Shane Neagle offers Finance Monthly a rundown of the opportunities investors should be exploring in 2021.

2020 has been a wild ride for investors. The coronavirus pandemic and subsequent lockdowns spooked many investors, causing a selling spree that peaked on 16 March . Dubbed “Black Monday III,” 16 March saw global markets decline 12-13%. Nervous investors can hardly be blamed for overreacting, however, when you consider that many across the country were stockpiling toilet paper and canned goods in preparation for the pandemic.

Thankfully, it wasn’t long before the market turned bullish again and stocks began skyrocketing back to their normal levels — or higher. Savvy investors who bought stocks, bonds and commodities during the dip yielded massive returns in almost every sector. 

Although we can’t replicate the amazing buying opportunity 2020 presented, we can look forward to other investments that will yield similar returns. Hopefully, 2021 will see the global economy head further into recovery and present unique buying opportunities of its own. 

In this article, we will discuss five of the best investment opportunities for 2021. 

Five Great Investment Opportunities in 2021

2020 was a unique year in that it brought investment opportunities outside the arena of traditional finance. Online trading became popularised and democratised through easy to use investment apps. For example, the aptly named Robinhood soared in popularity by enabling anyone to trade in the stock market — with a mere smartphone and bank account.

2020 was a unique year in that it brought investment opportunities outside the arena of traditional finance.

The rise of cryptocurrency, an enthusiastic topic among the tech-savvy and millennials, meant that financial opportunities presented themselves to those who might not normally have been interested in investing. 

Perhaps indicative of new market-disrupting trends and the waning power of conventional wisdom, many investment gurus were proven wrong about their predictions in 2020. For example, Warren Buffet, the “Oracle of Omaha,” advised investors to dump airline stocks in one of the worst pieces of advice given to investors this year.

There’s no point rehashing 2020, however. Every good investor knows that profit is made only by looking forward. So, without further ado, here are our top 5 investment opportunities for 2021. 

1. Retailers

Location-based retailers were hit hard by the pandemic, specifically those that hadn’t invested in an eCommerce platform. It’s easy to assume that most people will resume their online shopping habits even after the pandemic, especially when you consider the convenience of doing so. Business owners recognise this, which is why 74% of all organisations are actively involved in digitally transforming their businesses. That includes many brick-and-mortar retailers who are taking their stores online. 

However, there are many purchases that must be seen before being bought. The increased use of vanity sizing and misleading eCommerce photos mean that many consumers won’t purchase clothes without trying them on first. Products like perfume and cosmetics are difficult to choose online. Investing in Nordstrom, Macy’s and similar companies can yield sizable returns. 

Investing in stocks like Simon Property or other companies that hold retail spaces are another potential win. These investments are a little more stable when you consider that the companies actually own the real estate which the retail stores rent, which in the case of massive shutdowns of retail stores can be converted to another profitable use.

Investing in stocks like Simon Property or other companies that hold retail spaces are another potential win.

Home improvement retailers are also steadily on the incline, so buying early in 2021 is well-advised. As more people find themselves at home, interest in home renovations is at a record high. Stocks like Lowe’s or Home Depot are in this category. 

2. Clean energy stocks

As the US prepares to enter a Biden presidency, it’s a sure bet that clean energy will be a focus of his administration. Investing in clean energy stocks or at least keeping abreast of American government developments in eco-friendly policies is a must for 2021.

The movement towards clean energy is a long-term focus for many governments and organisations around the globe. Due to the longevity behind it — and the sector’s significant impact — clean energy is a great candidate for those who favour passive stock investing.

The electric car mandate that was passed in California, which required that all vehicles sold in 15 years be emission free, is a harbinger of more to come. The United Kingdom recently approved a £40 billion investment in green energy. Consider adding energy stocks that offer above average dividends to help your portfolio balance out long-term stocks that might take longer to recovery. 

3. Healthcare stocks (not involved in vaccine research)

A lot of investors looked to healthcare companies working on a vaccine during the pandemic for huge gains. However, many people neglected to consider the healthcare companies that were negatively affected by the pandemic and might yield large returns once a vaccine is rolled out. 

Nearly half of all Americans had medical care delayed due to the pandemic. Pharma and life science companies that are focused on cures and treatments for diseases were put on the back burner as many investors sought out companies like Moderna and Pfizer.

Many people neglected to consider the healthcare companies that were negatively affected by the pandemic and might yield large returns once a vaccine is rolled out. 

Companies that will benefit from an increase in elective surgeries are good investments for 2021. As hospitals have more room for patients other than those infected by COVID-19, there will be a need for different medical supplies and treatments for different ailments. Consider Intuitive Surgical, ARK Genomic Revolution or Danaher for your stock portfolio. 

4 - Bitcoin/cryptocurrency

This year, the Fed printed money at levels never seen before, which will lead to global inflation in the coming years. Investors who are interested in finding a way to store their money without losing its value would do well to look into cryptocurrency, which relies on cryptography to encrypt financial transactions. 

It’s largely for this reason that cryptocurrencies such as Bitcoin are an appealing investment option to so many people. In January of this year, Bitcoin was worth $7,000. As we end the year in December, Bitcoin is now worth a whopping $23,000 — a 228% increase in price.

Bitcoin shows no signs of slowing down in the future. According to Guggenheim’s Scott Minerd, Bitcoin should be worth closer to $400,000 due to its scarcity, the security of blockchain technology and its relative valuation. While you can never really know when it comes to emerging asset classes like cryptocurrencies, the fact that Bitcoin is getting institutional attention certainly says something. To take this a step further, whenever Bitcoin rises, it can act like a magnet — bringing other cryptocurrencies up with it.

5 - Travel Industry

Travel companies like airlines and hotels have no doubt been the hardest hit by the coronavirus pandemic. This presented excellent buying opportunities in 2020 which will continue into 2021. 

Investing in travel companies must be part of a long-term strategy, however. Many experts predict that it will take a few years before the travel industry fully recovers. This isn’t necessarily because people won’t want to continue travelling after being vaccinated. Many businesses that were hard hit by the pandemic will cut back on corporate travel, which is the leading driver of travel in most countries.

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Conclusion

As we head towards the end of an unpredictable year, it’s hard to think about what may still lay around the corner. However, as every good investor knows, it’s important to be ahead of the curve in order to recognise good deals and investment opportunities when they come. 2021 will see the continued recovery of the global economy and will present many great investment opportunities for those who stay focused and informed.