I hope this article finds you well into your holiday season. 2020 has been the best of years and the worst of years. Certainly we’re all looking forward to more times doing the things we love outside the home in 2021. But if you’ve been in the market this year, it’s been difficult to identify some of the best stocks to buy. You’ve been treated to a roller-coaster ride but that has mostly continued a bullish trend.
As I’m writing this, the Dow just closed over 30,000 for the first time ever. Hope is finding a way to overcome the very real problem presented by the novel coronavirus. Is that hope justified? Yes it is. Part of that hope is being driven by the optimism of not one, not two, but three novel coronavirus vaccine candidates. And part of that hope is that the noise from the election is dying down.
As an investor, this can be a time to take stock of your year and start positioning your portfolio for 2021 and beyond. I support the buy-and-hold mentality. I like to have a base of stocks that I can count on over time. This doesn’t mean these stocks will never have their down days. Of course they will. But these stocks don’t stay down for long and have multiple drivers for future business.
I don’t want to take up too much of your time this holiday season, so here are three of the best stocks to buy today and be thankful for your decision for years to come:
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- Apple (NASDAQ:AAPL)
- Disney (NYSE:DIS)
- PayPal (NASDAQ:PYPL)
Best Stocks to Buy: Apple (AAPL)
When considering the best stocks to buy, total return is an important metric. That’s because total return takes into account not only share price appreciation, but also any dividends that the company pays out. And in 2020, a company that gives you both should not be ignored. Which is only one reason you should consider Apple. The tech giant has a year-to-date total return of 56.43% (assuming reinvestment of all dividends on ex-dividend date).
Apple is one of my favorite companies. They have a distinct brand that is fundamentally rooted in its iconic iPhone. Many investors are looking at the launch of the iPhone 12 as a catalyst for AAPL stock. I agree with those that say we could be entering a super cycle for the stock.
But if you really want to understand the enduring appeal of the iPhone, you need to be thinking about this same time period in 2019. That’s when the iPhone 11 was launched. The only significant feature was a better camera. And Apple still blew away any expectations (including their own I would imagine).
However, while the iPhone still represents a significant source of revenue for the company, Apple is not a one-trick pony. In recent years, the growth in its services division has become impossible to ignore. And, the iPhone is quickly getting company from the company’s iWatch, which is leading Apple’s surge in the wearables segment.
The Walt Disney Company may seem like an odd choice for one of the best stocks to buy. The company’s theme park attendance was ravaged by the pandemic. And the same could be said for the company’s cruise line. The effects of the virus also played havoc with the company’s ability to create new content.
And yet, Disney just posted a strong earnings report on the heels of its streaming service Disney+. The company launched Disney+ before the pandemic. And that has been just the sprinkling of pixie dust that DIS stock has needed to survive the pandemic.
No company is looking forward to a return to something resembling 2019 than Disney. And multiple Covid-19 vaccines showing promise may be just what the doctor ordered. But as an investor you can invest in Disney stock with the confidence that the whole of the company is stronger than sum of any additional part.
Critics are fair to point out that Disney is currently suspending its cash dividend. And there’s no indication of when that will resume. But it’s fair to assume that Disney will resume the dividend payments as soon as they can.
In the meantime, investors who bought into the stock in 2019 finally saw the stock turn positive for the year. And that’s with more than half the company’s revenue literally locked up. It’s that kind of performance you look for in a blue-chip stock and why I highly recommend Disney.
While most of the market was cheering the Covid-19 vaccine news, tech stocks were getting hammered. The oversimplified narrative was that a vaccine would flatten the curve of e-commerce sales. But that thought has quickly been dismissed. And PayPal has been one of the beneficiaries. As of this writing, PYPL stock is up more than 80% for the year.
PayPal, and its subsidiary Venmo, are giving users multiple options for contactless payments in addition to the company’s signature peer-to-peer payments. And during the pandemic, a majority of the company’s customers are saying they would only make purchases at stores if they were contactless. And about a third preferred to use a QR code.
But that’s really just the beginning of what PayPal offers. In our e-commerce world, PayPal barged through the door as a truly disruptive force. As I’ve written before one of PayPal’s great strengths is that it provides a pathway for the unbanked to have access to things like a cash back debit card and even short-term business loans.
And with PayPal beginning to extend into cryptocurrencies, it should stand to capture more attention from the millennial and Generation Z markets that are critical to its success.