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The economy continues to recover from the 2020 crisis, and stock indices continue to make new highs. In the first six months of 2021, the Moscow Exchange index rose by 16%, and the US S & P500 – by 12%. We tell you which stocks are profitable to buy now and how much they can grow.
1. LSR
Russian construction company. One of the largest developers in Russia. It ranks second in terms of construction volumes in St. Petersburg.
Growth factors:
1. In 2021, LSR is commissioning several new residential complexes and expects to sell about 890 thousand m² of housing. The expected growth in sales is 12% yoy, up to 105 billion rubles.
2. Last year, the company replenished its land bank with new building areas. Now LSR owns more than 8.1 million m² of land. This is 32% more than in 2019.
3. Stable dividend payments and low debt levels.
4. Favorable conditions on the real estate market. The renovation that is taking place in some Russian cities, social assistance to citizens from the state and payments of maternity capital are increasing the demand for housing.
2. Darden Restaurants
American restaurant chain operator. Owns more than 1,500 restaurants, employing about 150,000 employees. The world’s largest restaurant company.
Growth factors:
1. Quality service helps Darden restaurants remain popular in the US. And the gradual return of people to “normal life” will allow the company to increase its financial performance due to the growth in attendance.
2. Darden has a low level of debt, which reduces the risks for businesses when repeated quarantine measures are introduced in the country.
3. Undervalued company with high growth potential.
3. Rosneft
The largest Russian oil and gas company in terms of production and the second in terms of the same indicator in the world.
Growth factors:
1. The company is developing a promising Vostok Oil project in the Krasnoyarsk Territory. It is expected that production at this area will begin in 2024, and after 2030 the peak production may reach 2.3 million barrels per day.
2. Attractive dividends. The company allocates 50% of net profit for payments.
3. Rosneft has low costs per barrel of production, which makes this segment one of the most efficient among other oil and gas corporations.
4. Gazprom
The largest company in Russia and the world in terms of gas reserves and production. Owns the world’s longest gas transmission system.
Growth factors:
1. The gas price in Europe has been consistently above $300 per thousand m³ for three consecutive years. This means that the situation in the key market is favorable for Gazprom.
2. Attractive dividend policy. It is expected that by the end of this year the yield on dividends will be about 10%.
3. The development of gasification in Russia and the increase in gas sales to China will have a positive impact on the company’s financial performance.
5. Amazon
- Potential return: up to 19.68%
- Horizon: May 2022
- Sector: consumer goods and services
- Invest in Amazon
American company, the world’s largest e-commerce platform.
Growth factors:
1. The absolute leader in the field of e-commerce. According to Amazon, the monthly audience of their site is about 197 million people. Due to a well-established business model and scale, a company can price goods below its competitors.
2. Amazon has strong financials, negative debt, and a high credit rating. On average, from 2018 to 2020, the company’s revenue grew by 30% every year. Analysts are optimistic about Amazon’s prospects and predict similar growth in the future.
3. The development of Amazon will be helped not only by the sale of goods via the Internet, but also by the company’s new services, whose share in total revenue is growing. For example, Amazon Web Services – a service for computing, processing and storing data – has recorded revenue growth for the fourth year in a row.
In addition, Amazon owns 40 subsidiaries, including the largest cinema portal IMDb, the streaming platform Twitch, the world leader in audiobook sales Audible and the Whole Foods supermarket chain.
6. VISA
- Potential return: up to 18.16%
- Horizon: July 2022
- Sector: financial sector
- Invest in VISA
The operator of the largest payment system in the world in terms of the total amount of transactions. The company processes about 140 billion financial transactions with a volume of payments of $9 trillion.
Growth factors:
1. Against the background of the global economic recovery, consumer spending will grow, and hence the number of payments through VISA.
2. During COVID-19, the world has accumulated pent-up demand for international travel, but thanks to vaccination, borders will gradually begin to open. When the epidemiological situation in most states becomes favorable, people will begin to travel to other countries more often. Their spending abroad will help restore VISA profits in the cross-border segment.
3. The level of cashless payments continues to grow worldwide. High rates are expected in the countries of the Asia-Pacific region, where there are not so many services that can be paid by card yet.
4. The company has stable financial performance. It demonstrates that it can generate large cash flows and keep debt levels low.
7 Applied Materials
An American company that makes equipment and software for the production of chips, as well as computer, television and telephone displays.
Growth factors:
1. Applied Materials records record profits and revenues. In 2020, sales of semiconductor products grew by 5%, and growth by 8.5% is forecast for 2021. This was facilitated by the transition of many people to remote work. So they increased the demand for the purchase of personal computers, the production of which requires semiconductors.
2. The digitalization trend will support the demand for the company’s products. Main drivers: the development of a new 5G communication standard and the growth of developments in the field of big data, cloud computing, artificial intelligence, virtual reality, etc.
8 Wells Fargo
Wells Fargo is an American financial group. Engaged in insurance and banking services. Together with JPMorgan, Citigroup and Bank of America, it forms the “big four” of the largest US banks.
Growth factors:
1. The bank’s strong position in the retail segment makes it a leader in the US business recovery cycle.
2. Compared to peers, Wells Fargo shares look undervalued, which means they have upside potential.
3. The company is restoring the level of dividend payments, which it reduced last year due to the impact of the pandemic. This makes the stock more attractive to buy.
9.Mastercard
Payment system operator. It ranks second after VISA in terms of payments – $ 6 trillion per year and the number of financial transactions – 90 billion.
Growth factors:
1. Factors that influence the growth of the share price of Mastercard are the same as those of VISA: the recovery of financial and economic activity, as well as the growth in the number of international flights. The number of transactions through Mastercard has already reached pre-crisis levels.
2. Demand for the company’s services increases the growth of digital financial transactions, the volume of which is already higher than the volume of cash settlement. COVID-19 has only accelerated this trend.
10 Morgan Stanley
A large American bank that provides investment services: wealth management and financial advice for private and corporate clients.
Growth factors:
1. Morgan Stanley has fared better than most banks in 2020 due to the company’s focus on investment rather than conventional banking. It showed strong growth in net profit and revenue.
2. The company helps large corporate clients to conduct initial public offerings and bonds on the stock exchange and conclude mergers and acquisitions. The growth of business activity against the backdrop of vaccination and the tendency for new companies to enter the stock exchange increase the demand for bank services.
3. Morgan Stanley increased its dividend yield to 2.9%, one of the highest in the industry.
How to buy profitable stocks
Shares are bought and sold only through brokers. An individual cannot invest on the exchange directly. Broker – a company that provides access to trading on the stock exchange and fulfills the requirements of the investor for transactions with securities. The broker also calculates taxes, publishes investment strategies, talks about the situation on the markets and helps to invest correctly.
The largest broker in Russia in terms of the number of clients is Tinkoff Investments. Here’s what you need to start trading with Tinkoff:
- When the bank employees approve the application, you will receive a login and password to access your personal account.
- Go to the office, replenish the account with a bank card, go to the “catalog” and find the necessary stocks to buy through the search bar. To invest in the shares of a particular company, click on the name of the company, and then on the “buy” button.
- Brokers do not work for free. They write off their commission for transactions. Commission in Tinkoff Investments from 0.025% of the transaction amount. Depositing, withdrawing money and maintaining an account is free of charge.
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Source: FINAM. It does not constitute individual investment advice.
