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CGC   7.36 (-0.54%)
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ACB   4.21 (-2.55%)
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MSFT   288.49 (-2.66%)
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AMZN   2,799.72 (-3.15%)
TSLA   918.40 (-1.25%)
NVDA   223.24 (-4.48%)
BABA   119.14 (-1.02%)
NIO   23.79 (-4.34%)
AMD   111.13 (-4.63%)
CGC   7.36 (-0.54%)
MU   80.72 (-2.69%)
GE   91.11 (-5.98%)
T   26.48 (+0.53%)
F   19.98 (-2.01%)
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AMC   16.02 (-3.73%)
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S&P 500   4,356.45 (-1.22%)
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QQQ   345.11 (-2.32%)
AAPL   159.78 (-1.14%)
MSFT   288.49 (-2.66%)
FB   300.15 (-2.77%)
GOOGL   2,538.70 (-2.96%)
AMZN   2,799.72 (-3.15%)
TSLA   918.40 (-1.25%)
NVDA   223.24 (-4.48%)
BABA   119.14 (-1.02%)
NIO   23.79 (-4.34%)
AMD   111.13 (-4.63%)
CGC   7.36 (-0.54%)
MU   80.72 (-2.69%)
GE   91.11 (-5.98%)
T   26.48 (+0.53%)
F   19.98 (-2.01%)
DIS   136.51 (-0.69%)
AMC   16.02 (-3.73%)
PFE   52.54 (+1.94%)
ACB   4.21 (-2.55%)
BA   204.10 (-0.05%)

7 Bellwether Stocks Signaling a Return to Normal

Posted on Friday, April 2nd, 2021 by MarketBeat Staff
7 Bellwether Stocks Signaling a Return to NormalBellwether stocks are considered to be leading indicators about the direction of the overall economy, a specific sector, or the broader market. They are predictive stocks in that investors can use the company’s earnings reports to gauge economic strength or weakness.

The traditional definition of bellwether stocks brings to mind established, blue-chip companies. They are the home of mature brands with consumer loyalty. These may be stocks that aren’t associated with exceptional growth; some may be dividend stocks.

But there’s something different about normal this time around. If it’s true (and I think it is) that the old rules no longer apply, investors need to change the way they think about bellwether stocks. Plus, let’s face it, many stocks that we might consider to be bellwether stocks have already had a bit of a vaccine rally. That means that the easy gains are gone.

With that in mind, we’ve put together this special presentation that highlights seven of what may be termed the new bellwether stocks. These are stocks that investors should be paying attention to as the economy continues to reopen.

One quality of many of these stocks is that they are either negative for 2021 or underperforming the broader market. And that means that they are likely to have a strong upside as the economy grows.

#1 - Coca-Cola (NYSE:KO)

Coca-Cola logo

The first stock on the list is a traditional bellwether stock. Coca-Cola (NYSE:KO) has managed to navigate the pandemic fairly well. Full-year 2020 revenue of $33.05 billion was only down about 9% year-over-year (YOY).  And earnings per share of $2.11 for the full year were virtually identical to the $2.15 the company posted in 2019.

Bullish investors might note that KO stock is up 25% in the last 12 months. But the stock is essentially flat in 2021 and 12% below its pre-pandemic high. It seems likely that Coca-Cola can make up that gap as live entertainment and sporting events begin to reopen.

The company is also in the process of getting leaner in terms of its brand portfolio. Management expects to cut the number of brands from 400 to 200. This will allow the company to put more emphasis on its core brands which should result in better earnings and free cash flow (FCF).

In addition to anticipation of higher revenues and earnings, Coca-Cola is part of the exclusive Dividend King club having delivered 59 consecutive years of dividend growth. Over the last three years, the quarterly dividend has grown over 10% and now pays $1.68 per share for the full year.

About Coca-Cola

The Coca-Cola Co is the nonalcoholic beverage company, which engages in the manufacture, market, and sale of non-alcoholic beverages which include sparkling soft drinks, water, enhanced water and sports drinks, juice, dairy and plant-based beverages, tea and coffee and energy drinks. Its brands include Coca-Cola, Diet Coke, Coca-Cola Zero, Fanta, Sprite, Minute Maid, Georgia, Powerade, Del Valle, Schweppes, Aquarius, Minute Maid Pulpy, Dasani, Simply, Glaceau Vitaminwater, Bonaqua, Gold Peak, Fuze Tea, Glaceau Smartwater, and Ice Dew.Read More 
Current Price
$59.82
Consensus Rating
Buy
Ratings Breakdown
10 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$62.33 (4.2% Upside)




#2 - Disney (NYSE:DIS)

Walt Disney logo

Disney (NYSE:DIS) has been one of my “I told you so” stocks. Throughout the pandemic, I pounded the table to tell investors to hold on to Disney and wait for the economy to come back. During the pandemic, the company’s new streaming service, Disney +, did the heavy lifting in terms of revenue.

However little by little, the company’s theme park and hospitality business is coming back. In fact, Disneyland in California will soon be open on at least a limited basis.

In fairness, many investors recognized that the pandemic selloff for Disney was overdone. In the last 12 months, the stock is up 100% in the last 12 months but has slowed down in 2021 with a gain of just 5%.

It may take a little while for the company’s engine to fire on all cylinders. However, this is the time for investors to get on the Disney train, because it’s about to leave the station.

About Walt Disney

The Walt Disney Co is a diversified international family entertainment and media enterprise. It operates through the following segments: Disney Media and Entertainment Distribution (DMED) and Disney Parks, Experiences and Products (DPEP). The DMED segment encompasses the company's global film and episodic television content production and distribution activities.Read More 
Current Price
$136.51
Consensus Rating
Buy
Ratings Breakdown
20 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$198.58 (45.5% Upside)




#3 - Apple (NASDAQ:AAPL)

Apple logo

Despite a four-for-one stock split and the launch of another generation of its iPhone, the iPhone 12, Apple (NASDAQ:AAPL) stock is down for the year. Right now, AAPL stock is only down about 4% but not long ago it was in the unusual position of being one of the Dogs of the Dow.

However, it’s one of those times when it’s important to understand why a stock is sliding. In the case of Apple, it really has more to do with an overall reevaluation and repricing of the entire tech sector. The growth drivers that Apple has enjoyed over the past several years are still in place.

And those drivers go well beyond the company’s iconic iPhone. Wearables and Services are becoming a core of the company’s business. For example, the Apple Watch has defied some early naysayers to become a core part of a consumer’s journey to connected fitness. And that’s part of the new normal that’s not likely to go away.

Stock # 5 on this list will surprise you 

To be fair, AAPL stock is up over 100% in the last 12 months. But with the stock split making the stock more accessible for retail investors, it’s safe to assume that it’s still a good time to get in on Apple stock.

About Apple

Apple, Inc engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other variety of related services. It operates through the following geographical segments: Americas, Europe, Greater China, Japan, and Rest of Asia Pacific. The Americas segment includes North and South America.Read More 
Current Price
$159.78
Consensus Rating
Buy
Ratings Breakdown
25 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$178.83 (11.9% Upside)




#4 - NextEra Energy (NYSE:NEE)

NextEra Energy logo

So far, I’ve looked at companies that could still be considered some of the old economy stocks. But the transition away from traditional energy sources has been going on for years. And that’s why savvy investors are looking at NextEra Energy (NYSE:NEE).

NextEra gives investors exposure to traditional energy sources as well as the renewable energy sector that is expected to reach a valuation of over $2 billion by 2025. And this combination of old and new is what makes NEE a bellwether stock.

NextEra Energy is one of the largest electric power companies in North America. And the consistent revenue it earns from that business is a key to its recent inclusion in the Dividend Aristocrats club after posting 25 consecutive years of dividend growth.

The company has a renewable energy division NextEra Energy Resources. This division stands to benefit from the Biden administration’s recently revealed $2 trillion infrastructure plan that will ramp up talk about a “Green New Deal.”

NEE stock is up 39% in the last 12 months. However, the growth has stalled out in 2021, posting only a 2% gain year-to-date. This gives investors reason to expect plenty of upside as the economy reopens.

About NextEra Energy

NextEra Energy, Inc is an electric power and energy infrastructure company. It operates through the following segments: FPL & NEER. The FPL segment engages primarily in the generation, transmission, distribution and sale of electric energy in Florida. The NEER segment produces electricity from clean and renewable sources, including wind and solar.Read More 
Current Price
$75.10
Consensus Rating
Buy
Ratings Breakdown
5 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$89.57 (19.3% Upside)




#5 - The Chef’s Warehouse (NASDAQ:CHEF)

Chefs

The restaurant industry was one of the hardest-hit sectors during the pandemic. However, many of the traditional restaurant stocks have already bounced back to pre-pandemic levels. That makes me a little hesitant to call them “bellwether” stocks.

That’s why I’m looking at The Chef’s Warehouse (NASDAQ:CHEF). The company supplies restaurants with the equipment and ingredients they need to thrive. But it’s not just restaurants. The company supplies its products to menu-driven companies such as country clubs, hotels, and caterers. These were businesses that were largely dormant as gatherings were limited.

As these businesses continue to reopen with increasing capacity, I would look at CHEF stock to show growth. Granted, it’s up 238% in the last 12 months.

But that growth has slowed in the last month. That recent dip may be just what the stock needed. It was beginning to look very overvalued. The recent selloff is giving investors a more attractive price point. And the stock is still about 30% below its all-time high.

About Chefs' Warehouse

The Chefs' Warehouse, Inc engages in the distribution of specialty food products. It focuses on serving the specific needs of chefs who own and operate some of the menu-driven independent restaurants, fine dining establishments, country clubs, hotels, caterers, culinary schools, bakeries, patisseries, chocolatiers, cruise lines, casinos and specialty food stores.Read More 
Current Price
$30.77
Consensus Rating
Buy
Ratings Breakdown
4 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$39.75 (29.2% Upside)




#6 - Zillow Group (NASDAQ:ZG)

Zillow Group logo

2020 was a great year for Zillow Group (NASDAQ:ZG). The stock climbed a whopping 352%. But 2021 has been a different story for ZG stock. Since closing at a high of $203.79 in mid-February, the stock has dropped 33% as the housing market seems to be cooling.

The housing market was one of the strengths of the pandemic economy. Does 2021 have more growth in store for the sector? That seems to be a topic of some debate. In some areas it appears that sellers are beginning to get the upper hand.

But that only means that prospective buyers are going to have to be more nimble and efficient in their home search. And Zillow puts the information that buyers need in the palm of their hands.

And analysts are still bullish on the stock. The consensus price target of 22 analysts suggests that the stock has over 20% upside from its current level.

About Zillow Group

Zillow Group, Inc engages in the provision of real estate and home-related information marketplaces on mobile and the web. It operates through the following segments: Internet, Media & Technology (IMT), Homes and Mortgages segment. The IMT segment includes premier agent, rentals and new construction marketplaces, as well as dotloop, display and other advertising and business software solutions.Read More 
Current Price
$48.86
Consensus Rating
Hold
Ratings Breakdown
11 Buy Ratings, 12 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$124.88 (155.6% Upside)




#7 - DocuSign (NASDAQ:DOCU)

DocuSign logo

The last stock on the list is a stock that perfectly fits the idea of a new bellwether stock. DocuSign (NASDAQ:DOCU)is a leader in the e-signature sector. The company was already helping consumers and businesses be more efficient in the way they got business done remotely.

And although the ability to handle things such as mortgage closings remotely is going to continue after the pandemic for convenience, not because of public health concerns. DocuSign is also expanding its cybersecurity services. This not only helps the company market its services to a wider range of businesses, but it will also help to make its services stickier to current customers.

DOCU stock is up 146% in the last 12 months. However, the stock is down 7% in 2021 as part of the tech sector recalibration. This helps give the stock room to grow. Analysts give the company a price target of $270.39. That’s a 30% gain from its current level.

About DocuSign

DocuSign, Inc provides cloud-based electronic signature solutions. Its cloud based electronic signature platform helps companies and individuals securely collect information, automate data workflows and sign anything. The firm automates manual, paper-based processes allowing users to manage all aspects of documented business transactions include identity management, authentication, digital signature, forms and data collection, collaboration, workflow automation and storage.Read More 
Current Price
$117.80
Consensus Rating
Hold
Ratings Breakdown
9 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
Consensus Price Target
$248.56 (111.0% Upside)



 

The Covid-19 pandemic has made many stocks expensive. Many stocks are trading well above what any fundamental metric suggests. And many bellwether sectors such as airlines, hotels, and even restaurants have already received a nice boost in anticipation of increased revenue. While it’s fair to suggest that these stocks may have more room to grow, it’s equally fair to point out that the upside may be limited.

This makes it difficult to use classical metrics to find bellwether stocks. The stocks in this presentation give you the benefit of growth that isn’t already priced into their stocks.

Although they are not some of the names you might expect, they are stocks that are worth keeping your eye on. Because as the economy reopens, these are likely the stocks that will grow alongside it. And in some cases, these stocks offer a nice dividend to support the shift to value stocks.

7 Large-Cap Stocks to Help Navigate a Volatile Market

Large-cap stocks are foundational elements of every portfolio. These steady performers may not excite growth investors in the midst of a bull market. However, in periods of volatility, large-cap stocks act as a port in the storm.

Large-cap stocks offer investors some important benefits. First, by definition large-cap stocks are companies that have a market capitalization of $10 billion or more. This is an indication that the company has a mature business that carries less risk of having a significant downturn in business during economic downturns.

Second, large-cap stocks frequently pay dividends. These dividends offset the relatively slower growth in the company’s stock price and can lead to an impressive comprehensive total return. In several cases these companies have increased their dividends over a long period of time making them members of the Dividend Aristocrats or Dividend Kings club.

Large-cap stocks also give investors access to a significant amount of financial data. This makes it easy for investors to conduct their due diligence and understand how profitable an investment is likely to be.

In this special presentation, we’re giving you a look at seven large-cap stocks that have a bullish outlook at a time when the market is likely to remain volatile.

View the "7 Large-Cap Stocks to Help Navigate a Volatile Market" Here.





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