Editor’s Note: This article is a part of our “If You Only Buy One Stock” series where we look at 2021’s most popular investing trends and have our top financial journalists make their very best pick. Click here to see more names for your must-buy list.
The second quarter has only just begun, and 2021 has already been a wild year. We are still navigating the Covid-19 pandemic, a boom in crypto assets and a retail investor revolution. You may be feeling like you need to schedule a target practice — how else would you find the top stocks of 2021?
From electric vehicles to penny stocks to cryptocurrencies, we know that there are several red-hot themes driving the market now. However, with so much noise, it can be hard to find the real winners. Luckily, the InvestorPlace pros did the hard work for you. They examined the top 10 investing trends of 2021 and pulled together their top picks.
With this list, you won’t need that practice. In fact, these top stock picks are setting you up for a bullseye.
In no particular order, here are the 11 bullseye investments InvestorPlace pros are betting on in 2021:
- Palo Alto Networks (NYSE:PANW)
- Li Auto (NASDAQ:LI)
- MP Materials (NYSE:MP)
- Cronos (NASDAQ:CRON)
- Zomedica (NYSEMKT:ZOM)
- Tuscan Holdings (NASDAQ:THCB)
- Enphase Energy (NASDAQ:ENPH)
- C3.ai (NYSE:AI)
- Splunk (NASDAQ:AI)
- Dogecoin (CCC:DOGE-USD)
- Ethereum (CCC:ETH-USD)
Top Stocks 2021: Palo Alto Networks (PANW)
Investor: Joanna Makris
Investors no doubt know that 5G is one of the hottest investment themes of 2021, and of years to come. The fifth and newest generation of wireless networking technology is incredibly powerful. It promises lower latency, much faster speeds, and wireless connections in all sorts of critical places. Potential uses are high-density venues like sports stadiums, and mission-critical facilities like hospitals.
However, 5G may feel a little bit like old news. Despite its still-growing potential, investors have already found several early winners in the space. Qualcomm (NASDAQ:QCOM) and Nvidia (NASDAQ:NVDA) make the mobile handsets and the components, and they have already gained on the 5G theme. Companies like Ericsson (NASDAQ:ERIC) and T-Mobile (NASDAQ:TMUS) have also already rocketed.
That does not mean there is no more opportunity in 5G stocks…
In fact, InvestorPlace Markets Analyst Joanna Makris has a top pick that many investors may not even know. That pick is Palo Alto Networks.
As Makris puts it, 5G is about to massively disrupt wireless communications. It will bring more connected devices than ever before, and also introduce new security risks. Our existing solutions will not be able to keep up.
Palo Alto Networks is ready to solve that problem, and Makris even thinks the company is ready to surprise Wall Street with healthy earnings. If you could only buy one 5G stock, it better be PANW.
Li Auto (LI)
Theme: Electric Vehicles
Investor: Ian Bezek
Seemingly every day, a new electric vehicle firm debuts on Wall Street.
In reality, EV stocks have become increasingly popular with institutional and retail investors. This makes a whole lot of sense. Consumers are increasingly adopting all-electric or hybrid-electric vehicles, and automakers are also pivoting their business models. Federal and state support continues to grow, and charging networks are becoming more robust. The electric future is here, and now investors just need to make some money.
InvestorPlace contributor Ian Bezek highlights a very real problem in the world of EV stocks: It may feel hard to pick a winner. Tesla (NASDAQ:TSLA) is no doubt leading the way, but its market capitalization is nearly $650 billion, raising concerns about upside potential. Some companies are hard to trust, coming to market without manufacturing facilities or vehicles on the road. And some decent companies simply do not seem likely to defeat the growing competition.
Thankfully, Bezek also highlights a solution.
He says that if you could only buy one EV stock, it better be Li Auto. This is because Li is well-positioned in the dominant Chinese automotive market. It rivals Nio (NYSE:NIO) with a strong balance sheet and it is already profitable. LI stock may not be the most glamorous investment, but Bezek says it is a wise one.
Top Stocks 2021: MP Materials (MP)
Theme: Battery Technology
Investor: Chris MacDonald
Want an even hotter theme than electric vehicles? Consider electric vehicle battery and battery tech companies.
These companies are the picks and shovels that make EV stocks hum. That is because where things stand, many consumers are unwilling to switch over to all-electric cars. Current batteries have range limitations and are heavy, increasing the overall cost of the car. Plus, slower charging times just cannot compete with the convenience of a quick trip to the gas station.
EV battery innovations promise to change this, making electric vehicles lighter, faster and easier to charge. As these innovations come to fruition, automakers are increasing their investments in electric vehicle production, and consumers are coming on board.
That is why InvestorPlace contributor Chris MacDonald is bullish on a rare earth elements play, MP Materials. These elements are critical components of electric vehicle batteries — and all sorts of battery makers and automakers need these elements. MP Materials currently produces a concentrate that contains 15% of the annual rare earth element consumption. By 2022, it will be separately producing neodymium and praseodymium.
One more perk with MP Materials? Unlike other rare earth elements plays, MP Materials concentrates its operations in North America. This shelters it from the ongoing U.S.-China tensions, and makes it a better pick for investors. That is why if you could only buy one battery stock, it better be MP.
Investor: Vince Martin
Investors have seen that investing in cannabis stocks can be quite volatile.
After the theme initially peaked, many cannabis stocks crumbled. Canadian companies were struggling to compete with black-market suppliers, and the rollout of Cannabis 2.0 which featured edibles and other derivative products was not as beneficial as hoped. Plus, many investors were mainly betting on widespread legalization in the U.S. That true catalyst has been delayed time and time again, and that reality has been weighing on cannabis investors.
So where do things stand now? That volatility is still present.
For bulls, pros include the fact that Democrats control Congress, and that President Joe Biden is on board with federal decriminalization. States have continued to make their own moves to legalize and decriminalize cannabis. Legal businesses may be about to gain access to banking services, and therefore, a greater sense of legitimacy. Cons include Covid-19 and its impact on demand, as well as an unclear legalization timeline.
InvestorPlace contributor Vince Martin recognizes this reality, and he is betting on Cronos to pull through.
The company may be struggling, generating less revenue than its competitors and posting big losses. However, it has backing from Altria (NYSE:MO) and is pushing forward with vaporizers and fermentation. These innovative pathways could help Cronos deliver in the long term. If you could only buy one cannabis stock, that is why Martin thinks you should pick CRON.
Top Stocks 2021: Zomedica (ZOM)
Theme: Penny Stocks
Investor: Will Ashworth
So what do the pros think about penny stocks? Is there even a top pick in this high-risk, high-reward space? According to InvestorPlace contributor Will Ashworth, one stock stands out.
What is this pick? Well, Ashworth recommends high-flying Zomedica.
Many retail investors will likely be familiar with Zomedica, particularly for its popularity on social media, including the r/PennyStocks subreddit. The tiny company promises to disrupt veterinary care, and therefore, make life better for our furry friends.
Specifically, Zomedica just commercially launched its Truforma diagnostic platform. The goal of this tool is to help vets get a correct diagnosis faster. If they can make a quick diagnosis, they can move quickly to treat Fido or Fluffy and get them feeling better in no time. That is better for veterinarians, better for owners, and definitely better for the pets.
But why is Ashworth bullish on Zomedica? Not only does he like its animal-friendly offerings, he also thinks investors are missing the bigger picture. After the company announced it was pivoting to a direct sales approach, ZOM stock started to quickly sell off. To Ashworth, that leaves an attractive discount and a much better growth runway for the penny stock. If you could only buy one penny stock, Ashworth is betting on ZOM.
Tuscan Holdings (THCB)
Theme: SPAC stocks
Investor: Thomas Niel
SPAC stocks became a dominant theme of 2020. Now, in 2021, investors and regulators are giving them a closer look, and not everything is looking rosy.
In the middle of the pandemic, investors became hungry for new stock offerings. Special purpose acquisition companies emerged from the shadows, delivering early stage and innovative companies to the public markets. In no time at all, investors dove in, and the SPAC offerings kept flowing. Popular names like DraftKings (NASDAQ:DKNG) and Virgin Galactic (NYSE:SPCE) chose this route to come public.
Now though, investors are not so sure. The U.S. Securities and Exchange Commission has asked pre-merger blank-check companies to re-value their warrants. This could remove a valuable incentive, and it will cost SPACs big bucks in accounting fees. Plus, we just learned that regulators are evaluating when safe harbor actually applies to forward-looking statements. This could further weigh on the growth-focused appeal of SPACs.
What does this mean? Is it time to run away from SPAC stocks?
InvestorPlace contributor Thomas Niel has a top pick, one pre-merger SPAC that has a solid valuation and great growth potential. This pick is Tuscan Holdings, the blank-check company planning on bringing battery firm Microvast public. Niel likes that Tuscan is entering into a red-hot industry through its acquisition. Plus, Microvast already has solid partnerships like one with Oshkosh (NYSE:OSK), which is the company fulfilling the U.S. Postal Service contract.
Here is the short story. If you could only buy one SPAC stock, Niel thinks it should be THCB.
Top Stocks 2021: Enphase Energy (ENPH)
Theme: Solar Energy
Investor: Chris Markoch
Electric vehicles are not the only clean energy investments gaining ground in 2021. Solar stocks are also heating up, and investors may be wondering how to pick a winner.
InvestorPlace contributor Chris Markoch recognizes that the entire sector is booming. Biden has included a proposal for increased solar investment in his American Jobs Plan, and energy storage advancements have enhanced the consumer appeal. Plus, installation and component costs are quickly decreasing, seriously increasing demand. That is why Allied Market Research thinks the entire solar market will be worth more than $220 billion by 2026.
However, Markoch is bullish on one solar stock in particular. If you could only buy one, he recommends Enphase Energy.
So what makes this solar company stand out? Markoch hones in on one specific catalyst, its work with microinverters. This technology addresses a key problem in the renewable energy market — it is not sunny all day, every day. Essentially, its microinverters help take the direct current power from solar panels and convert it to alternating current power to generate energy during gloomy days.
Combine this with international expansion plans, and ENPH stock looks absolutely sunny.
Theme: Artificial Intelligence
Investor: Chris MacDonald
Want to invest in the technology that helps make your Netflix (NASDAQ:NFLX) recommendations eerily accurate? If so, it is time to consider adding artificial intelligence stocks to your portfolio.
Importantly, investors should be very familiar with the idea that AI is a booming investment theme. Big Tech giants like Netflix, Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) continue to increase their spending in this field. However, those companies are working to harness artificial intelligence solely for their own gain.
To InvestorPlace contributor Chris MacDonald, that means retail investors may want to look elsewhere for success with AI stocks. One company he particularly likes is C3.ai.
As MacDonald tells it, C3.ai is all about bringing artificial intelligence to the masses. Its business model is to provide enterprises with AI solutions, without requiring major capital investments. Therefore, it will be a key player in unlocking AI innovation in a variety of industries.
So what else do you need to know? Although MacDonald is convinced that AI stock is a top pick, he recognizes that there are valuation concerns. C3.ai remains far off its peak, as its price-sales ratio may be deterring investors. However, if you are thinking long term, consider adding this pro pick to your portfolio.
Top Stocks 2021: Splunk (SPLK)
Theme: Internet of Things (IOT)
Investor: Joanna Makris
The internet of things (IOT) is moving from the realm of sci-fi movies into real life. We have connected medical devices, connected home thermostats, connected alarm systems, connected lightbulbs and so much more. This world is only going to grow, with Wall Street experts chattering about connected cars and entire connected homes.
Unsurprisingly, IOT stocks have become popular with investors. Who wouldn’t want a piece of this super innovative pie?
However, some of these investments have already had their moments in the spotlight. You have likely heard of Dexcom (NASDAQ:DXCM), Cisco (NASDAQ:CSCO), Intel (NASDAQ:INTC) and their connected peers. In some ways, this means that upside potential faces limitations, and these stocks may not be as appealing anymore.
InvestorPlace Markets Analyst Joanna Makris found a lesser-known winner, and it touches on a very scary component of the internet of things. The more devices we connect, the more room we open for hackers and other bad actors. We need to make our networks more secure, and we need better analytics to know what is going on. Splunk promises to deliver all of that and more.
Considering all that Splunk has going for it, it’s clear why Makris has given it her endorsement. That is why if you could only buy one IOT stock, it better be SPLK.
Investor: David Moadel
There is really no way you could make a star-studded portfolio in 2021 without including a cryptocurrency or two. That is because, long story short, mainstream support for digital currencies is rapidly growing. In just the last few months, Bitcoin (CCC:BTC-USD) has rocketed to new all-time highs once unimaginable. Financial institutions are coming on board, retail interest is climbing, and even celebrities are talking crypto.
So then, how should wise investors prep themselves for the year ahead?
According to InvestorPlace contributor David Moadel, there is no better crypto to pick than Dogecoin. That is because the meme coin has proven itself in a big way in 2021. DOGE has absolutely rocketed higher, setting an all-time high above 40 cents in recent weeks. It has racked up endorsements from Elon Musk, Guy Fieri and Snoop Dogg. Plus, rising Dogecoin prices speak to its strong community backing.
As Moadel puts it, Dogecoin is not the largest or the most technologically savvy cryptocurrency. However, Dogecoin is a crypto that comes with incredibly strong retail support. In a space all about decentralization and the power of the people, DOGE may just be the best bet.
And, if nothing else, investors should know by now that the retail crowd is mighty powerful.
Top Stocks 2021: Ethereum (ETH-USD)
Investor: Thomas Yeung
OK, Dogecoin may be fun and all, but what if you are not willing to put a literal meme in your portfolio?
Well, there is no need to worry, because InvestorPlace Markets Analyst Thomas Yeung has you covered. In fact, he has an alternate cryptocurrency recommendation, and this coin just happens to take the No. 2 spot. That is because Yeung is bullish on Ethereum, which is the top rival to Bitcoin now.
So what makes Yeung a big fan of Ethereum?
To start, Ethereum is all about beating Bitcoin at the blockchain game. Its underlying blockchain brought about a revolution in smart contracts, and its developers are continuing to improve its codebase. Next, Ethereum has become the crypto of choice in the world of non-fungible tokens. These digital assets typically use one of two tokens on the Ethereum blockchain, and investors continue to flock to digital gifs, artwork and even historic tweets. Because Ethereum is playing a star role in this trend, we could continue to see Ethereum prices get a boost.
Lastly, Yeung thinks that Ethereum is making a key, eco-friendly move. Importantly, one concern about its blockchain is that it requires a great deal of computational power to facilitate transactions. In response, its developers launched a proof-of-stake blockchain, and it could move away from mining quickly. This gives it further edge against Bitcoin, and can help it beat out other altcoins.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is the Editor of Today’s Market with InvestorPlace.com.