The Top 6 Blue Chip
Stocks for 2021
Louis Navellier here. To say that 2020 was an outlier is an obvious understatement. In my 30+ years of investing, 2020 was unique.
The pandemic 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. Scientists are currently rolling out different COVID-19 vaccines 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.
Still, the 10-year Treasury ticked higher lately, reaching over 1.6%. Recent bid-to-cover ratios on the Treasury bond auctions have improved, however, so I think we’ve probably seen a peak, near-term, in interest rates.
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.
VEEV released results for its fourth quarter and fiscal year 2021 in early March. The “transformational year” for the company led to double-digit total revenue growth, including a 32% annual increase in subscription services revenue.
First, for the fourth quarter, Veeva Systems reported total revenue of $396.8 million, or 27% year-over-year growth. Subscription services revenue accounted for $322.8 million, or a 27% year-over-year increase. Fourth-quarter earnings jumped 44.4% year-over-year to $0.78 per share, compared to $0.54 per share in the same quarter a year ago.
The analyst community was expecting fourth-quarter earnings of $0.68 per share on $380.23 million in revenue. So, Veeva Systems topped earnings estimates by 14.7% and posted a slight revenue surprise.
For fiscal year 2021, Veeva Systems achieved total revenue of $1.47 billion, with subscription services revenue accounting for $1.18 billion. Full-year earnings came in at $2.94 per share. That represented 33% annual revenue growth and 34.2% annual earnings growth. The company noted that it ended the year with 993 customers, which is up from 861 in fiscal year 2020.
Looking forward to the first quarter in fiscal year 2022, Veeva Systems expects total revenue between $408 million and $410 million and earnings per share between $0.77 and $0.78. For fiscal year 2022, the company is looking for total revenue between $1.755 billion and $1.765 billion and earnings per share of about $3.20. Both outlooks are slightly higher than analysts’ current estimates.
Top Stock #2: BGFV
Back in 1955, United Merchandising Corp. was founded and operated five stores under the trade name “Big 5 Stores” to provide World War II army surplus items. The company’s first five stores were located in Southern California.
The company changed its name to Big 5 Sporting Goods Corporation (BGFV) in 1963 as it expanded its business to include sporting goods products.
Today, Big 5 Sporting Goods is a leading sporting goods store in the U.S., with about 430 locations across 11 states. The company’s retail stores offer traditional sporting goods and accessories, including athletic shoes and apparel, as well as indoor and outdoor athletic equipment; hunting, camping and fishing gear; winter and summer recreation products; and tennis, golf and roller sports gear.
With folks turning to outdoor recreation and home fitness programs during the global pandemic, many Americans turned to Big 5 Sporting Goods for their equipment needs.
In fact, BGFV touted that it achieved record earnings growth in the company’s 65-year history in its most-recent fourth-quarter and full-year 2020 announcement.
Company management commented, “Our strong fourth-quarter results highlight our exceptional performance in fiscal 2020 with record earnings driven by top-line sales growth, merchandise margin expansion and an improved cost structure.”
For the fourth quarter, BGFV reported total sales of $290.6 million, up from $244.1 million in the fourth quarter of 2019. Same-store sales rose 10.5% during the quarter. Fourth-quarter earnings surged 5,150% year-over-year to $21.0 million, or $0.95 per share, compared to $0.4 million, or $0.02 per share in the same quarter a year ago. Analysts were expecting earnings of $0.90 per share on $290.53 million in revenue, so BGFV posted a 5.6% earnings surprise and a slight revenue surprise.
During fiscal year 2020, BGFV achieved total sales of $1.04 billion and earnings of $55.9 million, or $2.58 per share. That represented 4.4% annual sales growth and 565.5% annual earnings growth. The consensus estimate called for full-year earnings of $2.54 per share and revenue of $1.04 billion.
BGFV also noted that its momentum from 2020 had carried over into 2021, with same-store sales rising 20% in the first quarter so far. As a result, the company expects first-quarter earnings per share between $0.47 and $0.53, which is up from a $0.22 per share loss in the first quarter of 2020.
Top Stock #3: FUTU
Based in Hong Kong, Futu Holdings Limited (FUTU) is a Chinese financial services company. Through its brokerage and wealth management platform, Futu Holdings provides stock trading, wealth management services, market data and information, margin financing and other interactive services. The company’s services are available in Hong Kong, China and the U.S.
The company’s main platform, Futubull, enables investors to trade stocks in several markets, as well as offers real-time stock prices, financial news and other market data. The platform also provides an interactive community for investors, which allows them to connect and share trading ideas. Futu Holdings’ Moomoo platform is geared for international investors, offering transaction services for stocks and options, as well as ADRs, ETFs and other financial products.
Some folks refer to Futu Holdings as the “Robinhood of China,” given that the company offers similar services—paid and commission-free brokerage services. The company revealed that it had 516,721 paying clients at the end of 2020, or a 160.5% year-over-year increase. Its total number of registered clients jumped 97.8% year-over-year to 1.42 million, while its total number of users rose 58.6% year-over-year to 11.9 million.
For the fourth quarter, Futu Holdings reported total revenue of HK$1.2 billion, or a 281.6% year-over-year increase. Adjusted earnings surged to HK$552.9 million. In U.S. dollar terms, Futu Holdings achieved fourth-quarter revenue of $153 million and adjusted earnings of $71.3 million. Fourth-quarter earnings per ADS surged 880% year-over-year to $0.49, up from $0.05 per ADS in the same quarter a year ago. That topped estimates for earnings of $0.45 per ADS by 8.9%.
For fiscal year 2020, Futu Holdings announced total revenue of $427 million and adjusted earnings of $175.9 million. That represented 213.3% annual revenue growth and 655% annual earnings growth. Full-year earnings per ADS increased 712.5% year-over-year to $1.30, also beating estimates for earnings of $1.19 per ADS.
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.
DocuSign, Inc. (DOCU) crushed analysts’ earnings and revenue estimates for the fourth quarter in fiscal year 2021. Company management noted that “fiscal 2021 was a milestone year for DocuSign,” as the company’s services were in strong demand in the “work-from-anywhere” environment.
Fourth-quarter revenue soared 57% year-over-year to $430.9 million, with subscription revenue accounting for $410.2 million. Fourth-quarter earnings surged 208.3% year-over-year to $0.37 per share, up from $0.12 per share in the same quarter a year ago. The analyst community was expecting fourth-quarter earnings of $0.22 per share on $407.65 million in revenue, so DocuSign posted a whopping 68.2% earnings surprise and a 5.7% revenue surprise.
For fiscal year 2021, DocuSign achieved total revenue of $1.5 billion and earnings of $0.90 per share. That represents 190.3% annual earnings growth and 49% annual revenue growth. Analysts were expecting full-year earnings of $0.74 per share on $1.43 billion in revenue.
Looking forward to the first quarter in fiscal year 2022, DocuSign expects revenue between $432 million and $436 million. And for fiscal year 2022, DocuSign looks for revenue to come in between $1.96 billion and $1.97 billion.
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.
The company noted in its report for the second fiscal quarter that we’re in the midst of “a second wave of digital transformation,” and that “Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform.”
During the company’s second quarter in fiscal year 2021, commercial cloud revenue jumped 34% year-over-year to $16.7 billion. Total second-quarter revenue rose 17% year-over-year to $43.1 billion, exceeding analysts’ estimates for $40.18 billion. Second-quarter earnings increased 34% year-over-year to $2.03 per share, which beat forecasts for $1.64 per share by 23.8%.
Top Stock #6: WST
West Pharmaceutical Services (WST) manufactures quality containment, packaging and drug delivery products that are designed to meet its customers’ standards and specifications. The company is mainly focused on containment and delivery systems for injectable drugs. As an example, West Pharmaceutical Services provides stoppers and seals for injectable packaging systems, syringe and cartridge solutions, and self-injection products.
At its nearly 50 locations around the world, including 25 manufacturing facilities, West Pharmaceutical Systems manufactures more than 100 million components every day. And, considering that the company achieved total sales of $1.84 billion in 2019, its products remain in top demand.
In fact, company management stated that West Pharmaceutical Services has seen “underlying demand growth in our existing business for our high-value products and in high adoption rates from customers who are developing therapeutics and vaccines to address the COVID-19 pandemic.”
So, it’s not too surprising that West Pharmaceutical Services revealed better-than-expected fourth-quarter results.
For the fourth quarter, sales increased 23.3% year-over-year to $580.2 million and adjusted earnings jumped 63.4% year-over-year to $1.34. The consensus estimate called for adjusted earnings of $1.12 per share on $543.67 million in sales, so WST posted a 19.6% earnings surprise and a 6.7% sales surprise.
During fiscal year 2020, sales rose 16.7% year-over-year to $2.15 billion and adjusted earnings grew 46.9% year-over-year to $4.76 per share. These results also exceeded expectations for adjusted earnings of $4.54 per share and sales of $2.11 billion.
After the strong finish to 2020, West Pharmaceutical Services expects this strong momentum to carry over into the current year. For fiscal year 2021, West Pharmaceutical Services expects for total sales between $2.5 billion and $2.525 billion and earnings per share between $6.00 and $6.15.
I should also add that West Pharmaceutical Services has consistently rewarded its shareholders; the company has paid a dividend for more than an incredible 151-straight quarters.
How To Take Your Gains
to the Next Level in 2021
The stocks we’ve just discussed are a great start. Own even a few shares of the winners I’ve identified, and you could increase potential profits and income. But if you’re like the tens of thousands of people I’ve talked to in my career, you want more.
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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!