In January every year, I put together a list of investment themes I think could endure for the entire year or longer. This is also what some fund managers do when buying stocks. With this list of six of my favourite investment themes for 2021, I try to capture some of the real reasons why stocks go up and down.
#1 – Online shopping
E-commerce is growing and I expect it will continue to do so for the next few years. The coronavirus crisis has taught retailers they can’t simply rely on stores, and must have an online presence.
I like stocks such as Next and The Hut Group, that have strong brands and growing online sales. A company like Clipper Logistics is also on my radar. It provides retailers the infrastructure to fulfil their online orders.
#2 – Covid-19
Unfortunately the coronavirus pandemic has not been resolved in 2021. While there are vaccines out by Pfizer and AstraZeneca I’m selecting the small-cap stock Synairgen to play out this investment theme for 2021.
The AIM-listed company is the process of developing a Covid-19 treatment. So far it has had successful trials and has been fast-tracked by the US regulator, the FDA.
#3 – Travel
There have been travel restrictions during the pandemic and these are likely to persist as the vaccination programme is being rolled out. I agree with many in the travel industry, and expect travel to start picking up in the second half of 2021.
With a recovery in travel as one of my investment themes for 2021, I’d select an airline stock like easyJet. This company operates predominately short-haul European flights. I think consumers are likely to book a quick European trip once it is safe to travel and government restrictions are lifted.
I’d also consider Rolls-Royce shares as 50% of its revenue comes from servicing planes. As the airliners start to resume their normal operations, this stock is likely to recover strongly.
#4 – Technology
There’s no doubt that technology stocks have been a clear winner during the coronavirus crisis. The fact that people have had to work from home has meant that companies such as Zoom and Microsoft have had a huge demand for their services.
Instead of focusing on the big technology stocks, I’m focusing on shares such as Draper Esprit. This is a venture capital firm that invests in some of Europe’s fastest growing private, pre-IPO technology businesses.
#5 – Home improvement
People are currently working from home and I think that going forward most employers will allow some remote working. This has enabled consumers to rediscover their homes and find ways to improve them.
I expect home retailers such as Kingfisher and Dunelm to benefit from home improvement as one f my investment themes for 2021.
# 6 – New and old safe havens
During the pandemic, investors have been looking at assets that diversify a portfolio and hedge inflation, and I think this will continue as an investment theme for 2021. Gold has typically been the old safe haven and hence the price of the precious metal rallied last year. A small-cap gold miner that I’m considering is Greatland Gold, which has had a series of successful drilling projects.
Popular cryptocurrencies such as Bitcoin have rallied and some are even considering it as the new ‘digital gold’. Rather than buying cryptocurrencies directly I’d consider Argo Blockchain. This stock is a cryptocurrency miner and has been delivering positive operational updates over the past few months.