The audience has spoken: The users of nasdaq.com couldn’t get enough of the ten companies mentioned in this article. They have been ranked according to popularity in terms of page views — not to be confused with stock performance. However, had you bought all ten companies at the start of 2020 and done nothing else you would be sitting on sizable returns. But which of them will be great buys in 2021?
1. Tesla (TSLA) - 743% YTD Returns
Shares of Tesla — a prototypical battleground stock — have run over every bear who stood in the way of the company. While skeptics continue to scoff at the stock’s high valuation, including issuing proclamations that Tesla wouldn't be profitable without government subsidies, Tesla keeps making believers wealthy. The company’s growth trajectory and its diverse product portfolio, which includes batteries, software, solar roof/panels, has been key to its success. CEO Elon Musk Elon Musk had promised is company would change the world. And that’s exactly what is taking place. The electric vehicle pioneer has taken the lead in not only its industry, but has also blazed of path for a massive industry in clean energy.
2. Apple (AAPL) - 80% YTD Returns
As the the pandemic has fueled demand for technologies to enable work-from-home and learn-from-home, Apple has delivered strong revenue growth across all of its major products and services, driven by iPhones, Macs, and iPads. Better still, Apple has demonstrated that it is more than just a phone shop. Its Services business, which now accounts for almost 30% of all revenue, surged in the fourth quarter to a record $14.5 billion, topping consensus of $14.12 billion. What’s more, the company is now sitting on close to $200 billion in cash and investments. Add in the $60 billion in operating cash flow, Apple’s balance sheet fortifies and de-risks any chance of weakness in the business.
3. Amazon (AMZN) - 76% YTD Returns
Driven by explosive growth from the e-commerce sector boosted by tailwinds from the coronavirus, Amazon is executing at near perfection evidenced by the 40% rise in total net revenue in the third quarter. The company is benefiting from a combination of factors and continues to be effective in its strategy not only to grow its Prime members, but also getting them to spend more during each transaction. And there is tons of evidence to suggests that its market share gains are here to stay, beyond the pandemic. When factoring these growth opportunities, combined with potential for further cost savings, AMZN stock is poised to hit the $4,000 mark in 2021. As such, it would be a mistake to part with this long-term winner.
4. Microsoft (MSFT) - 41% YTD Returns
Work and learn-from-home trends continue to power more demands for Microsoft services, evidenced by the strong performances in the company’s Productivity and Business and Intelligent Cloud segments over the past two quarters. Wall Street remains broadly positive about the company’s prospects to achieve double-digit revenue growth in fiscal 2021, driven by Azure's momentum. What’s more, with about $140 billion in cash reserves and $60 billion in annual operating cash flow, Microsoft has a war chest to fuel stock buybacks and dividends, while arming itself with tons of options (whether via M&A or R&D) to keep the growth momentum going well into the next decade.
5. Nio Limited (NIO) - 1112% YTD Returns
Chinese electric vehicle maker Nio which is vying to become the next Tesla, has posted quadruple-digit gains. No longer cash-strapped, the company has reported record deliveries in five consecutive months. And there is no slowing down. But can the stock continue to rise? China's passenger electric vehicle sales rose some 26% month over month in November and 143% year over year. Impressively, the stock's rise suggests that growth is accelerating. All told, China’s auto industry is poised to post double-digit sales gain in the new year — a trend that would benefit Nio. So, it would be a mistake to part with Nio stock until there is meaningful signs of slowing down.
6. Nvidia (NVDA) - 122% YTD Returns
Up 121% year to date, while surging 41% in six months, shares of the graphic chip powerhouse has been one of the better performers not only among the chip stocks, but also in the entire tech sector. Seven straight quarters of earnings beats have gotten investors less concerned about valuation and more in-tuned with Nvidia’s growth capabilities in key markets for graphics cards, particularly those that are used in video games. What’s more, the company has taken the lead in chip productions for high-growth areas such as network data-center, autonomous driving, artificial intelligence, among others. Can the stock continue its strong run? I’m not ready to bet against it.
7. Moderna (MRNA) - 434% YTD Returns
Is the Covid vaccine trade over? Moderna stock has taken a beating over the past week, falling more than 15%. In terms of the new Covid strain discovered in the UK, which thought to be highly transmissible than its predecessors, there are conflicting reports about the efficacy of Moderna’s vaccine. The company issued a statement, saying it expects the immunity presented by its vaccine would be protective against the new strain. In the coming week, Moderna said it will run tests to confirm the activity of the vaccine against any strain. The stock is also under pressure due to an an 8-K filing authorizing company insiders to resume trading in company shares.
8. Nikola (NKLA) - 55% YTD Returns
Investors who have missed the surge in Tesla are wondering whether they can make up for that mistake by buying Nikola, which designs and plans to manufacture hydrogen-electric trucks. While there are similarities with both companies, namely their vehicles produce zero emissions, there are stark differences in their approach and technology. Tesla produces electric cars that are recharged by plugging them in, while Nikola’s hydrogen fuel cell technology will produce electricity by combining hydrogen stored in a tank with oxygen from the air. For Nikola, the question is, when will production begin on its flagship product, the Badger truck? And can the company escape the flood of negative news that have hurt the stock?
9. Facebook (FB) - 33% YTD Returns
Facebook has topped consensus earnings expectations in each of the past eleven quarters, underlying an exceptional track-record in execution. But can Facebook, along with other tech titans, escape the political risks brought on by their dominance? The FTC, along with several States, have sued Facebook over allegations it has engaged in monopolistic practices in both its social media and communications apps businesses. It’s for this reason Facebook stock has been a relative under-performer compared to other stocks on this list. Investors, however, would do well to recognize that any legal action will take years to sort out. And in the meantime, Facebook stock will move with each headline.
10. Advanced Micro Devices (AMD) - 100% YTD Returns
Expectations remain high for AMD, despite the fact that shares are trading at all-time highs. AMD has seemingly surpassed rival Intel (INTC) when it comes to execution and innovation. Its market share gains serves as evidence. The chipmaker, which has topped the Street’s revenue estimates in five of its last six quarters, is well-positioned to do so again. The market assumes minimal disruption to AMD’s business despite the pandemic as recent supply chain data suggests robust sales growth in October and November. In seems AMD is poised to deliver a strong Q4 which should drive its shares even higher in the weeks ahead. So it would be a mistake to sell now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Richard Saintvilus
After having spent 20 years in the IT industry serving in various roles from system administration to network engineer, Richard Saintvilus became a finance writer, covering the investor's view on the premise that everyone deserves a level playing field. His background as an engineer with strong analytical skills helps him provide actionable insights to investors. Saintvilus is a Warren Buffett disciple who bases his investment decisions on the quality of a company's management, its growth prospects, return on equity and other metrics, including price-to-earnings ratios. He employs conservative strategies to increase capital, while keeping a watchful eye on macro-economic events to mitigate downside risk. Saintvilus' work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. You can follow him on Twitter at @Richard_STv.
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