Prior to the novel coronavirus, most business media pundits declared that the benchmark indices were enjoying the most “unloved” bull market. In my view, I’d say that 2020 produced the most perplexing one. Yes, Wall Street is at or near record highs, yet Main Street doesn’t seem to be doing all that well. Nevertheless, there might be a case for buying breakout stocks for 2021.
Before we get into it, though, let’s break down how we got here. Initially, the fundamentals matched the technical trajectory. Once it became clear that Covid-19 was in our borders and rapidly infecting people, the major indices tumbled. As well, unemployment skyrocketed, as data from the U.S. Bureau of Labor Statistics reminds us. Guaranteed, very few were thinking about breakout stocks for 2021. Instead, most folks were hoping to avoid a break down.
Amid this tumultuous environment, though, a strange thing happened. Speculators jumped aboard the market, sparking a conspicuous rise in user volume on popular trading apps like Robinhood. Some of the enthusiasm was understandable in the sense that many wanted to channel their inner Gordon Gekko. However, a larger “culprit” is that millions of Americans found themselves working from home. And typically, if you’re working from home, you’re doing something else.
Whatever the case, sheer boredom may have been one of the catalysts for newbie market participants. As well, those who get paid on commission and whose occupation have been sidelined turned to stock trading for income. But above all, millions of white-collar employees had extra time on their hands. And thus, the narrative for breakout stocks for 2021 became much more feasible.
However, the problem now is the funneling effect. Basically, most newbies are zeroing in on the obvious trades. But if everyone bets on the same horse, the payout is limited. Furthermore, a possible correction could be devastating. Therefore, current speculators may want to go off the beaten path and consider these under-the-radar breakout stocks for 2021:
- Sea Limited (NYSE:SE)
- Freshpet (NASDAQ:FRPT)
- Shockwave Medical (NASDAQ:SWAV)
- Fast Retailing (OTCMKTS:FRCOY)
- Carparts.com (NASDAQ:PRTS)
- Panasonic (OTCMKTS:PCRFY)
- Cresco Labs (OTCMKTS:CRLBF)
A word to the wise: I do not recommend going all-in on these names. While taking the road less traveled may offer some risk mitigation in case the smelly stuff hits the fan, there’s still that dichotomy between Wall Street and Main Street. But for the knowledgeable speculator, these breakout stocks for 2021 may provide a smarter pathway to growth.
Sea Limited (SE)
Whenever the discussion of wide-ranging e-commerce firms come up, the obvious names like Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA) rise to the top. Now, just to be clear, I’m not suggesting that these aren’t viable investments. After all, there is a reason why they’ve outperformed the markets over the past few years. But if you’re seeking breakout stocks for 2021, you may want to elect lesser-known companies like Sea Limited.
Based in Singapore, Sea Limited has a strong presence in Southeast Asia, Taiwan and Latin America. Therefore, from a political perspective, SE stock is more palatable. Let’s face it: there’s just something not right about China’s role in downplaying the pandemic, only to later recover while the global economy burns. More importantly, there’s wide consensus on this opinion. In turn, don’t be surprised if it ends up playing into investor psychology.
But specific to SE stock, I appreciate the underlying company’s exposure to multiple relevant business sectors: digital gaming, payment processing and e-commerce. And just as importantly, Singapore’s economy looks poised to recover next year due to slowing contraction in the third quarter. If so, Sea Limited screams as one of the breakout stocks for 2021.
If only we treated each other like we treat our four-legged friends, the novel coronavirus may not have gotten so out of control. Now, all we can do is hope that Covid-19 magically fades away like President Donald Trump once suggested. Sure, we have vaccines now, but the reality is that distribution will take some time. Furthermore, many people will likely research the safety profiles of vaccines, which have some interesting notes that might worry them.
Oh, but when it comes to our animals, there’s no expense spared and no coddling is too much. That right there is one of the reasons why investors ought to consider Freshpet as one of the breakout stocks for 2021. According to data from the American Pet Products Association (APPA), we spent a total of $95.7 billion on our pets in 2019. That’s a staggering increase from what the APPA stated we spent in 2018, which was $72.56 billion.
By the way, that 2018 haul was a record-breaking one. Naturally, this should be an easy lift for FRPT stock.
To be fair, the coronavirus pandemic has hurt our personal economy, no question. Still, next year could remain robust for the pet market because humans are spending less on their selves (i.e. no office clothing). So, FRPT stock can deliver.
Shockwave Medical (SWAV)
For the broader healthcare sector, the coronavirus has been both a blessing and a curse. On one end of the spectrum, the crisis pushed the best of American ingenuity to come forward in producing vaccines in record time. But on the other end, biotechnology firms specializing in addressing long-term conditions have been put to the wayside. Fortunately, that didn’t seem to impact Shockwave Medical negatively.
On a year-to-date basis, SWAV stock is up 123% and for good reason. The company specializes in addressing calcified cardiovascular disease. However, unlike other medical device companies, what Shockwave offers is a true paradigm shift. Featuring the proprietary delivery of sonic pressure waves, medical doctors now have the ability to treat calcified plaque and engineer consistently positive health outcomes.
With Shockwave’s system, the emphasis isn’t just on the convenience of the platform. Rather, the emitted sonic pressure waves gently break down calcium deposits, even those that are incredibly hardened, and which traditional methodologies have no answer.
While investors may want to wait a bit for a better price on SWAV stock, the longer-term framework is enticing. That’s because Shockwave’s platform can potentially address other conditions throughout the body, offering a multivariate product pipeline from one technology.
Fast Retailing (FRCOY)
I’m a big fan of Steven Yuen of The Walking Dead fame because let me keep it real: the man is doing a great job representing Asian Americans in media. It’s almost like we don’t exist in mainstream television and film.
Anyways, I saw a clip of him saying that he likes visiting Tokyo, Japan because retailers there have clothes that fit him perfectly. I forgot if Yuen mentioned Uniqlo, a subsidiary of Fast Retailing. But if he did, it wouldn’t surprise me. Fast Retailing is easily one of the under-the-radar breakout stocks for 2021 because it’s rarely discussed.
Part of the comparative blackout toward FRCOY stock is the underlying industry. As you know, so many apparel brands have struggled, with many failing to understand millennial consumers. Furthermore, it doesn’t help that Fast’s flagship, Uniqlo, doesn’t have as strong of a presence relative to America’s top brands.
But that could very well change soon because of changing demographics in the U.S. Here’s the thing — people come in all shapes and sizes. But that’s especially true when the population is diverse. As an international apparel maker, Fast Retailing realizes this, which makes FRCOY stock one of the underappreciated breakout stocks for 2021.
I’m just going to say this straight out so that we’re on the same page from the get-go. Carparts.com could very well be one of the riskiest plays among breakout stocks for 2021. Obviously, the biggest concern is the economy. At the onset of the coronavirus, millions of Americans found themselves working remotely. Thus, out of nowhere, there was little need for car repair because all cars were essentially 100% reliable.
If you’re like so many drivers, you probably received a discount or even a refund on your auto insurance premiums. Again, this is an understandable circumstance. With fewer people on the road, there were fewer chances of an accident occurring. That’s wonderful for broader health and safety concerns. However, this did not serve the fundamentals for PRTS stock. Still, this was one of the surprisingly positive plays that should receive more attention than it’s getting.
But would the narrative continue to be positive next year? As I said earlier in 2020, this is an intriguing but risky play. However, if you can handle the volatility, PRTS stock can tickle one’s speculative bones because, due to Covid-19 infection fears, people are driving more this holiday season than using any other transportation method. If so, this is one of the breakout stocks for 2021 to watch, especially if coronavirus cases worsen.
Though 2020 will be forever associated with the pandemic, it could secondarily be considered as the year of the electric vehicle. Because the crisis affected global auto supply chains, EVs became that much more attractive due to their fewer moving parts. And with a greater emphasis on the environment and sustainability, EVs just made sense.
But the thing is, everybody had the same idea. Now, it’s tough to consider something like Tesla (NASDAQ:TSLA) without wondering if you’re not risking hold the bag (and a huge one at that). Organically, sentiment filtered down to battery technology specialists and why not? EVs can’t get anywhere without advancements in battery innovations, and the solid-state battery concept has taken off like wildfire.
If you think you missed the boat, you may want to look at Panasonic. No, it doesn’t rank highly on the sexy scale. But PCRFY stock gives you exposure to a proven battery company. Yes, it’s tempting to chase hype and potential, but Panasonic is actuality in the here and now.
Furthermore, PCRFY stock is tied to multiple relevant business units. If the EV battery development doesn’t go as planned, Panasonic could still ride out other revenue channels. That’s different from single-focused battery names, which could end up imploding if they fail to deliver the goods.
Cresco Labs (CRLBF)
Up until recently, cannabis-related companies have been disappointing. Even now, many organizations are well below their highs from prior years. However, the incoming administration of President-elect Joe Biden has offered much-needed optimism for the sector. Though Biden has historically opposed full marijuana legalization, he may change his mind.
Prior to the pandemic, some experts stated that cannabis was the fastest-growing job sector. What do we desperately need right now to bolster Main Street? You guessed it, marijuana. But also jobs.
Now might be a time to consider the usual suspects for breakout stocks for 2021, such as Canopy Growth (NASDAQ:CGC) and Cronos Group (NASDAQ:CRON). However, you may also want to go off the beaten path with Cresco Labs. One of the main reasons why Cresco is attractive is that it focuses on the holistic benefits of cannabis. The brand imbues professionalism, which is excellent for product evangelism purposes and by logical deduction, CRLBF stock.
Just as importantly, the legislative environment is quite compelling. Recently, the House voted to decriminalize marijuana, though that might not pass the Senate. But all eyes are now on Georgia and its senatorial runoff elections.
Frankly, Senator David Perdue’s absence during the debate between challenger Democrat Jon Ossoff was cowardly. Americans hate that kind of stuff. And Senator Kelly Loeffler is in real trouble because of her shady image. That means we could get that blue wave, which bodes well for CRLBF stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.