In the end, 2020 has proven to be a turbulent year for investors. After a sharp market crash in February, many global equities bounced back swiftly. Nevertheless, the macroeconomic landscape has undoubtedly changed, with many companies struggling under the financial pressure caused by the Covid-19 pandemic.
Despite this, I’m confident 2021 could be a good year for global stock markets. After all, news of the coronavirus vaccine and government stimulus packages ought to prick up the ears of investors. With that in mind, I’m going to take a look at several stocks that I think rank among the best shares to buy as we move into 2021.
Stocks benefiting from an improved economic outlook
It comes as no surprise that companies operating in the travel and tourism industry received a battering this year. Widespread lockdown restrictions caused passenger numbers to almost completely dry up. Nonetheless, with vaccinations under way and improved coronavirus testing capacity, I think stocks found within this sector look set to bounce back strongly in 2021.
Airline companies like IAG, easyJet, Ryanair and Wizz Air could prove to be huge beneficiaries. As such, I reckon hoovering up several shares in these types of companies could be a smart long-term play. That’s particularly the case considering they’re still trading well below pre-covid valuations.
Not only do I feel airline stocks should recover nicely, but I’m confident business could boom for companies in the hospitality sector. Granted, that will only be once their doors are allowed to open without restriction. But while many of these businesses have been hit hard by the effects of Covid-19, they’re likely to recover strongly over time given the vastly improving outlook.
As a result, I think stocks such as Marston’s, Whitbread and InterContinental Hotels Group could turn out to be worthwhile shares to buy for 2021 and beyond.
Shares to buy regardless of the economic outlook
Regardless of the way 2021 begins to unfold, there are several shares that I’d buy come what may. Most of them share a few key characteristics, including their ability to maintain stable earnings despite unfavourable trading conditions.
I’m thinking of healthcare giants like GlaxoSmithKline and AstraZeneca. Not only do these two companies boast defensive characteristics, but in my view, they also present significant long-term growth potential. What’s more, the pandemic has further exposed the vital role these drug manufacturers play in keeping the world safe and healthy.
One of the few sectors to profit in spite of the pandemic was online retail. Furthermore, given the shifting consumer trends, the sector looks likely to benefit from long-term growth. While strong sales over the period of the pandemic don’t guarantee continued future success, they certainly underline the resilience of the underlying business models.
Considering this, I’d rank companies like ASOS, Boohoo and AO World among the best shares to buy for the coming year and beyond. All three performed outstandingly in 2020 and I think they look set to continue this momentum moving forward.
Matthew Dumigan owns shares of boohoo group and International Consolidated Airlines Group SA. The Motley Fool UK has recommended ASOS, boohoo group, GlaxoSmithKline, InterContinental Hotels Group, Marstons, and Wizz Air Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.