It’s hard to think of anybody who will come out of the coronavirus pandemic and consider it a positive experience.
But the way of the world is that where there is distress, there is opportunity, and stock traders have been able to profit where they have thought ahead of the game.
In 2020, the share value of the likes of Zoom, Netflix and Amazon enjoyed massive gains – the former saw its revenue rise by an astonishing 355% compared to the previous year.
In the second half of last year, attention turned to pharmaceutical companies when it became apparent that a COVID-19 vaccine was being developed successfully – the share price of Pfizer, Astra-Zeneca and Moderna reacted accordingly.
As we hurtle into Q2, what are the best shares to buy 2021?
If we knew that, we would probably keep the information to ourselves and enjoy all of the riches! However, there are no guarantees when trading the stock market, and you should be looking to minimise your risk where possible or at least accepting of the risks attached to volatile trading and reducing your investment accordingly.
In 2021, it is expected that there will be two general types of company that you want to be investing in – the solid earners and the recovery prospects.
The solid plays – lower risk, lower rewards
Whether you’re a professional investor with significant capital in hand, or you’re simply an individual looking to make some money work for you, there’s one thing that really does frustrate: low interest rates.
When banks and financial institutions cut the rates on their ISAs and savings accounts, many are left wondering, why even bother saving in the traditional way?
Granted, that 0.5% rate or whatever it may be is guaranteed, but if you really want to maximise your assets, this is not going to get the job done.
With stock investing, there is a risk that you won’t make an annual profit at all – this cannot be stressed enough – however, there are some firms that can be considered ‘cash cows’ to some degree.
Take Amazon, for example. This is a company that is essentially the size of a small country when you consider its annual turnover, and it seems highly unlikely that its authority as an online retail behemoth is going to be challenged any time soon.
Indeed, as it opens up into new sectors – grocery shopping and online pharmaceuticals are two of its new ventures – its profitability is likely to increase even more. A single share in Amazon was worth around $750 in January 2017 – today, you could sell yours for $3,000. We’re not suggesting that this trajectory will continue, but as low-risk investments go, the brand seems as smart as any.
Clearly, if you’re looking for a low-risk investment, then a business that has monopolised its market is a savvy play – you could argue that Apple is essentially in that position right now.
There are still pretenders to its throne, such as Samsung and Huawei, but can you see the iPhone or the iPad being usurped as the tech of choice any time soon? They have such market penetration that any individual seeking a new device will probably – not always, but probably – automatically upgrade to the next version of Apple’s armoury.
Technology tends to be cyclical in nature over the long term, but Apple will surely rule the roost for years to come.
The calculated risks – banking on a recovery
With COVID-19 vaccines being rolled out across the world, there is a sense of optimism that by the end of 2021, the world will have achieved some level of normality once more.
It seems that international travel could be on the agenda, and so eyeing shares that are low in price now – but likely to increase in the near future – is smart.
The share value of Disney has already rebounded, but there will be a significant appetite among people to make up for lost time as far as holidays and experiences are concerned – Disneyland will surely achieve new highs in popularity as a consequence.
Disney had already proofed itself, to some extent, against the COVID-19 fallout by launching its Disney+ streaming service, and in the years ahead, this will surely prove to be a hugely profitable arm to its business. It looks a solid buy option right now.
Aviation is an industry that should enjoy a full, or close to full, recovery in the next year, and so some considerable brands within that space are also worthy of investment consideration.
There are lots of options, but Delta Airlines is particularly interesting. Not only is it one of the largest carriers in America, but it has also made investments of its own in related industries – it has its own oil refinery, for example, to fuel its planes.
In the months ahead, expect global tourism to return with a flourish – stock values are likely to reflect the fact.
