In order to provide you with a comprehensive list of the best companies to invest in 2021, I’ve spent hours researching market data, as well as studied the stocks chosen by successful fund managers and the financials of the companies themselves. I intend this to be a guide, rather than a definitive list to help get you started and give you some pointers as to which sectors deserve your attention when building a diversified portfolio.
2021 is all about economic recovery, and with the first part of the year having been spent in lockdown, it’s off to a slow start. However, that’s not to say that there aren’t great investment opportunities to be had, and indeed the best stocks could be picked up at a bargain price at the moment, given the struggling economy.
Being the first country in the world to roll out an effective vaccination campaign could see the UK well on its way to recovery however, there is plenty of reason to proceed with caution as new strains of coronavirus emerge, unemployment continues to climb, inflation increases and the stock market lies in danger of another crash.
Picking stocks is a tricky business at the best of times, and investing in individual companies is a risky endeavour that could result in a total loss of investment. It’s always a good idea to research companies you are considering buying stocks in, set your objectives from the start and ensure you properly diversify the content of your portfolio in a number of sectors and geographies.
Industries that are re-opening in the wake of lockdown could see a period of growth in market value, especially in the travel and entertainment sector and of course, there are the industries that thrived during lockdown including tech, e-commerce and biotech.
If history has taught us anything it’s that time in the market will always outperform timing the market, so as always, you should be looking to invest for the long term with any stocks that you select. Equities always come with a degree of volatility, especially in times of uncertainty so you should be prepared for the value of your stocks to go down as well as up. The main thing to remember is to keep a steady hand and avoid making decisions based on emotions or panic. With time to ride out the bumps in the road, you are more likely to see the value of your stocks return and surpass your purchase price.
The argument for investing in stocks remains strong, with the next decade looking likely to provide near-zero interest rates alongside low growth and barely any inflation. This all means that any capital held in savings accounts will earn interest at a rate that is less than the rate of inflation, resulting in funds that will actually lose value over time. In this article, we take a look at some of the sectors that are worthy of your attention and in particular, the stocks we expect will perform well.
What Companies Will Experience Earnings Growth In 2021?
The companies that tend to perform well on the stock market in the coming environment are those in growing markets, however, experts will always recommend that in order to select the most successful growth stocks you should try to identify companies that could do well amidst any economic challenges ahead. With new coronavirus variants threatening the efficacy of the vaccines, investors could do well to consider stocks that are well placed to ride out any storms ahead.
I’ve picked seven business sectors and highlighted some of the companies that continue to grow in 2021 and beyond.
With demand outstripping supply in the housing sector and families looking to relocate to the country following lockdown, the property and construction sector are both experiencing revenue growth. Demand is currently outstripping supply and the government’s Help to Buy scheme has opened the door to property ownership to many people who couldn’t afford it previously.
If you had Rightmove stocks five years ago, you would have earned 58% returns by now and indeed this company have just purchased 170,000 of its 0.1p ordinary stocks.
2. Online Products and Services
The other sector that is worth watching are companies that are well placed to provide products and services such as entertainment online. As more and more people start working from home this sector looks set to grow and with this growth will come accelerated growth for online payments and fintech.
Fintech enjoyed enormous earnings growth during the pandemic as millennials started investing from their phones, due largely to the rise in the amount of investment apps becoming available to retail investors.
Another company to watch is Wayfair with 10 million more customers now than it had a year ago, the online goods retailer is experiencing gains that could amount to 35% to 40% in the next 12 months.
3. Renewable Energy
Another key company when it comes to supplying products online is Amazon who reported a rise in sales of 51% in 2020 and are now tapping into another growing market by becoming Europe’s largest corporate buyer of renewable energy.
In the UK, renewable energy has started to outpace fossil fuels for the first time and should remain the largest source of power in the future. The current climate crisis means that it will take a lot to derail renewable energy which is currently enjoying record highs in terms of growth and as such presents a great opportunity for investors.
However, investors considering buying stocks in renewable energy should check financial data to identify companies that allocate capital to renewable energy projects that can successfully achieve great returns on investment.
4. Online Gaming
Anyone who has just spent lockdown with a child (and even some adults) will appreciate the enormous growth in online gaming. These enterprises flourished while we were all stuck at home and due to their highly addictive nature, they should continue to do well.
Console companies such as Electronic Arts Inc, Nintendo Co Ltd, Microsoft Corp, and Sony Corp are all stocks to watch while video game stocks such as VanEck Vectors Video Gaming, SciPlay Corp, and eSports ETF have done well in recent months.
5. Leisure Industry
Despite being one of the worst-hit during the lockdown, the leisure industry could enjoy a welcome earnings rebound in the coming months, with survivors of the pandemic in a position to enjoy less competition during a surge in consumer spending. However, many of these shares are still considered very risky and could plummet should COVID take hold again.
Restaurants equipt to adapt to a takeout environment offer better investment opportunities including Restaurant Group which includes names such as Wagamama and Chiquito.
A staggering 3.2 million households welcomed a new pet into their lives during the lockdown, and as prices for puppies soared, so did the demand for pet food and medical treatment.
CVS Group, one of the leading veterinary groups in the UK, first listed on the stock exchange in 2008 and have since experienced a 13.4% growth per year in earnings per share. They continue to expand to meet consumer demand and should enjoy a good amount of growth in the coming months.
7. Food Sales
We all saw the empty supermarket shelves at the start of lockdown, and the Easter shelves were no different with households rushing to spend their spare lockdown cash on holiday treats.
Online shopping rose an impressive 90% for Tesco, who excelled at meeting the challenges thrown up by COVID and reported an impressive 7% rise from the start of the year with food sales rising 9%.
What Are The Best Stocks To Invest In 2021?
For our pick of best stocks to invest in 2021, I’ve chosen five companies that are well placed in sectors that should experience good growth in the coming months. These are all companies that have enjoyed a lengthy period of success and have the financial infrastructure to ride out any bumps ahead.
1. Paypal Holdings (NASDAQ:PYPL)
Paypal has grown 35% in the last six months and 140% in the last twelve months. Paypal has a strong position in the online payments sector which is expected to almost double in size and volume by 2025 fueled largely by remote working and online shopping. These stocks make for a great long term investment.
2. Microsoft (NASDAQ:MSFT)
Microsoft is second only to Apple as the world’s largest company and stocks in this giant have risen more than 60% in 2020 and are currently up 17% in 2021. This momentum looks set to continue with recent product development concentrating on Microsoft Azure and an agreement with the US army to supply 120,000 augmented-reality headsets to soldiers over the next ten years. This announcement has seen a rise in the price of stocks by almost 12%.
3. Tesla (NASDAQ:TSLA)
No one can deny the success Tesla has enjoyed with a 1,000% surge in stock price between March 2020 and February 2021. It is nicely placed between innovation and green technology and the demand for electric cars is due to skyrocket with the UK Government pledging to end the sale of petrol and diesel vehicles by 2030.
Tesla stocks could increase by 300% by 2025 according to some experts and current expansion of production capabilities would certainly support their continued gain of market share.
4. Pinterest (NASDAQ:PINS)
Pinterest is a social media platform that allows users to share images in categories. Whilst Pinterest has yet to turn a profit, its new partnership with Shopify and ad technology should start to generate profits and stocks may start to experience positive gains of 25% over each of the next four years.
5. iRobot (NASDAQ:IRBT)
iRobot has had a bumpy ride on the stock market, losing 40% on its stock price in 2019 and then rebounding a significant 60% in 2020. The vacuum and mopping device that utilises artificial intelligence could continue to see a rise in revenue in 2021, however, this is a riskier bet and I would recommend that investors proceed with caution.
How Do I Start Investing In The Stock Market in 2021?
Investing has never been easier, more accessible or cheaper than it is now with the emergence of online investment platforms. Trading platforms vary significantly in price and structure and you will need to ascertain which one is best suited to your investment style in order to help you achieve your financial goals.
Three things to look out for when selecting the right investment platform for you including:
- Fees and Charges – Small portfolios may be better off with a percentage platform fee whereas larger portfolios will reduce these costs with a flat fee. Check any other hidden costs, as well as the cost per trade before choosing the best fee structure for you.
- Investment Choices – Make sure the platform you choose offers the stocks you wish to buy before you open an account.
- Accounts on Offer – Different platforms will offer different accounts and you may want to consider this in order to ensure you are being as tax efficient as possible.
If you would like further guidance on which platform to select, then you may find some useful information on our Best Trading Platform guide.
Related article – How to Start Investing
Best Overall Trading Platform – IG Investments
At Investing Reviews, our top pick for the best overall trading platform is IG Investments who are currently the largest spread betting and CFD provider in the UK. IG have a well designed and easy to use platform that caters to both experienced and novice investors with a great selection of stocks, including many of the best stocks to invest as recommended in this article. Its pricing structure comes in as great value for investors who are likely to make more than three trades per quarter and they also supply a free demo account so you can try your hand at trading before you risk any of your own funds.
The Top 10 Best Stocks to Buy Now UK
These stocks have all performed well in 2020 and look to continue their success in 2021 with a strong position to ride out any challenges that may be thrown up in the months ahead, regardless of any new CoronaVirus threats to business. These stocks are all worthy of your consideration however, you should still conduct your own research before purchasing any of these recommendations.
- CVS Group
You buy these stocks and more at Interactive Investor here.
It’s important to acknowledge that whilst we hope the information contained within this article is helpful, it is not intended as investment advice. The onus is still on the investor to check information such as the performance, financial data, board of directors, price to earnings ratio, dividend yield and market capitalization of any company you are considering as part of a diversified portfolio.
It is also prudent to remember that past stock performance in the equity market is not a reliable indicator of future performance and the value of your investments can go down as well as up. Investing always carries an element of risk and you could lose all your money when investing. Investing Reviews will not be held responsible for all losses that arise as a result of investments made on the back of the recommendations within this article.
Antonia is the Financial Editor at InvestingReviews.co.uk and brings a wealth of experience, having written for various industries over the past 10 years.
Her investment platform reviews, news, blogs and guides are meticulously researched, fact checked, and updated on a regular basis.