If we look back a century, when the Spanish Flu had run its course and WWI had finished, we quickly entered the Roaring Twenties, a time of wealth and enthusiasm. We’re now entering the end of the novel coronavirus pandemic as vaccines are getting distributed around the world. And it looks like it’s going to bring about some celebrating for consumers — and for investors as well. As such, investors may be looking for hot stocks that will benefit from this upcoming time of celebration and growth.
According to the National Retail Federation’s annual forecast, the association that includes the biggest retailers in the U.S. and most other players as well, sales are expected to rise 6.5% to 8.2% this year.
This is after a rise of 6.7% last year. And after 22% growth in online sales last year, the forecast is predicting another 18% to 23% growth to more than $1.1 trillion in sales.
These seven hot stocks are my choices for taking this big ride. Let’s take a look:
- Amazon (NASDAQ:AMZN)
- Chewy (NASDAQ:CHWY)
- Costco (NASDAQ:COST)
- Pinduoduo (NASDAQ:PDD)
- Target (NYSE:TGT)
- Vipshop Holdings (NYSE:VIPS)
- Walmart (NYSE:WMT)
Hot Stocks: Amazon (AMZN)
Amazon remains the major player in e-commerce, and that title won’t be handed off anytime soon, even with the departure of founder and CEO Jeff Bezos later this year. He’ll still have a seat at the table and a voice everyone will hear in management.
But what AMZN has done so well is integrating every aspect of the online model to facilitate operations that work for its customers. And those customers reward the company with new business.
It’s the leading cloud and Big Data computing company in the world, which delivers so much cash to the company that it can fund a low-margin food business and e-commerce business with it. And as it builds out its own logistics company, it will be able to grow margins there as well.
With a price-to-earnings (P/E) ratio in the low 70s and a 52% run in the past 12 months, AMZN stock may seem expensive. But the fact is, Amazon continues to expand its opportunities and grow the business in the fastest growing sector in the retail market. It’s going to be a hot stock as long as consumers are spending.
AMZN currently has a “B” rating and a buy recommendation in Portfolio Grader.
One of the hot niches now in online retail is pet supplies. Not only are more people buying pets, but taking care of them has also reached a new level of intensity. The pandemic certainly saw a boost in pet ownership as well as pet-product demand.
We’ve seen so many clips about comfort animals on airplanes — remember airplanes? — that airlines had to create policies for what animals qualified.
Chewy has become one of these hot stocks because it’s completely online. That means it doesn’t have to deal with brick-and-mortar stores and the overhead that they come with. Some of the national pet supply companies that are CHWY’s rivals have to manage that piece, as well as expand their services online, which isn’t as easy as you might think.
CHWY has the advantage of focusing on e-commerce fulfillment, and that’s it. That’s a big advantage when it comes to operating costs and margins.
The stock is up 195% in the last 12 months and 10% in the past three months. That kind of growth should keep this stock at the head of the pack.
CHWY stock currently has an “A” rating and a strong buy recommendation in Portfolio Grader.
Next on our list of hot stocks is Costco. While this retailer/wholesaler has been around since 1985, its secret sauce isn’t transitioning over to an online e-commerce model. It’s about price, variety and quality.
And at this point, its Kirkland brand products have developed their own following among members. For example, it’s one of the largest wine buyers in the world, which means it can get much better prices on quality wines and then sell them at very reasonable prices. And it remains the second-largest retailer by revenue in the world.
The member model also means that it has a revenue base it can count on whether a member even sets foot in a store. But if you have ever been to a Costco on a weekend (or any day of the week, really), you know that empty parking lots aren’t a big worry.
But COST has been left out of the big bull run of recent, likely due to the fact that it isn’t a cool online retailer. The stock is down 3% in the past 12 months, and it is down 17% in the past three months.
Investors might see this dip as a buying opportunity. It’s still a solid buy as vaccines become more available and people can feel safer shopping in stores again.
COST currently has a “B” rating and a buy recommendation in Portfolio Grader.
While the U.S. is just getting to the point of seeing some kind of relief in the near future from the pandemic, China is already enjoying a rebounding economy. And in its new discussions regarding its five-year plan, one of the key points is growing the consumer sector.
PDD is one of the top hot stocks in this sector. It operates the largest agricultural e-commerce sites in China, with 240 million buyers, 12 million growers and 586,000 vendors. The company sees the agricultural sector — fruits, vegetables, etc. — as a great opportunity for e-commerce that has been overlooked up until now.
While the Chinese government has been watching over the expansion of the fintech industry very cautiously, it’s very supportive of expanding any opportunities to help farmers and create more domestic supply of agricultural goods.
This hot stock is up 323% in the past 12 months and already has a market capitalization of $189 billion in the U.S. market. It’s a big player in this sector, and there’s plenty of growth potential left.
PDD stock currently has an “A” rating and a strong buy recommendation in Portfolio Grader.
After nearly succumbing to the huge e-commerce wave that hit big-box retailers in the early 2000s, this 99-year-old retailer had to make some big changes if it was going to survive, much less thrive in the new retail environment.
After some stumbles, Target is certainly hitting its stride now, especially during the pandemic. The company reported this week that it grew revenue by $15 billion in 2020. That’s more than the past 11 years combined.
And the company announced that it’s going to spend $4 billion a year for the next four years on building out smaller stores. It seems that its success last year was due to the fact that Target had more stores closer to consumers so that it was easier to pick up goods at the store rather than have them shipped from bigger retailers like Walmart.
TGT stock is up 57% in the past 12 months, but it’s in the red year-to-date, which means there’s a good opportunity here to grab this hot stock while its cool.
TGT stock currently has an “A” rating and a strong buy recommendation in Portfolio Grader.
Vipshop Holdings (VIPS)
Think of VIPS as an online discount department store. It just reported Q4 and full-year 2020 numbers, and they were very good.
Again, the trend toward digital was apparent all around the world, and given the fact that China has 1.4 billion people, what’s true in the U.S. is even truer in China. In Q4, active customers hit 53 million, up 37%. For the full year, active customers hit 83 million, up 22% year-over-year. Total revenue was up 22% in Q4 and 9.5% for 2020, year-over-year.
VIPS stock performance also illustrates its hot stock status, up 206% in the past 12 months and 59% in the past three months. Yet even after this significant performance the stock is still trading at a current P/E of 42. There’s plenty of opportunity left in VIPS.
VIPS stock currently has an “A” rating and a strong buy recommendation in Portfolio Grader.
I would be remiss if I didn’t talk about the world’s largest retailer by revenue. When talking about hot stocks in the retail industry, Walmart is one that can’t be missed.
When Walmart went national, one of its big branding campaigns emphasized that everything it sold was made in America. But as competition ramped up over the years, the company abandoned that pledge and started buying from low-cost manufacturers around the world. Low prices drove the business, not national pride.
But just this week, WMT has announced a 10-year, $350 billion commitment to invest in U.S. manufacturing for its goods. There are a lot of factors at play here, but part of the reality is that China is no longer as cheap as it used to be. And therefore, reliable supply chains for the long term are crucial. Made in America makes more sense.
Of course, WMT’s business remains solid, and it’s looking to take its subsidiary Flipkart public in the U.S. via a SPAC (special purpose acquisition company).
The stock is only up 9% in the past 12 months, and it’s in the red in the past three months. Furthermore, its current P/E of 27 as well as its 1.7% dividend make it very attractive here.
WMT stock currently has a “B” rating and a buy recommendation in Portfolio Grader.
On the date of publication, Louis Navellier has positions in AMZN, CHWY, COST, PDD, TGT, and VIPS in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.