The New Year is quickly approaching, which means the most bullish time of the year is arriving. Do your homework now and you will be able to enjoy the holidays knowing you are well-positioned for the transition to ’21.
Market uncertainty resulting from the second wave of the virus is likely to steer money away from risky stocks toward those with a “Strong Buy” rating. The right combination of value stocks and tech stocks will bode well for your portfolio in the potentially tumultuous months ahead.
Let’s take a look at four “Strong Buy” stocks every investor should consider adding to his or her portfolio before the new year: Alphabet (GOOGL), Home Depot (HD), PepsiCo (PEP), and United Parcel Service (UPS).
Though GOOGLE had its first-ever reduction in revenue this past second quarter, it is only a matter of time until search advertising returns to normal, helping the stock move even higher. GOOGLE has a wide variety of business segments designed with stay-at-home entertainment squarely in mind. From YouTube to its popular app store and beyond, the company rakes in the cash from those who remain at home, locked onto their screens. Furthermore, if there is a successful coronavirus vaccine, the travel industry will bounce back, helping GOOGL increase even more.
The POWR Ratings show GOOGL has “A” grades in the Industry rank, Peer Grade, Buy & Hold Grade, and Trade Grade components. GOOGL is ranked second of nearly 60 publicly traded companies in the Internet space. The average analyst price target for GOOGL is $1,928.70, meaning the stock has the potential to increase by 10% soon.
Do not be scared away by GOOGL’s forward P/E ratio of 34.81. This is a high-flying tech stock that is likely undervalued compared to its peers.
Home Depot (HD)
As the largest home improvement retailer on the planet, HD is deserving of your attention. More and more homeowners are visiting HD as most other businesses have temporarily closed or restricted offerings due to the pandemic. HD is enjoying quite the revenue spike simply because more people are improving their homes during the pandemic as this is where most individuals are spending the majority of their time while social distancing.
The POWR Ratings reveal HD has “A” grades in the Buy & Hold Trade Grade and Industry Rank components. HD is ranked first of 69 publicly traded companies in the Home Improvement & Goods category. Check out the analysts’ take on HD and you will find they are bullish, having set an average price target of $313.32.
Look for HD to move back to $300, possibly blasting through its summer high of $291 as holiday home-related spending increases all the more.
Snacks and sugary beverages are selling quite well during the pandemic. Instead of eating out at local restaurants and traveling, people are hunkering down and eating junk food sold by the likes of PEP. The POWR Ratings reveal PEP has “A” grades in the Peer Grade, Buy & Hold Grade, Trade Grade, and Industry Rank components. PEP is ranked first of 29 publicly traded stocks in the Beverages category.
The top analysts have set an average price target of $152.27 for the stock, indicating it has around 6% upside. It should come as no surprise that PEP has quickly returned to its pre-COVID trading level of $140 to $150. Though the company certainly took a hit in the reduction in consumer spending at fast-food restaurants, the shortfall was made up through grocery store sales.
PEP’s most profitable segment, FritoLay, is generating considerable growth as people buy more snacks while remaining indoors during the pandemic, a habit that is likely to continue even if a vaccine proves effective.
United Parcel Service (UPS)
UPS has taken off like a rocket in recent months. The stock has clearly benefited from the reduction in foot traffic and the hike in shipping. Check out the POWR Ratings for UPS and you will find the stock has “A” grades in the Buy & Hold and Trade Grade components. UPS is ranked first of 9 stocks in the Air Freight & Shipping Services category.
The average analyst price target for the stock is nearly $179, meaning there is an 8% upside. In short, UPS is a roundabout means of investing in eCommerce simply because the company plays an increasingly important part in transporting the products people and businesses need.
Take advantage of UPS’s record-setting revenue, scoop up this stock before the new year and the holiday sales figures should help your investment grow.
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HD shares were trading at $272.40 per share on Tuesday afternoon, down $7.17 (-2.56%). Year-to-date, HD has gained 26.99%, versus a 13.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More…
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