Trends and trades for 2021
2020 proved to be a difficult year for the global economy. The UK is still facing the possibility for a double-dip recession this winter, amidst more lockdown measures and slower recovery rates challenging the early months of 2021.
The stock market has been needless to say "chaotic" during the past year, with many of the "top stocks" to invest in, in 2021, heavily reliable to the economic recovery prospects. Experts can only speculate that the top stocks to watch in 2021 are based on the same factor that dominated the markets in 2020.
The Pandemic:
The top stocks of 2020 were tied to companies that accelerated from trends as a result of global lockdowns but, on the other hand, many of the "top stocks" for 2021 are expected to potentially benefit from a healing economy and a return back to less turbulent times.
If 2021 proves to show strong earnings growth, stocks may have the room to grow into elevated valuations. As 2020 draws to an end and COVID-19 vaccines begin to be handed out to the public, some may believe that we will see historically low interest rates, giving the perfect scenario for equities to thrive under the assigning of a new US President.
So what trends do we see happening in 2021?
Biotech stocks - In light of the COVID-19 pandemic, biotechnology companies such as Moderna and Pfizer saw huge increases in the year to date performance. Moderna has already seen a 599.12% increase and Pfizer a little behind at 11.04% (until Dec 2020). Although Pfizer's YTD growth is a little lower than Moderna's, it's by no means a company lagging behind. It's the 49th largest company in the world with a market value worth of $210 billion and Moderna supports a $60 billion market cap.
As the quest for vaccines goes on, analysts can presume that these biotech companies will be on the road to develop even more therapies, vaccines and medicines which will only add more to their stock value, so in turn, biotech companies are surely ones to watch in 2021.
Cloud infrastructure - Public cloud services have been growing rapidly over the past year due to working habits changing. As more people work remotely, the demand for cloud services and online communication apps such as Zoomand Google Meet, are on the rise. Zoom proved to be one of the biggest booming communication stocks in 2020, increasing 728% from March to October 2020 due to this very reason.
Zoom has an impressive market cap of over $113.55 billion which, if we continue to "work from home" and change our online habits for good, Zoom could grow even further. In the wake of the pandemic, businesses have now realised just how important it is to have an online presence (marketing, online stores) as well as the cruciality behind data sharing and remote work. As we delve deeper into online services in the coming years, we can only predict that cloud services will be a hit in 2021.
Technology stocks - Analysts expect the habits that developed during the pandemic, such as delivery services and online shopping to persist during the recovery. E-commerce companies such as Amazon, Alibaba, and information technology companies such as Microsoft, all support the changing behaviours. As consumer demand increases for online shopping and small businesses rely on e-commerce and tech companies, technology stocks will continue to be a rising trend in 2021.
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