Many stock prices surged in 2020, which could make new gains potentially harder to come by in this upcoming year. Yet bargains can still be found for the patient investor. Here are a few of the stocks I like for 2021:
Exxon – Oil stocks have been in the doldrums for a long time. Exxon is trading at a price we haven’t seen since 2004 (See chart below). True, oil prices may remain low for longer, but demand for oil may pick up in 2021 as the global economy restarts. Exxon shareholders aren’t too happy either – there may be a push for cost cutting (See Exxon is in Crisis - CNN). For me, I like Exxon at these levels for long-term investors as I see it as buying a global leader in an important industry at a reasonable price. Goldman Sachs recently upgraded Exxon to a buy, citing “shares are cheap.”
Figure 1: XOM Stock Price Over the Years - Source: MarketWatch
JP Morgan – The multinational bank’s stock price is down 12% as of December 18, 2020 (Source: Morningstar). CEO Jamie Dimon said the company is looking to make acquisitions to boost growth, citing peer Morgan Stanley’s acquisitions (Source: Reuters). Morgan Stanley purchased E-Trade and recently outbid JP Morgan for money manager Eaton Vance. Morgan Stanley’s stock price is up 30% year to date as of December 18, 2020 (Source: Morningstar). If JP Morgan follows Morgan Stanley’s approach of buying asset managers and fintech in 2021 it could the boost the company’s growth and help its share price. Plus, I like buying stocks at bargains, and buying JPM when it’s down 12% gives me some hope.
Hilton: Hotel stocks took a beating in 2020. But this upcoming year could be different. Consumers will want to get out of their living rooms and travel. This pent-up demand bodes well for the leisure, airline, and travel sector. Headwinds remain, but the stock market is forward looking. Hilton’s stock price could recover faster than that part of the economy. Hilton is down about 5.46% year to date (Source: Morningstar). Oh and by the way, Hilton has $3.5 Billion in cash, which is a 328% increase in year-over-year cash reserves – that’s one impressive rainy day fund (Source: MacroTrends).