Congress is getting closer to passing the next round of Covid-19 relief and people could soon have their new stimulus check in hand. Investors looking to put that money to work in the stock market have a lot to consider.
The big technology growth stocks that soared last year are in retreat, there’s a rotation into cyclical value stocks and speculation is running rampant in cryptocurrencies and cannabis companies.
Add in the so-called “meme stocks” that are being driven sky-high by the WallStreetBets crowd on Reddit and it’s easy to see how investors with some extra money could be confused.
To help clarify matters, we offer the following four stocks to invest your stimulus check in.
Stimulus Check Stocks: JPMorgan Chase (JPM)
Banks are one of the few sectors that do better in a high-interest rate environment. This is because banks earn the majority of their revenue and profits from the interest they charge on mortgages and other loans.
As people fret about the economy overheating and interest rates going up, banks are a good bet. Plus, banks will do better as the economy recovers and consumers feel more confident spending on everything from travel to new homes and cars. Among banks, JPMorgan Chase is the largest in the U.S. based on total assets and JPM stock is a top performer.
The current rotation out of technology stocks has benefitted JPM stock in recent months. Since the start of this year, the bank’s share price has risen 18% and seems to have momentum behind it.
Investors would be wise to place their stimulus check in JPMorgan Chase stock, which can be viewed as both a safe haven amid the recent market turmoil and a great way to play the economic reopening. Plus, JPM stock has behaved a lot like a growth stock over the last decade, rising nearly 250% from the beginning of 2010 through the end of 2019.
Oil stocks are rebounding this year after a devastating 2020. Among the major oil companies, Chevron recently got a big vote of confidence when it was revealed that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) bought a major stake in the company.
Berkshire spent a total of $4.85 billion to purchase 48.5 million shares of CVX stock. Buffett is looking to capitalize on the current rebound in oil prices and ride the upswing in Chevron stock. Retail investors would be smart to follow the Oracle of Omaha’s lead and grab some Chevron shares with their stimulus pay.
Beyond the investment by Warren Buffett, Chevron recently completed its acquisition of Noble Drilling in a deal valued at $13 billion. The Noble Drilling deal enabled Chevron to increase its production by 1% last year despite a deep industry downturn. Plus, Chevron pays a sizable 5.8% dividend yield.
The dividend was no doubt one of the main attractions of CVX stock to Warren Buffett, who is a buy-and-hold value investor. Given its positive position, Chevron should perform well this year as the global oil industry continues to rebound.
CVX stock has climbed 19% higher year-to-date and currently trades at $100 a share.
Investors searching for a solid reopening stock need look no further than Caterpillar.
The heavy equipment and engine manufacturer has seen its share price rise to record levels in recent months as focus turns to the economic reopening and much-needed infrastructure spending.
A leading industrial company, Caterpillar has been developing multiple new products to boost its growth, including self-driving vehicles, telematics software and remotely operated construction equipment.
After being beaten down over the last few years, CAT stock is finally trending higher. Year-to-date, the company’s share price is up 18% at $215.88. However, the current run in Caterpillar’s stock began last fall. Since October, the company’s share price has risen 42%.
With governments at both the state and federal level expected to spend heavily on infrastructure projects such as road repair in the coming year, and with commodity prices on the rise, the current and future growth prospects for Caterpillar look very bright indeed.
ETSY stock just got a big pop after reporting better-than-expected quarterly earnings.
In the fourth quarter of 2020, Etsy’s earnings came in at $1.08 per share versus 59 cents per share that had been expected by analysts. Revenue was $617.4 million compared to $516 million expected by analysts.
Fourth-quarter revenue was up an astounding 129% compared to a year earlier. In terms of forward guidance, the e-commerce company said it expects revenue in the current first quarter to be between $513 million and $536 million, far ahead of Wall Street’s forecast of $383 million in revenue.
Etsy, which operates an online marketplace for handmade goods and crafts, has been one of the biggest beneficiaries of the pandemic, as stay-at-home shoppers turned to the company for both essential and non-essential items.
Face masks, for example, have thrived on Etsy during the pandemic, comprising 4% of total gross merchandise in the fourth quarter. Etsy also reported that it attracted 61 million new or reactivated shoppers to its site and recorded nearly 160% growth in “habitual buyers” in the fourth quarter.
ETSY stock has risen 32% so far in 2021 and is one of the growth stocks from last year that continues to outperform. The company’s share price is currently at $220.27 a share.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.