As we hang on to the promise that in 2021 the economy will start to recover, stock investment can seem like a good idea for the next year. With a few months away from a new start, it is the right time to consider your options in the stock market.
Investing in the stock might seem like a brave endeavor in a time of crisis, but when you know which stocks to invest in, it’s a different story.
After months and months of uncertainty, you probably don’t want to take risks any time soon. That’s why you should navigate towards fundamentally strong stocks with promising growth.
If you’re looking for a stock investment that can lead to 30–100% returns (within 5–10 years), you should consider stocks with strong fundamentals. Those fundamentals represent the company’s features that promise growth. A fundamentally strong company should have:
- A strong business model
- An advantage when compared to competitors.
- Sustainable EPS growth
- Consistent profit growth (at a rate of 15%)
- No debt or ratio that is as low as 0.10 or 0.25
- Good dividend yield
Doing the analysis before the investment is essential, so that’s what we’ve started with. Based on the research, here are some of the most promising stocks that you can consider investing in.
One of the top-ranked stocks is Incyte, a pharmaceutical company. The pandemic has strengthened the position of pharmaceutical companies on the stock market.
With devoted work and positive reports on treatments for coronavirus, Incyte is predicted to have a notable growth ratio. To be more precise, it is expected to see a growth of 767% over the next 3 years.
Zoom Video Communications (ZM)
After the world of business started relying on remote work and online communication, Zoom has taken over.
Zoom Video Communications is a cloud-based platform that supports video chat, voice calls, and sharing content. The platform is also suitable for large companies as it can host thousands of people in a single meeting.
Thanks to the massive use of this platform across the world this year, ZM’s stock has gained 610% up to now.
The revenue growth is expected to reach 287.3% in 2021. Zoom Video Communication’s EPS is estimated to see a growth of 625.7% in 2021 and at a rate of 38.5% per annum over the following 5 years.
Advanced Micro Devices (AMD)
The information technology sector is one of the predominant ones. The predicted ratio is more than 100% between the current year and 2023.
Chipmaker Advanced Micro Devices falls under the category of one of the promising stocks in the upcoming year. The three-year ratio forecast for this stock is 377%.
Other information technology companies like Synopsys (semiconductor firm) and Juniper Networks (network security firm) also have a predicted ratio of more than 100%. However, Advanced Micro Devices is in the lead.
This well-established brand has surprised many with its continuous growth over the years. CROX could be one of the best mid-cap stocks to invest in 2021. But let’s leave the numbers to explain why.
Over the last 5 years, Crocs’ shares went up 370%. When you compared that with S&P 500’s 70% and Nasdaq-1000’s 159% (for the same period), you’ll understand why CROX is worthy of your time.
Forming partnerships with stars such as Justin Bieber and Luke Combs is what leads to predictions for 15% revenue growth for CROX stocks in the next year. Additionally, research analyst Mitch Kummetz has conducted a footwear survey, and data shows that CROX can produce a strong fiscal 2021 start.
The largest online retailer in the world will continue to conquer the market. Currently, Amazon’s stock holds the 4th place in the Internet industry out of 58 stocks.
Amazon’s five-year average EBITDA year-over-year growth rate is 51.5%. So far, the Amazon stock (AMZN) has gained 64.9%.
The estimation is that AMZN will see revenue growth of 36.6% ending December 2020. In 2021, this stock is expected to witness a growth of 18.1% in revenue.
In terms of EPS, Amazon EPS is expected to see a growth of 30.6% in the next year and 36.4% in growth per annum over the course of the next 5 years.
Cadence Design Systems (CDNS)
Ever-evolving digital transformation is continually driving the growth of dominant players in the field of technology. Cadence, the provider of design solutions for integrated circuits and electronic devices, is one of those players who is expected to see growth in the years to come.
In 2020, CDNS secured a place on the list of IBD 50 Stocks To Watch.
While in the previous year the stock rocketed 59.5% higher, the forecast suggests that CDNS stocks will reach 117% growth over the next 3 years.
Shopify is an e-commerce web platform that allows retailers to design, set up, and manage their online sales on the platform. The pandemic has led to an increase in online purchases by 6% to 10%, which positively reflected on SHOP stocks.
So far this year, this company’s stocks have gained 150.5%. On the Internet – Services industry list of stocks, SHOP holds second place out of 35 stocks.
The expectations are that SHOP will witness 31.2% revenue growth in 2021. In addition, the EPS is expected to grow at a rate of 105.4% per annum over the next 5 years.
The unique platform aimed at helping sellers to market and sell their goods both offline and online is increasingly expanding.
With more people recognizing the profitability of selling their vintage, handmade, or unique items, Etsy is a growing platform. Just in the second quarter of the year, Etsy welcomed 12 million new users.
However, from August 4, 2020, the company’s wholly-owned subsidiary Reverb’s has increased the selling fee from 3.5% to 5%. They justified the revised selling fee as an opportunity to invest and sustain the growth of sellers.
As the company evolves, its stocks are going up. This year, ETSY managed to reach a growth of 197.1%.
Etsy’s revenue is expected to grow by 13.7% in 2021. The EPS is estimated to rise 155.3% this year.
If you aren’t sure about what Snap is, the name Snapchat might sound more familiar. Snap’s Snapchat is one of the most popular social media platforms among Millennials and Gen Z.
Despite Instagram’s and Facebook’s cloning of Snapchat’s features, SNAP continues to grow. In fact, CEO Evan Spiegel claimed in a conference call that Snapchat managed to reach “over 90% of the Gen Z population, and 75% of the Gen Z and millennial population, in countries like the U.S., the U.K., and France.”
Wall Street predictions are that Snap will witness a rise in revenue of 41% in the next year. Considering that SNAP stocks have gone up by 150% this year, the expected profitability sounds reasonable.
This American global corporation focuses on informatics, detection, imaging, and service in the fields of life science research, environmental and industrial testing, diagnostics, and food. With its mission to make scientific workflow easier and more efficient, PerkinElmer is establishing a strong position in the science and healthcare industry.
Anyone who is looking to buy strong computer and technology stocks can find the answer in PerkinElmer. Among the 615 tech companies in Zacks’ Computer and Technology stocks group, PKI sits at number 7. PKI’s performance is only getting stronger with each quarter, so they are a stock you should keep your eye on.
Up until now, PKI’s stock has gained 28.3%. When it comes to revenue, it is expected to grow by 6.4% in 2021.
EPS growth for the next 3-5 years is expected to be around 30.25%. Overall, the predictions for PKI stock look highly promising.
Deckers Outdoor Corporation (DECK)
Decker Corporation operates through these brands: UGG, Teva, HOKA, Brand, Sanuk, and other brands. Besides, they also work directly with consumers. Their vast reach and embodiment of different brands are what gained DECK 40.6% this year.
With several new collaborations such as Teva and Cotopaxi’s collaboration and Sanuk and KASSIA+SURF collaboration, the company has created new paths towards an increase in revenue.
The revenue is predicted to reach 12% in growth in 2022, so estimations are favorable for DECK. Not to mention that DECK’s EPS is estimated to grow 21.4% in 2021 with a 16.3% rate per annum over the next 5 years.
Match Group (MTCH)
Match Group is one of the pioneers in online dating apps. While you will probably recognize their currently most popular dating app Tinder, Match’s online dating service include Match.com, OkCupid, Meetic, PlentyOfFish, Hinge, OurTime, and Ship.
Over the last quarter, Match revenue went up by 18%. The company has seen a 15% growth in Tinder’s direct revenue as well as 23% direct revenue from the other dating apps.
Match’s dominance in the online dating market justifies the rise of MTCH stock by 70% this year. Their expectations for the next year’s revenue growth are 18%, so investing in MTCH doesn’t seem like a bad idea.
While some stocks crash, others are rising higher than ever. If you want to invest in a strong buy stock, you should consider the stocks on this list.
Bear in mind that it is recommended that you consult your advisor before you make the final call.