The stock market year 2020 will undoubtedly be remembered as the stock markets faced an unprecedented economic disaster related to the confinements in the still-raging coronavirus pandemic. In this context, it is becoming increasingly complicated to know which stocks to buy. However, there are always exciting opportunities, regardless of the market context.
In this guide, we will explain in detail how to choose the best stocks for 2021, and we will also present you with a list of 10 exciting stock market bets at the moment. We’ll also explain how to open an online trading account, including a step-by-step tutorial on how to buy your first stock.
Which profitable stock to buy in 2021? Our top 10 promising stocks to buy
Every trader who invests in the stock market is looking for what profitable store to buy right now. So here we look at the best stores to buy in 2021 that has promising upside potential:
1 – Apple
2 – Amazon
3 – Google
4 – Netflix
5 – Tesla
6 – Facebook
7 – Orange
8 – EDF
9 – BNP Paribas
10 – LVMH
So let’s find out why these top 10 stocks to buy are exciting and why they are worth your investment right now. As we’ll see below, you’ll be able to invest in these top profitable stocks commission free thanks to the eToro trading site and its all-level platform.
1 – Profitable Stock: Invest in Apple Stock
The profitable Apple stock remains a safe bet. Just like the rest of the U.S. tech scene, the company has had a successful 2021. Containment or not, there seems to be no stopping this giant of phone and media devices and accessories. That’s according to the company’s recent earnings report, which far exceeded market expectations.
Why invest in Apple?
Apple’s revenue grew 11% year-over-year to just under $60 billion. Even more impressive, earnings per share rose to $2.58, up 18%. Notably, Apple announced a dividend of $0.82 per share. In addition, Apple conducted a 4-for-1 stock split, making its price more accessible to small investors.
Apple started the year at $75 per share (including the split). By the end of October 2020, the share price was just over $116, which represents a 55 per cent increase since the beginning of the year. According to its recent earnings report, there is no reason to believe that the upward trend will end soon.
Apple stock: key figures
Market capitalization: $2 trillion
Price/earnings ratio: 35
2 – Buy Amazon Stock
Amazon.com is a giant in online sales and also in cloud services, and more recently in streaming, which has managed to pull through the health crisis. And the e-commerce star is expected to gain even more market share.
Why invest in Amazon?
Amazon Prime is expected to grow considerably, pulling the company and its stock price upwards, offering increasingly competitive content against Netflix, which essentially keeps the upper hand in the sector for now. The AWS cloud service is also generating more and more revenue, including the growing use of telecommuting, despite significant competition from Microsoft’s Azure offering.
Amazon stock started the year at $1,898. At the end of October 2020, the stock was trading at nearly $3,270. As a result, Amazon’s stock price has climbed more than 72% since the beginning of the year. It, therefore, remains one of the best stocks of the year and has done well in the context of covid 19.
Amazon stock: key figures
Market capitalization: $1640 billion
Price/earnings ratio: 125
3 – Google: a profitable stock to buy
Google is a profitable stock to buy. Some people might be a little concerned about Alphabet, Google’s parent company, given that revenues declined year-over-year in the first half of the year. This is the first time this has happened since it became a public company.
But concerns about Alphabet seem overblown. For starters, Google is the world’s most dominant Internet search platform by far. According to GlobalStats, Google’s share of global search has ranged from 91.9 per cent to 93 per cent over the past 12 months.
Alphabet also has two fast-growing businesses: YouTube and Google Cloud. YouTube is one of the three most visited social platforms on the web, and as a result, has seen a significant increase in advertising revenue. At the end of the first half of the year, on June 30, YouTube’s advertising revenue accounted for about 10% of the company’s total sales.
Why invest in Google?
So Google’s business, while affected by the coronavirus pandemic, remains strong. But future growth potential could come from a newer company. It’s the Google Cloud that could be the most significant bullish catalyst aspect for Alphabet. Cloud revenue topped $3 billion for the first time in the second quarter and was up 43% from the year-ago period as of June 30.
That’s especially commendable because this growth comes despite the worst economic downturn the U.S. economy has seen in decades. Since cloud margins are significantly higher than advertising revenue, Alphabet’s operating margins and cash flow should proliferate as the cloud accounts for a more significant percentage of total sales. This is a good reason for traders to buy Google shares.
Google stock: key figures
Market capitalization: $1004 billion
Price/earnings ratio: 36
4 – Buy Netflix stock
Netflix is the undisputed global leader in video streaming services and has therefore been one of the hottest stocks this year. Netflix has seen its subscriber base soar in the face of the covid-19 pandemic and containment efforts, as people had little choice but to watch movies and series while all businesses and entertainment venues were closed.
Why invest in Netflix?
Netflix stock has therefore risen very significantly in 2020 and is up 73.5% year-over-year. This trend seems to be continuing into 2021, but what about future prospects? The arrival of competition from several players could raise doubts, but Netflix has assets that will undoubtedly allow it to maintain a good lead over its challengers.
The first advantage is the sheer volume of content available on Netflix, which will be hard to match, even by Disney+. The second reason why Netflix stock should continue to rise is that the competition should not dent its market share too much. Indeed, several studies show that most consumers are willing to subscribe to multiple services, so it’s a safe bet that Netflix will be their first choice in any case.
Finally, Netflix is well established in Europe and the United States but still has significant room to grow in Asia. Netflix’s best performance in the quarter was indeed in the Asia-Pacific region, where it added 1 million new subscribers, accounting for 46% of its total growth in the period. Asia-Pacific is currently its smallest market, but it has the most potential as the region, even without China, is home to more than 2 billion people.
Netflix stock: key figures
Market capitalization: 216 billion dollars
Price/earnings ratio: 82
5 – Buy Tesla stock
Tesla is the world’s largest automaker by market value, with a market capitalization of approximately $393 billion, and is one of the world’s leading electric vehicle manufacturers. Tesla designs and manufactures fully electric vehicles, including luxury and mass-market sedans and trucks. It is also a clean energy company that manufactures solar energy generation and storage products.
Why invest in Tesla?
Tesla posted a net profit in the third quarter of 2020, its fifth consecutive quarterly profit, a significant improvement after a long string of financial losses. Investors now expect the stock to join the S&P 500 stock index, which would be another boost to its share price.
The year began at $86.05 a share for Tesla. Its price then climbed 394% to $425 at the end of October.
Tesla stock: key figures
Market capitalization: $393 billion
Price/earnings ratio: 839
6 – Buy Facebook Stock
With about 2.5 billion users, Facebook is gobbling up the world, and reasonable people might argue that if privacy is dying, individual investors might as well benefit in the stock market. Its stock is listed on the NASDAQ.
Why invest in Facebook?
Long-term opportunities still exist for Facebook. Instagram monetization is still in its infancy, and opportunities in dating, the Facebook marketplace and elsewhere abound. Facebook Shops, which allows businesses to sell directly on Facebook and Instagram, is the most promising rollout, especially as a result of covid 19 and its impact on the advertising industry.
The Facebook stock started the year with a stock price of $209.78 and climbed to $280 nearly ten months later, posting a gain of more than 33%.
Facebook stock: key figures
Market capitalization: $803 billion
Price-to-earnings ratio: 36
7 – Orange stock
A component of the CAC 40, French telecom operator Orange has suffered mainly from the pandemic, like many other stocks. However, unlike other stocks, Orange shares have rebounded very little since the March lows. While at first glance, this is not reassuring, the company has plans that are exciting, making the current low price a bargain.
Why invest in Orange?
The main reason investors should bet on Orange stock is the rollout of 5G technology. In addition to paving the way for many technological developments, the rollout of 5G will lead to a wave of smartphone upgrades and new subscriptions, and operators like Orange will be in the front line to benefit from this. Orange is all the more a good choice to bet on 5G as the company won the most extensive range of 5G spectrum in France following the auction of the 3.5GHz band.
By winning 90 MHz, Orange now has the most extensive range of 5G spectrum of any French operator and the most significant spectrum portfolio on the French market: 257 MHz of spectrum in total, according to the company. Stéphane Richard, chairman and CEO of Orange, said: “With these auctions, we have taken an essential step towards making the networks of the future a reality. We are delighted with the way the auction process has gone. Indeed, the result is well balanced and encourages operators to invest in Orange in the financial markets.
Orange share: key figures
Market capitalization: 24 billion euros
Price/earnings ratio: 9.4
8 – EDF share
As an electricity producer, EDF is a defensive stock par excellence. Indeed, whatever the economic situation, households and businesses have electricity needs that must be met. This makes EDF a good choice for a long-term investment that will not be too affected by crises.
Why invest in EDF?
Apart from its status as a defensive stock, recent news also justifies the purchase of the EDF share. Indeed, given the current progress of the maintenance program, the EDF group announced in mid-October an upward revision of its estimate of nuclear production in France for the coming years, to around 325-335 TWh.
In addition, the group is a critical player in the energy transition, having developed a diversified generation portfolio based on nuclear, hydro, new renewable energies and thermal energy, and is therefore well-positioned to benefit from the future green revolution and socially responsible investments.
EDF share: key figures
Market capitalization: €31 billion
Price/earnings ratio: 19
9 – BNP Paribas share
BNP Paribas is one of the largest European banks. After a tough start to the year for banks and the BNP Paribas share, the latest financial results of the largest European banks suggest a solid rebound in the sector. The stock could also regain the right to pay dividends, making it an even more exciting stock to buy.
Why invest in BNP Paribas?
The stock price has fallen from 53.58 euros to 31 euros in nearly ten months, a loss of 41%. This is an opportunity to buy BNP Paribas stock at a lower price.
BNP Paribas: key figures
Market capitalization: 39 billion euros
Price/earnings ratio: 6
10 – LVMH share
LVMH, the owner of the Louis Vuitton brand, among others, is one of the world leaders in luxury goods.
Why invest in LVMH?
Despite the health crisis, the group has managed to adapt thanks to online sales. In addition, LVMH’s customer base has not really experienced a drop in revenue due to covid-19, while the Middle East has not been strongly affected by the virus, and China has quickly returned to growth, very positive factors for LVMH stock.
LVMH shares are virtually unchanged at the end of October 2020, trading at 419 euros, but the price has rebounded strongly since the March low of 288 euros.
LVMH share: key figures
Market capitalization: 214 billion euros
Price/earnings ratio: 48
Sectors in which to invest in stocks at the moment
To diversify a portfolio, you need to invest in stocks from different sectors. Here are the sectors in which to invest at the moment.
With the technology sector being the top performer this year, it may be worth starting there. While solid growth might make some investors worry that tech stocks are expensive, the shift to remote work has made cloud services and infrastructure more valuable. This trend is still likely to continue.
Some of the more notable stocks that can perform in this sector include Microsoft, Apple, Alphabet (Google) and Facebook.
Investing in the healthcare stock market
The healthcare sector is a good investment choice because of long-term demographic trends. A rising average life expectancy worldwide should benefit pharmaceutical companies and medical device manufacturers.
In addition, the healthcare sector can be described as defensive, as it has managed to survive many economic crises and still make a profit. Indeed, the demand for healthcare services is constant, regardless of the financial situation of a country or the world.
The most relevant stocks, such as Sanofi, Gilead Sciences, Pfizer, or Johnson & Johnson, can be attractive in this sector.
Investing in consumer staples
The pandemic-related pantry loading and home cooking have benefited many consumer staples companies. This sector has not grown as dramatically as some of the other sectors, but it remains a solid choice, as households will always look to spend on their basic consumer needs, even in times of crisis.
Carrefour, Casino, Walmart and Costco Wholesale are some of the more notable stocks in this sector.
Investing in communication services stocks
In an increasingly connected society, communication services have become a sector similar to consumer staples. In case of financial difficulties, telephone or internet subscriptions are now among the last expenses that people are willing to cut. This ensures stable revenues for these companies.
In the long term, shares such as Orange, Bouygues, SFR or AT&T in the United States can therefore be considered for purchase on the stock market.
Investing in renewable energy stocks
The renewable energy sector is gaining popularity and strength among the largest investors in the stock market world. It has become an important theme even in the financial markets, which should allow the stocks of this sector to perform well in the coming years.
French stocks in this sector include Albioma, Voltalia and Akuo Energy, and First Solar in the U.S.
Which stocks to buy? Types of promising stocks
When choosing which stocks to buy, you have to consider the sector, as we have seen above. But you also have to consider the type of stock.
In this section, we will, therefore, detail the main types of stocks, explaining which market context is the most favourable for each type of stock.
Growth stocks, or cyclical stocks
These are the stocks you buy for capital growth rather than dividends. Growth stocks are essentially stocks of companies that are generating positive cash flow in the relatively short term and whose earnings are expected to grow at a faster rate than the market average. These stocks generally do not pay dividends.
This is because issuers of growth stocks are generally companies that want to reinvest the profits they earn in order to accelerate their growth in the near term. When investors invest in growth stocks, they expect to make money from the capital gains, they will realize when they sell their shares in the future.
Dividend stocks, or yield stocks
Dividend stocks are stocks that are chosen for their strength, consistency and high dividend payout to shareholders. The yield on stocks is calculated by dividing the annual dividends paid by the company by the company’s stock price. For example, if a company is scheduled to pay $0.50 in dividends over the next year and is currently trading at $20, the dividend yield is 2.5%.
Dividend stocks are generally crisis-resistant because investors who invest in these stocks hold them for the long term for the dividends, so they are not affected by short-term market fluctuations.
Defensive or non-cyclical stocks
These are stocks that don’t fall as much in tough times because they sell consumer staples. Typically, these types of stocks offer a steady dividend (and therefore are sometimes also yielding stocks, if the dividend is high) and pay stable earnings, regardless of the state of the overall stock market.
Also known as non-cyclical stocks, these companies operate businesses that are not highly correlated with the economic cycle, such as utilities or food.