As the sun sets on 2021, these 5 stocks are my most convinced holdings
Are you still looking for some staple long term headlines to start the New Year? Names you can trust no matter what might happen to the vast market? If so, read on. Below are my top five fundamental picks for almost any portfolio as 2021 moves into 2022. In no particular order …
You know the business. Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is of course a parent of search engine giant Google and online video site YouTube. It also has other income-generating projects in its collection, but these two platforms alone account for around 80% of its total business. More than that, the activities of both platforms are pretty darn secure. Data from GlobalStats suggests that Google manages over 90% of the world’s web searches, a statistic that has been stable for a decade. And while it’s anything but a traditional streaming service like Netflix Where Disney+, YouTube has established itself in our living rooms as a preferred entertainment destination. Numbers Nielsen published earlier this year indicate that American consumers stream as much YouTube content as they stream Netflix content, and stream significantly more YouTube content than Disney content.
Credit this audience to the 2 billion regular monthly YouTube users who collectively watch over 1 billion YouTube videos every day. The watch-anything format works!
Amazon were perhaps the pioneers and then generalized the idea of online shopping. But its business model was and still is far from perfect. The more it grows, the more the site becomes complicated and impersonal. And, if it is to continue to grow, it will eventually have to compete with its own third-party vendors and pit them against each other.
Enter Shopify (NASDAQ: SHOP), the non-Amazon. Rather than restricting an online seller’s options to Amazon’s online storefronts, Shopify gives merchants a way to build their own stores in their own way. At last count, over 1.7 million businesses are using Shopify’s online sales tools.
This is only the beginning, however, as many small businesses have yet to discover this more user-friendly alternative. Last quarter revenue grew 46% year over year, extending what has become a well-established uptrend.
On the other end of the size spectrum is Walmart (NYSE: WMT), the reason why many small brick-and-mortar businesses have had to turn to e-commerce to survive, while also being a disadvantaged competitor to Amazon. Walmart’s physical retail empire did not seem equipped to deal with Amazon or the armada of newly empowered small merchants who went online.
However, the world’s largest brick and mortar retailer is not as helpless as it was a few years ago. Indeed, it changed everything, leveraging its physical footprint with its growing online reach. Although it still only makes up a fraction of Amazon’s e-commerce business, online sales in the third quarter of this year were 87% higher than the total before the 2019 pandemic. That growth also has extended a long series of improvements.
However, this is only the beginning of Walmart’s merger of its online and offline operations into one powerful platform. The company announced in February that it plans to invest around $ 14 billion in its supply chain, automation and other customer-centric technologies over the coming months. These investments should start to bear fruit in 2022.
If you are only looking for high growth prospects, let this guide you Verizon Communications (NYSE: VZ). Before I dismiss the idea entirely, can I ask the most growth-oriented investors that there is a lot to be said for generating reliable dividend income? This is true even if you are only looking for recurring cash injections to buy more growth stocks.
Despite the low interest rate environment we currently find ourselves in, the yields of all dividend paying stocks have not been reduced to reflect this dynamic. Verizon is currently showing an above-average return of almost 4.9% – based on a dividend, I might add, which has been paid like clockwork every quarter since 2000, when Verizon came into being via the merger of GTE and Bell Atlantic. The dividend payment has also been increased at least a little each year since 2007. This does not yet qualify the action for aristocratic dividend status, but given the nature of its activity (consumers are not sure. the point to stop using cell phones now!), that possibility is certainly on the radar.
Finally, computer equipment Nvidia (NASDAQ: NVDA) has earned a spot on my high conviction stocks list for 2022.
You might know it primarily as a name in video game hardware, and the company still does a lot of video game business, that’s for sure. In fact, sales of video game equipment were its biggest activity in the last quarter, accounting for 45% of its revenue.
There is another company that will end up generating a lot more revenue for Nvidia than video games. These are data centers, and data centers dedicated to artificial intelligence (AI) applications in particular. It turns out that the same technological architecture that is well suited to handling the intense graphics display needs of video games is also ideal for the intensive number computation performed for AI purposes. And, Nvidia is now building that hardware from the ground up with artificial intelligence in mind. This is one of the main reasons why nearly 70% of the supercomputers currently in use around the world are powered by Nvidia technology.
However, the world has only scratched the surface of the evolution of AI. Tech market research firm IDC believes the AI hardware market will grow from $ 85 billion this year to $ 200 billion in 2025. Even earning a fraction of this business would be a huge boon to Nvidia.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.