4 Red-Hot Growth Stocks That Should Double In 2021
Despite the novel coronavirus pandemic, 2020 was a strong year for stocks, and especially for some new growth stocks. The March collapse may have caused some investors' ulcers to flare up. However, it paved the way for major indices like the Nasdaq and the S&P 500 to hit new all-time highs in the months that followed.
So-called “Stay at Home” stocks like Zoom Video (NASDAQ: ZM) and Peloton (NASDAQ: PTON) each gained more than 400%, while technology leaders like Apple (NASDAQ: APPL) and Nvidia (NASDAQ: NVDA) rose share prices have more than doubled compared to the previous year. Where is the growth likely to come from in 2021? Will these stocks continue to be all-stars or will other growth stocks steal the spotlight?
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Many investors are betting on the "reopening game" as more and more people are being vaccinated against Covid-19 and the US economy is seriously reopening. Others are betting on another shift of capital into cyclical stocks. Whatever happens, not all growth stocks will be invested the same until 2021. With that in mind, here are four growth stocks that could double in the next 12 months:
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Coty (NYSE: COTY)
Draftkings (NASDAQ: DKNG)
Qualcomm (NASDAQ: QCOM)
UPS (NYSE: UPS)
Growth Stocks That Should Double: Coty (COTY)
The Coty (COTY) logo on a glass office in Poland.
Source: Konektus Photo / Shutterstock.com
At $ 7 per share, COTY stock is barely outside the penny stock range. Despite its relatively cheap valuation, the beauty retailer's stocks, which specialize in perfumes, cosmetics, skin care, and nail care, have risen sharply in recent months. In a five-day trading session in late November, Coty's share price rose 48%. Since October 1, the stock is up 145%.
The impressive growth was fueled by a better-than-expected earnings report that reinforced the company's successful turnaround efforts. The announcement that Coty would complete the sale of its professional hair care business, Wella, to KKR (NYSE: KKR) also boosted the share price.
In particular, Coty reported a surprise profit for the first fiscal quarter announced on November 4th. The company achieved adjusted earnings per share of 11 cents, compared to the 5 cents per share forecast by analysts. The surprise win was also a vote of confidence in Sue Nabi, the new CEO of Coty, who is the company's third CEO in a year.
Wall Street now hopes that Sue Nabi will lead Coty in the right direction after several failed turnaround attempts for the cosmetics company, which has been operating since 1904. COTY stock received another boost when it was revealed that it holds a 60% stake in Wella, which is set to be sold to KKR for $ 2.5 billion by the end of November. Coty will retain the remaining 40% stake in Wella and plans to "use $ 2 billion of the proceeds to pay off debt." All of these moves position Coty for continued success in 2021.
DraftKings (DKNG) logo on a phone
Source: Lori Butcher / Shutterstock.com
With the widespread use of a Covid-19 vaccine, sport should really return in 2021. We talk about all sports - college football, March Madness, the Olympics, and so on. Professional basketball, baseball, soccer and hockey should welcome fans back to the stadiums and resume their regular schedule. And all bodes well for sports betting company Draftkings.
The company, which went public in June 2020 through a Special Acquisition Deal (SPAC), saw its share price jump 29% to $ 53.90 in the past six months. However, the past year has been extremely difficult for the world of sports and Draftkings' core business, betting on sports. Many of Draftkings' most lucrative sporting events, such as March Madness, were canceled last year. This has called the future of DKNG stock into question, but it has managed to stay strong this year anyway.
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In 2021, the DKNG share should do significantly better. Not only will most major sporting events resume as normal in the New Year, but there is also growing expectation that more US states will legalize sports betting in the coming months. Oppenheimer analysts recently noted that many states are facing declines in sales due to the Covid-19 pandemic and may turn to sports betting as a new source of income amid growing budget deficits. Oppenheimer expects New York, Massachusetts, Connecticut and Ohio to legalize sports betting in the coming year. That would certainly help to raise the DKNG share to a new level.
Qualcomm (QCOM) logo on the side of a building in San Jose, CA.
Source: jejim / Shutterstock.com
Despite its sporadic introduction so far, 5G wireless is here and will be the dominant form of connectivity in the future. Several companies are poised to take advantage of the 5G revolution that is set to lead society into new technological areas.
Qualcomm is one of the companies that will most likely benefit from 5G. The semiconductor and software manufacturer benefits from the use of its microchips in various 5G wireless technologies and platforms. In particular, Qualcomm chips are being used in a growing number of 5G Android phones. Not only is Qualcomm at the forefront of the 5G revolution, but it's also making the 5G revolution possible.
The enormous potential of 5G is reflected in the growth of QCOM shares. Qualcomm's share price has more than doubled since March 2020, up 144% to $ 147.42 per share. And analysts see big things happening for the stock. Morgan Stanley named Qualcomm as one of 10 stocks best positioned to capitalize on the global adoption of 5G. Other analysts covering the company have an average price target of $ 165 per share on Qualcomm stock with a high estimate of $ 200.
With the continued adoption and adoption of 5G networks and technologies around the world, the coming year looks very bright for Qualcomm and its shareholders.
Dark brown delivery truck with the United Parcel Service (UPS) logo
Source: Diverse Fotografie / Shutterstock.com
Not only is UPS still benefiting from online orders while they seek shelter at home, but the shipping and logistics company is poised to take advantage of the massive rollout of Covid-19 vaccines in the US and around the world. This is the time for companies like UPS to shine, and the Atlanta, Georgia-based company is doing just that.
UPS is expanding its business and working double-ended to meet unprecedented demand and help us all overcome the global pandemic. Those efforts have helped UPS stock hit new highs, rising 113% to $ 175.18 per share since March.
UPS has momentum on its side as we head into 2021. The company posted strong gains in the third quarter. In particular, the company's revenue rose 16% year over year to $ 21.2 billion, and earnings per share rose 10% to $ 2.28 per share. This exceeded analysts' expectations for earnings per share of $ 1.90 per share. While UPS refused to provide a forecast for earnings, the company has aggressively expanded its North American operations through 2020.
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In Canada, for example, UPS has opened a new hub for the sorting and delivery of packages valued at $ 800 million. The company hired more than 5,000 employees in the wake of the pandemic. Hence, the company is showing no signs of a slowdown in the New Year.
At the time of publication, Joel Baglole held long positions in APPL and NVDA.
Joel Baglole has been a business journalist for 20 years. He was a reporter for the Wall Street Journal for five years, and has also written for The Washington Post and Toronto Star, as well as financial websites such as The Motley Fool and Investopedia.
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