As 2021 begins, many investors are taking a close look at their portfolios and planning for the year to come. Some may be locking in gains from a record-setting 2020, while others are just beginning their investing journey.
But whether you’re trying to find the best bang for your buck in a market that has gotten dramatically more expensive over the past year or searching for the next big thing, there are plenty of opportunities to be had this month. High hopes over vaccine rollouts and business reopenings as the year progresses means smart investing early in the year could reap some sizable rewards later on.
To get your New Year started right, here are five of the best stocks to buy in January:
— Hasbro (ticker: HAS)
— Wyndham Hotels & Resorts (WH)
— Twilio (TWLO)
— Microsoft (MSFT)
— Snap (SNAP)
As January begins, the first thing investors need to do is determine which companies are going to win big from the holiday shopping season — and while toy companies are always a good bet, Hasbro has been anything but a winner over the past year. The lack of Disney ( DIS) and Marvel movies in theaters means Hasbro’s biggest toy tie-ins have fallen flat, while the poor timing of its acquisition of Canadian studio Entertainment One at the end of 2019 sapped the company’s coffers. The combination has sent shares of Hasbro down 9% year over year.
But a new year brings new opportunities, and Hasbro is well-positioned to bounce back. Analysts have high expectations of strong holiday toy sales, and the films that were meant to be released last year will be coming out this year, giving Hasbro a stacked deck for toy tie-ins throughout 2021.
Wyndham Hotels & Resorts (WH)
With vaccinations taking place around the globe, the entire tourism and hospitality industry, including Wyndham Hotels & Resorts, has begun to breathe a sigh of relief. At first glance Wyndham’s third-quarter earnings don’t paint a pretty picture: Revenue declined 66% year over year, while earnings per share dropped 38%. But believe it or not, those are far better results than Wyndham has seen all year, and Wyndham’s drive-to leisure business model continues to sustain the company through an extended decline in business travel. Meanwhile, management has successfully cut costs and saved cash, increasing Wyndham’s cash balance from $71 million to $735 million in the third quarter.
Wyndham shares aren’t going to skyrocket anytime soon, but a fundamentally sound business combined with gradual reopenings and increased rates of travel are a potent combination that shareholders will profit from in the months to come.
You know those pesky text messages you get from food delivery services? Turns out they’re “big business” — just ask Twilio, a cloud communications company that connects businesses with customers. In a year where staying in contact with customers has never been so difficult, Twilio makes it easy, which has made the company a very good investment. In the third quarter Twilio enjoyed a 52% bump in revenue year over year, as the number of active customer accounts rose 21%.
Twilio’s shares rose about 200% in the last year, and the company sees more good fortune ahead. Management anticipates fourth-quarter revenue to rise 36% to 37%, and the recent completion of its acquisition of Segment, a customer data startup, should provide the company with further opportunity for growth. Twilio had an excellent 2020, and still has plenty of room to grow heading into 2021.
2021 is shaping up to be another strong year for Microsoft. In the near term, the software giant should enjoy a bit of time in the spotlight courtesy of the Xbox Series X, Microsoft’s first new console in seven years. Sales seem to be solid since its November debut, and Microsoft has made several smart moves improving its Game Pass service to keep new console gamers around for the long haul.
Meanwhile, Microsoft’s Teams service continues to ratchet up the pressure on competitors like Slack ( WORK ), with new features like the ability to connect 1,000 participants at once in a single video chat keeping customers interested. Finally, Microsoft’s cloud computing platform Azure continues to enjoy strong growth, as Azure’s 48% increase in revenue last quarter can attest to. A near-term bump from the Xbox, combined with long-term growth in Teams and Azure puts Microsoft in an excellent position for 2021.
With shares of Snap up nearly 200% in the last year, you might think that the social media company should be running out of steam. But Snap continues to churn out innovations that keep users happy, such as its Lenses, Shows and Discover content, which may explain how the company saw its daily active user base grow by 18% year over year.
The company’s also keeping shareholders happy with a focus on direct-response advertising that businesses love. Connecting companies directly to consumers via Snap’s platform is a profitable endeavor, and although Snap itself remains unprofitable, it’s getting closer by the quarter. In the third quarter the company reported a net loss of $200 million, a 13.5% improvement from last year. A young, expanding user base combined with a dynamic and ever-evolving platform is a surefire way to enjoy a strong 2021.
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