The Top 6 Blue Chip
Stocks for 2021
Louis Navellier here. To say that 2020 has been an outlier is an obvious understatement. In my 30+ years of investing, 2020 has been unique.
The pandemic has forced governments around the world to take unprecedented measures in response, including shutdowns of businesses, trillions in financial stimulus and an enormous push to safeguard public health. Indeed, scientists are currently speeding different COVID-19 vaccines through trials in a history-making push to inoculate the world’s population.
After suffering steep losses earlier in the year, the good news is that the stock market has rebounded.
We’re seeing signs that a V-shaped economic recovery remains well underway, with GDP roaring back, improved productivity, retail sales beating expectations in most categories, home sales surging and imported goods returning to pre-pandemic levels, which is a sign of healthy consumer spending.
There was a lot of uncertainty surrounding the presidential election, but Wall Street bounced back quickly after it was made clear that there would continue to be gridlock between the Senate and House.
I want to draw your attention to another key factor to keep a close eye on: interest rates. In order to support the economy, the Federal Reserve has said it will maintain near-zero interest rates through 2023. Personally, I wouldn’t be surprised if ultralow interest rates persist for the rest of my lifetime.
Interest rates at this level benefits select corners of the market, including real estate and commodities like gold. But overall, low interest rates will drive yield-hungry investors back to the stock market, as it continues to yield much more than Treasuries and banks.
That doesn’t mean I’m suggesting you park your hard-earned cash in an index fund and forget it. Far from it. The indexes exist to represent the market as a whole, but they usually contain a lot of lousy stocks.
At Growth Investor, we’re focused on the industry leaders that can regularly beat the market, not just follow along or play catch up. That’s why I get superior returns.
I recommend my stocks based on their strong fundamentals, earnings and sales growth. And I select the stocks that have the buying power to propel them higher through the year.
So when all of that sidelined cash comes roaring back into the market, my fundamentally superior stocks are in prime position to take full advantage.
With Growth Investor, my mission is to find you the next big stocks in the large-cap arena, as well as to steer you away from the duds. Over 30 years in the industry, I’ve devised a system that analyzes roughly 5,000 stocks, grades them according to eight specific fundamental factors, and waits for the right signal to buy. In other words, my flagship service is all about maximizing returns while minimizing risk.
Many of our Growth Investor stocks are also enterprises that dominate their markets and their industries. These fundamentally superior equities boast double-digit forecast sales and earnings growth on average.
But in this report, I’m going to show you the six companies that have emerged as the crème de la crème that you should buy in 2021. With strong sales growth and profits ahead, these stocks are a must-have for your portfolio in the year ahead…
Top Stock #1: VEEV
Veeva Systems (VEEV) is a leading provider of cloud software solutions for the life sciences industry. The company’s solutions help pharmaceutical and life sciences companies use cloud-based architectures and mobile applications for their businesses.
The company has an interesting story. Veeva Systems was founded in 2007 by Peter Gassner and Matt Wallach, who had never met before. In fact, they lived 3,000 miles away from one another. However, they both saw the direction cloud computing was heading and how it could benefit the life sciences industry.
Given Gassner’s experience in Silicon Valley and Wallach’s experience in life sciences, they were the perfect duo to bring the cloud and life sciences together. The company was launched right before the iPhone hit the streets, so there was plenty of opportunity for VEEV to use cloud computing to take the life sciences industry by storm, developing technology solutions specifically to meet its customers’ needs.
Today, VEEV offers a variety of cloud computing solutions that fall under the Veeva Commercial Cloud, a suite of multichannel customer relationship management (CRM) applications, and Veeva Vault, a cloud-based enterprise content management application for managing commercial functions. The company has a number of well-known clients, including AstraZeneca, Teva Pharmaceuticals and Bayer.
Over the years, strong global demand has added nicely to the Veeva Systems’ top and bottom lines.
In fact, the company released better-than-expected earnings and revenue for its third quarter on December 1, 2020. Third-quarter revenue increased 34% year-over-year to $377.5 million, compared to $280.9 million in the same quarter a year ago. Earnings jumped 32% year-over-year to $125.6 million, or $0.78 per share, up from $95.4 million, or $0.60 per share, in the third quarter of 2019.
The analyst community was expecting earnings of $0.68 per share on $361.82 million in revenue. So, Veeva Systems posted a 14.7% earnings surprise and a 4.3% revenue surprise.
Looking ahead to the fourth quarter, Veeva Systems expects to achieve revenue between $378 million and $380 million, up from $311.5 million in the fourth quarter of 2019. Fourth-quarter earnings are forecast to come in between $0.67 and $0.68, up from $0.54 per share in the same quarter a year ago.
The company also has a solid outlook for fiscal year 2020: Full-year revenue is expected to be between $1.446 billion and $1.448 billion and earnings per share are forecast to be between $2.83 and $2.84, which compares to earnings of $2.19 per share and revenue of $1.1 billion in fiscal year 2019.
Top Stock #2: CLX
For more than 100 years, The Clorox Company (CLX) has provided disinfectants and cleaning products to individuals and businesses around the world. In fact, Clorox liquid bleach was first developed back in 1913 as an industrial-strength product, but it was quickly marketed as a “bleacher, germicide, cleanser and disinfectant” to attract more consumers to the product.
By 1914, the Clorox brand name was registered and synonymous with liquid bleach—and the rest, as they say, is history.
Over the next 100-plus years, Clorox’s business expanded rapidly. The company’s namesake bleach was widely used in homes in the 1920s, and Clorox introduced quart-sized containers of bleach for national distribution. In 1934, Clorox was featured in Good Housekeeping magazine, a stamp of approval that drove more households to use Clorox bleach for their cleaning and disinfecting needs.
Today, Clorox operates through four distinct divisions: Cleaning, Household, Lifestyle and International.
- Cleaning: The company’s cleaning division includes Clorox bleach, as well as Clorox disinfectant wipes, Pine-Sol, Liquid Plumr, Formula 409, S.O.S and Tilex.
- Household: The company’s household division is comprised of Kingsford, Match Light, Glad, Fresh Step, Scoop Away and Ever Clean brands.
- Lifestyle: The company’s lifestyle division includes Hidden Valley, KC Masterpiece, Kingsford and Soy Wave dressings and sauces, as well as Brita, Burt’s Bees, Rainbow Light, Natural Vitality and Neocell brands.
- International: The company’s international divisions provides products under the following brands, Agua Jane, Ayudin, Bon Bril, Chux, Clorinda, Lestoil, Limido, Mistolin and PinoLuz.
Clorox’s products are sold in more than 100 countries around the globe, and they have been flying off the shelves during the global coronavirus pandemic. You may have noticed that Clorox household wipes and other cleaning products haven’t been available at most stores, as individuals and businesses are striving to disinfect everything in an attempt to kill the coronavirus on surfaces.
For its first quarter in fiscal year 2021, sales increased 27% year-over-year to $1.92 billion, up from $1.51 billion, thanks to growth in eight of Clorox’s 10 businesses. First-quarter earnings surged 103% year-over-year to $3.22 per share, compared to $1.59 per share in the same quarter a year ago. The consensus estimate called for earnings of $2.32 per share and sales of $1.75 billion, so Clorox posted a 38.8% earnings surprise and a 9.7% sales surprise.
Looking forward to full-year 2021, Clorox expects sales to grow between 5% and 9%. Earnings per share are forecast to come in between $7.70 and $7.95, or 5% to 8% annual earnings growth. The new outlook reflects the company’s expectations for double-digit sales growth in the second quarter.
Top Stock #3: DG
Back in 1939, J.L. Turner and Cal Turner Sr. saw an opportunity to offer wholesale dry goods to retailers that were recovering from the Great Depression. Within six years, the business was serving consumers directly at its junior department stores in Scottsville, Kentucky. And, in 1955, the first Dollar General storefront was opened and offered all items for a dollar or less.
Clearly, the Dollar General Corporation (DG) had humble beginnings but it has now expanded rapidly.
Today, the Dollar General Corporation has more than 16,000 stores in 45 U.S. states. The retail chain offers many of America’s most-well-known brands, including Clorox, Procter & Gamble, Coca-Cola, Unilever, General Mills, Kellog’s and PepsiCo, as well as the company’s own brands of Clover Valley, Smart and Simple, true living, Comfort Bay, Bobbie Brooks and DG Health.
The Dollar General Corporation remains committed to its customers, offering necessities at affordable prices. And these low prices is what will attract consumers back to Dollar General stores in the wake of the coronavirus pandemic.
The company caters to low-income households that have been hit particularly hard amidst the recent government stay-at-home orders. These are the same people who we talked about earlier in the issue—households with less than $40,000 in annual income. This economic chaos means that folks on unemployment and other government assistance will need to be very careful with their money. That, in turn, should drive more foot traffic to Dollar General stores.
Thanks to “elevated demand” at its namesake stores, Dollar General Corporation achieved double-digit earnings and sales growth in the third quarter. Third-quarter sales rose 17.3% year-over-year to $8.2 million, up from $7.0 billion in the same quarter a year ago. That topped analysts’ estimates for sales of $8.15 billion. Same-store sales climbed 12.2% year-over-year.
Dollar General also reported that third-quarter earnings soared 57.1% year-over-year to $574.3 million, or $2.31 per share, compared to earnings of $365.6 million, or $1.42 per share in the third quarter of 2019. Analysts were expecting earnings of $2.00 per share, so Dollar General posted a 15.5% earnings surprise.
During the third quarter, Dollar General bought back $902 million worth of its stock. The company also recently announced that it will pay a quarterly dividend of $0.36 per share, up from the $0.32 per share dividend paid in the same quarter a year ago. The dividend will be paid on January 19 to all shareholders of record on January 5.
Despite the strong quarterly results, Dollar General refrained from providing any guidance for the fourth quarter or fiscal year 2020. The company cited the continuing uncertainty surrounding the COVID-19 pandemic as its reason for not providing an outlook.
Top Stock #4: DOCU
After determining that paper-based agreements were costly, slow and prone to errors, DocuSign, Inc. (DOCU) developed e-signature technology in 2003. Eliminating the manual paper process gives companies faster turnaround times, limits errors and reduces expenses.
Through DocuSign’s cloud-based platform, companies can develop, upload and send agreements to all stakeholders for electronic signatures. The agreements can be approved on practically all devices and from nearly anywhere in the world. In fact, DocuSign has more than 500,000 customers and millions of users in more than 180 countries.
Consider this: 18 of the top 20 global pharmaceutical companies, 10 of the top 15 global financial services companies and seven of the top 10 global tech companies all utilize DocuSign’s technology. In addition, 800 federal, state and local government agencies utilize the company’s platform.
Total third-quarter revenue for the company soared 53% year-over-year to $382.9 million, which topped analysts’ expectations for $361.15 million. Subscription revenue accounted for $366.6 million, or a 54% year-over-year increase. Total billings during the quarter were $44.04 million, a 63% year-over-year jump.
Third-quarter earnings per share doubled to $0.22, up from $0.11 per share in the same quarter a year ago. The analyst community was expecting earnings of $0.13 per share, so DocuSign smashed analysts’ estimates by 69.2%.
Company management commented, “As companies accelerated the digital transformation of their business and agreement processes, DocuSign’s role as an essential cloud platform continues to grow. Our third-quarter results reflect that tailwind, as well as the immediate and long-term value that customers see from eSignature and our broader Agreement Cloud.”
Looking ahead to the fourth quarter in fiscal year 2021, DocuSign expects total revenue between $404 million and $408 million. Subscription revenue is anticipated to account for between $384 million and $388 million. And billings are forecast to be between $512 million and $522 million.
Top Stock #5: MSFT
Did you know that the founders of some of the biggest tech companies in the world were college dropouts?
Bill Gates is probably one of the most well-known Harvard University dropouts. At a young age, Gates had a proclivity for math and science and was soon captivated by the inner workings of computers. Not surprisingly, he achieved a near perfect score on the SATs, which enabled him to enroll at Harvard.
However, Gates dropped out of Harvard after only two years when he decided to start his own company, Microsoft Corporation (MSFT), with his friend, Paul Allen. Both were excited about the future of personal computers, and the first product that they developed in 1975 was a BASIC software that ran on the Altair computer.
In the following years, Gates and Allen developed several other programming languages, and in 1980, the two were tasked with developing software for IBM’s first personal computer. The MS-DOS operating system was born and used on the IBM personal computer in 1981. By the early 1990s, more than 100 million copies of the MS-DOS system were sold.
Today, Microsoft Corporation is most-known for its Windows operating systems. There are currently more than 900 million devices utilizing the latest Windows operating system, Windows 10. But Microsoft Corporation offers much more than just Windows, including cloud platform Azure, LinkedIn, Xbox hardware and software, the Bing search engine and Microsoft Office.
Thanks to strong demand for cloud offerings, Microsoft achieved $15.2 billion in commercial cloud revenue, or a 31% year-over-year increase, in the first quarter of fiscal 2021. Total first-quarter revenue rose 12% year-over-year to $37.2 billion, topping estimates for $35.72 billion.
Microsoft also achieved first-quarter earnings of $1.82 per share, or 31.9% annual earnings growth. Analysts were expecting earnings of $1.54 per share, so Microsoft beat forecasts by 18.2%.
Microsoft also noted that it returned $9.5 billion to its shareholders in the form of dividends and stock buybacks during the first quarter. That represented a 21% increase over the first quarter of fiscal year 2020.
Wall Street expects earnings will increase 16.3% to $6.7 per share in fiscal 2021, and climb another 25% to $8.4 per share in fiscal 2023. Sales should rise 10% in fiscal 2021 to $157.4 billion, and up to $194.9 billion in fiscal 2023.
Top Stock #6: ADBE
Adobe Systems Inc. (ADBE) is a perfect example of a monopolistic play that will perform well no matter what the broader market is doing. Chances are that you’ve used Adobe’s software, whether it was to edit a PDF document, touch up a digital photo or update a part of a website. Adobe is best known for its Acrobat Pro software; when it comes to creating, editing and sending PDF documents, it is the clear market leader.
However, there is much more to this company than just PDFs. Adobe Systems has three business segments: Digital Media, Digital Experience and Publishing. Digital Media encompasses all of Adobe Systems’ popular software, including Photoshop, InDesign, Illustrator, Dreamweaver and Acrobat Pro.
While some of these products have been around for nearly three decades, Adobe has had no problem adapting with the times. Gone are the days where users would have to pay hundreds of dollars for a single piece of software. Nowadays, Adobe hosts its software on its Creative Cloud. So users can subscribe to an affordable monthly or annual plan and obtain access to Adobe’s proprietary software packages and cloud storage options.
Adobe Systems is also making a splash with the latest round of updates to its video editing and motion graphics software. The company has unveiled two creative tools that are powered by Artificial Intelligence (AI). Video editors can use Adobe’s Sensei AI platform to match colors between footage taken with multiple cameras. They can also take advantage of a new audio autoducking feature to do a lot of the legwork with soundtrack editing. As minor as these changes may sound, they work out to a lot of time saved.
Along with Digital Media, Adobe Systems also runs a Digital Experience segment. This division provides marketing and analytics solutions to digital marketers, advertisers, publishers, web analysts and more. Major market players such as Ford Motors (F), Marriott International (MAR) and Panasonic Corp. all rely upon Adobe Systems’ marketing and analytics products to reach their respective customer bases.
During the fourth quarter, Adobe achieved revenue of $3.42 billion and earnings of $2.81 per share. That represented 14% year-over-year revenue growth and 22.7% year-over-year earnings growth. The analyst community was expecting earnings of $2.66 per share on $3.36 billion in revenue, so Adobe posted a 5.6% earnings surprise and a slight revenue surprise.
For fiscal year 2020, Adobe reported earnings of $10.10 per share and revenue of $12.87 billion, or 28.3% annual earnings growth and 15% annual revenue growth. These results also topped analysts’ estimates for full-year earnings of $9.94 per share and revenue of $12.81 billion.
Looking forward to fiscal year 2021, Adobe expects total revenue of about $15.15 billion and earnings of about $11.20 per share. If achieved, that would represent 17.7% annual revenue growth and 10.9% annual earnings growth.
How To Take Your Gains
to the Next Level in 2021
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Thank you for taking the time to read this report. I hope you enjoyed reading it as much as I enjoyed preparing it for you. And I hope that you will carefully consider joining me at Growth Investor. Whatever you decide, I wish you the best of luck with your investing knowledge. Join Now!