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Originally Posted by jyl
Things I am interested in for 2021, at least the start of the year:
4. Selected beat to crap cyclicals stocks in the US. I bought the stocks that were hardest hit by Covid, as long as they had the balance sheet and borrowing capacity to survive the pandemic. So, not all movie theater stocks, but one of them; not all airlines and hotels, but a few of them; not all department stores, but one of them; and so on. Most of these are +50% to +90% from then, and some still have another +30% to +50% in my view. I don’t need to think that the stocks should trade at 50X revenues or that the companies will grow to 5-10X their current size or other dreamy stuff. All I need is for the virus to be defeated, some of their competitors to go under, and for their own revenues to recover to 80% of pre-pandemic levels. Which I think is pretty likely.
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That was my approach in March. My "Lockdown Stocks" are up 52% overall, with none in the negative at this point. Unicorn of the bunch was KSS with a 128% return thus far since mid-March. Not a bad for a 9 month investment. I'm planning on riding that wave as much as possible until it levels off.
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5. Selected REITs. Real estate is an inflation hedge, unless local rent control is extreme. There are still some classes of REIT trading at -20% to -40% discount to pre-pandemic levels. There is tons of money looking for investment opportunities so they can resume growth when they are ready. I’m not interested in a Manhattan office building REIT (yet?) but a multifamily REIT with mostly Sunbelt exposure is a different story.
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Absolutely. Especially REITs with less investments in NYC & hospitality and more in commercial and multi-family homes. I augmented REITS with some conventional RE stocks - focusing in on developers & builders, which have held their ground. I am hoping to see some nice steady increases starting in the springtime. I also think NYC RE will drop more before it beings a slow climb...
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6. Green stories. Some valuations are really high but there’s a lot of money with “green” mandates and, unlike generic ESG, the number of solar, wind, hydro, etc stocks is pretty limited. Government policy favors non fossil fuel energy in many countries, and economics favors it in many other cases. Some of the green yieldcos actually have decent dividend yields, it’s not all crazy-priced Chinese dollar panel makers.
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I invested a little into this sector, given the new admin's desire to push more green initiatives. I don't expect a huge bounce like Retail, hospitality RE, and travel investments will see, but I hope to see steady growth as this area matures.
Besides what's been mentioned above, including Tabs warning (the guy has valid arguments here), this is what I see: The most gains I have seen in my non-retirement portfolio has been in technology and "biotech" stocks.
1. I don't think tech is over-hyped just yet - and there should be more room for growth. I am avoiding stocks that had huge gains due to the constraints of the pandemic like Zoom and Electronic gaming stocks. I feel they will grow, but not at the same significant rates as other stocks in the tech sector. Stocks like ROKU, on the other hand, was already on a tear prior to the pandemic, and I suspect it will continue to see growth.
2. Biotech is another story. It has always been one of the strongest sectors in my portfolio. And I'm not talking about pandemic related stocks, but rather companies that have been successful with incorporating more technologies to improve the conditions of people with chronic conditions. For example - DXCM - they produce CGM's (Continuous Glucose Sensors) for diabetics that are using closed loop insulin pumps to manage their insulin levels. This is the most accurate CGM out there, and it integrates with insulin pumps made by the biggest companies (Tandem, Omnipod, and Medtronic). Diabetes isn't going anywhere post-Covid, and more and more folks, including non-pump wearing Type 1 & Type 2 diabetics, are turning to this technology. The focus here should be to see where the companies are in their product line, and if their product lines are due for an upgrade sooner than later. New devices and tech launches always give these stocks a nice bump. I expect to see more integration with such devices with other wearables and smart devices. (Example: if the Dexcom triggers a low blood sugar alert and the diabetic doesn't respond to the alert on his or her smartphone, it will run an ITTT script to turn on the bedroom lights and play death metal music on their BT speaker. If 30 minutes later, still no response, send a message to 911. This integration is already half-way there - DXCM uses bluetooth to communicate with cell phones and insulin pumps)
Other than that, I'm not sure what to invest in. As always - one size does not fit all. Your mileage may vary, Serving suggestion - keep frozen. Research and familiarity of the investment sector goes a long way...
-Z