions within the last 60 days, indicating solid business prospects. Thirdly, these stocks have a
Growth Score of A or B. Finally, each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) at present. You can see . the complete list of today’s Zacks #1 Rank stocks here The chart below shows the price performance of our five picks year to date.
MACOM Technology Solutions Holdings, Inc. ( MTSI Quick Quote MTSI - Free Report) is a provider of power analog semiconductor solutions to varied markets. The company has been benefiting from solid momentum across data centers and telecom markets. The growing proliferation of cloud services is benefiting both domestic and international deployments of the company. Additionally, high-performance analog components such as TIAs, CDRs and drivers, which are required in 100G deployment, are strengthening its presence in the data center market. The company remains optimistic about strong 5G network deployments, the rising demand for its RF and microwave products, strength across defense applications and growing data center traffic, which are expected to continue driving its top-line growth in the near term. The Zacks Rank #1 company has an expected earnings growth rate of 66.3% for the current year (ending September 2021). The Zacks Consensus Estimate for current-year earnings has improved 10.1% in the past 60 days. The stock has risen 99.2% year to date and has a Growth Score of A. CrowdStrike Holdings Inc. ( CRWD Quick Quote CRWD - Free Report) provides cloud-delivered solutions for next-generation endpoint protection in the United States, Australia, Germany, India, Romania and the U.K. The company has been benefiting from the rising demand for cyber-security solutions, owing to the slew of data breaches, and the increasing necessity for security and networking products amid the COVID-19 pandemic-led remote working trend. Continued digital transformation and cloud-migration strategies adopted by organizations are key growth drivers. CrowdStrike’s portfolio strength, mainly the Falcon platform’s 10 cloud modules, boosts its competitive edge and helps add users. Additionally, the acquisition of Preempt Security is anticipated to enhance the company’s Zero Trust security capabilities. The Zacks Rank #2 company has an expected earnings growth rate of 47.2% for the next year (ending January 2022). The Zacks Consensus Estimate for next-year earnings has improved 45.5% in the past 60 days. The stock price has increased 312.9% year to date and it has a Growth Score of B. Zscaler, Inc. ( ZS Quick Quote ZS - Free Report) is one of the world’s leading providers of cloud-based security solutions. The company is benefiting from the rising demand for cyber-security solutions, owing to the slew of data breaches. Increasing demand for privileged access security on digital transformation and cloud-migration strategies is a key growth driver. Moreover, a strong presence across verticals such as banking, insurance, healthcare, public sector, pharmaceuticals, telecommunications services and education is safeguarding Zscaler from the pandemic’s negative impacts. Also, Zscaler’s acquisitions of two start-ups, Cloudneeti and Edgewise, are expected to enhance its portfolio. The Zacks Rank #2 company has an expected earnings growth rate of 54.2% for the current year (ending July 2021). The Zacks Consensus Estimate for current-year earnings has improved 27.6% in the past 60 days. The stock has jumped 325.5% year to date and has a Growth Score of B. CareDx, Inc. ( CDNA Quick Quote CDNA - Free Report) is a precision medicine company that discovers, develops and commercializes healthcare solutions for transplant patients and caregivers worldwide. It offers products, testing services and digital healthcare solutions along the pre- and post-transplant patient journey, and is the leading provider of genomics-based information for transplant patients. The company is focused on improving transplant patient outcomes by providing innovative and intelligent solutions throughout the patient journey. The Zacks Rank #2 company has an expected earnings growth rate of 148.8% for the next year (ending December 2021). The Zacks Consensus Estimate for next-year earnings has moved up 161.5% in the past 60 days. The stock has surged 239.5% year to date and has a Growth Score of B. Medifast, Inc. ( MED Quick Quote MED - Free Report) is a remarkable direct-selling company with more than 40 years of experience in the health and wellness space. The company is known for its leading health and wellness community —OPTAVIA — which provides Lifelong Transformation, One Healthy Habit at a Time lifestyle solutions. It is benefiting from strength in its OPTAVIA lifestyle solution and coaching support system, which is set to keep gaining on consumers’ rising inclination toward health. Also, the company’s focus on developing tools and programs to increase the efficiency of coaches has been working well. Also, its supply-chain investments are noteworthy. The Zacks Rank #2 company has an expected earnings growth rate of 13.8% for the next year (ending December 2021). The Zacks Consensus Estimate for next-year earnings has moved up nearly 3% in the past 60 days. The stock has rallied 75.3% year to date and has a Growth Score of A. Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
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