Here is your January Wall Street’s Best Digest Top Picks issue 837.
Happy New Year to you all!
I hope your holidays were wonderful. I’m very hopeful for a much healthier New Year for all of us in 2021 and am also very thankful for the performance of the stock markets last year. The biggest winner was technology, with the Nasdaq returning a whopping 45%, followed by 18.4% at the S&P 500, and 9.7% at the Dow Jones Industrial Average.
And I’m thrilled to say, with this Top Picks issue and a calculation of 2020’s Top Picks, that our newsletter contributors really did hit it out of the park—with an average 180.19% return! Our Top 5 picks averaged 252.7%, with the #1 pick, Inovio Pharmaceuticals (INO)—chosen by Joseph Cotton of Cotton’s Technically Speaking—gaining 742.86%! Congratulations to them all!
And the crop of Top Pick recommendations for 2021 also look very attractive.
We begin with Growth stocks from the marijuana, electric vehicle charging, and space and air travel sectors. Our Financial choices include three banks and a jewelry company. In Healthcare, you’ll find a business of cell-based products, an insulin maker, COVID-related biotechs, and a couple of companies focusing on nervous system disorders.
Our Technology ideas come from the social media, search, travel, robotics, and artificial intelligence industries. The Real Estate Investment Trust section includes a marijuana REIT, as well as one that operates in the cell tower business. In High Yield, you’ll find a retail pharmacy and a tobacco company.
In Income, one of our contributors is focusing on Treasury bills instead of equities. And that conservative slant is also seen in our Resources and Energy section, where our advisors chose three gold companies, a pipeline business, and an electric utility. We’ve also included a few Low-Priced Stocks for you, coming from the energy, biotech, and lithium sectors.
Lastly, our Top Picks wrap up with a variety of Funds & ETFs in the income, cybersecurity, robotics/AI, and marijuana industries.
Our final recommendation this month is a non-Top Pick, an alternative energy company.
I’m looking forward to seeing how these Top Picks do this year, as well as bringing you lots more excellent recommendations from our more than 200 contributors. I look forward to hearing of your successes. Please reach out to me at nancy@financialfreedomfederation.com, with any questions and comments.
Top Picks of 2020 837
Our Top Picks of 2020 Returned an Average 180.19%
Our Top Picks of 2020 Returned an Average 180.19%
What a year! The markets began 2020 with a bang but suffered a big surprise when COVID-19 rocked the world in March.
Fortunately, they staged a comeback, with the Dow Jones Industrial Average generating a 9.7% total return including dividends, the S&P 500 gaining 18.4%, but both came up far short than the Nasdaq Composite’s 45% amazing gain.
But that was nothing…
Our contributors at Wall Street’s Best Digest beat them all, hands-down, averaging a return of 180.19%! And as you can see from the following table, our top five contributors posted stellar returns, averaging a very healthy 252.72%.
| Contributor | Publication | Stock | Return % |
| Joseph Cotton | Cotton’s Technically Speaking | Inovio Pharmaceuticals (INO) | 742.86 |
| John Gardner | Equity Research & Portfolio Evaluation | The Trade Desk (TTD) | 181.05 |
| Chris Temple | The National Investor | Piedmont Lithium (PLL) | 166.83 |
| Jeffrey Hirsch | Stock Trader’s Almanac | Horizon Therapeutics (HZNP) | 94.03 |
| Tom Bishop | BI Research | Anavex Life Sciences (AVXL) | 78.81 |
Congratulations and a hearty thanks to all of them!
Let’s take a quick look back and review what our Top 5 had to say when they chose their 2020 picks:
Joseph Cotton of Cotton’s Technically Speaking, chose Inovio Pharmaceuticals, Inc. (INO). Joe’s comments: “Inovio Pharmaceuticals, Inc. is a late-stage biotechnology company that focuses on the discovery, development and commercialization of DNA-based immunotherapies and vaccines to prevent and treat cancers and infectious diseases.
“Its partners and collaborators include Regeneron Pharmaceuticals, the National Institutes ofHealth, Genentech, and many more. We consider this a speculative stock.”
It might have been speculative, but that bet was worth taking! Joe sold the stock in June for a 742.86% gain.
The Trade Desk, Inc. (TTD) was picked by John Gardner, of Equity Research & Portfolio Evaluation. John’s thoughts: “Trade Desk, Inc. is a valuable partner to corporations worldwide. The Trade Desk provides a self-service platform for advertising buyers to purchase and manage data-driven ad campaigns. The Trade Desk uses artificial intelligence to give marketers a clearer picture of where their programmatic dollars actually go.
“The Trade Desk has been a big winner, and this growth stock will continue to deliver in 2020.” And it certainly did, returning 181.05%!
Piedmont Lithium Limited (PLL) was chosen by Chris Temple of The National Investor. Here’s why Chris picked PLL: “Lithium is on the Defense department’s list of strategic materials. An emerging story in that sector is Piedmont Lithium Limited.
“Already sporting a more than 20-year resource in its area of the historic tin-spodumene belt in the south-central part of that state, Piedmont is driving toward development of what could be a major U.S. source of battery-grade lithium hydroxide and other by-product industrial minerals and chemicals.
“With a present valuation but a fraction of its resource’s apparent value, subdued Piedmontshares should be acquired.” Investors who did so have to be very happy with their 166.83% gain!
Jeffrey Hirsch of the Stock Trader’s Almanac told me his favorite stock for 2020 was Horizon Therapeutics Public Limited Company (HZNP). He noted, “Horizon Therapeutics Limited Company develops therapies for rare and rheumatic diseases. HZNP has rallied recently following a positive recommendation for its experimental eye drug from a Food and Drug Administration advisory committee.
“Our October screen indicated accelerating revenue and earnings growth with attractive valuations, flying below Wall Street’s radar. This looks like just the beginning, based on HZNP’s developmental pipeline.” Jeffrey was right, and HZNP gave investors gains of 94.03%.
Anavex Life Sciences Corp. (AVXL) was Tom Bishop of BI Research’s choice. In his recommendation, Tom said, “Anavex Life Sciences Corp. is a bio-pharmaceutical company that amazingly few know about, but those who do are passionate about. Its lead drug is Anavex 2-73 (A2-73) is an orally available drug with a clean safety profile that gives every indication so far of being highly effective against Alzheimer’s disease. Though there are four drugs approved, none of them really works beyond 6 months.
“In an earlier, smaller Phase 2a study, comparable patients in the ADNI data base not taking Anavex 2-73 saw four times the deterioration in their Mini Mental State Exam score as those protected by the higher dosage of Anavex 2-73 after two years. This is phenomenal. Nothing on the market today can come even close to this and if the company can prove this in the Australian trial, it will be on track to become the lead Alzheimer’s drug in a market that is at least $10 billion worldwide.
“I would now call this a Table Pounder.” The stock returned 78.81% to its investors.
Now, it’s on to our Favorite Stocks for 2021. Let’s get started!
Top Picks - Growth 837
Growth stocks were the big winners in 2020, returning 40% (small caps), 33.3% (midcaps), and 30.9% (large caps).
*Columbia Care Inc. (CCHWF)
Aggressive
Columbia Care is a modern-day marijuana company, focused less on the product and more on the numbers.
Columbia has four quarters of triple-digit revenue growth behind it, with the latest quarter (the third) showing revenues of $54.2 million, up 145% from the prior year, and EPS at a loss of 5 cents, which is projected to swing to a profit in the middle of 2021.
The company has 76 U.S. dispensary locations and 24 U.S. cultivation and manufacturing facilities spread across eleven states. It relies heavily on data to drive product innovation, like the home delivery service that is operational in Arizona, Delaware, Massachusetts and New York—and that increases the average customer spend from $119 to $190.
And it has introduced the country’s first legal credit card for marijuana purchases, a feature that increases the average customer spend 20% for in-dispensary purchases and 25% for those opting for home delivery.
Finally, the company has no debt.
CCHWF is a still-being-discovered story, so is less likely to have a big correction.
Timothy Lutts, Cabot Marijuana Investor, cabotwealth.com, 978-745-5532, December 8, 2020, December 22, 2020
*Uber Technologies, Inc. (UBER)
Uber has revolutionized the lives of millions of city dwellers, first year as a public company didn’t go so well, as its overhyped IPO, a mountain of red ink and, of course, the onset of the pandemic crushed the firm’s Rides business. However, that’s one of the reasons we like the stock in 2021—even during Q2’s horror show, the Rides business was cash flow profitable, and now the recovery is underway. Indeed, in Q3, Rides-related bookings nearly doubled from the prior quarter, and as the pandemic lessens, that figure is sure to spike.
But the real growth driver these days is Uber’s Delivery segment—there’s been a secular change in the willingness of people to use delivery services, be it for take-out, groceries or even prescription medications. Bookings in this area are accelerating and growing at triple-digit rates, and the firm’s recent acquisition of Postmates only extends the firm’s reach.
Analysts see total company revenues up 41% next year, and the company believes it will get to breakeven on a cash flow basis, too. And the stock likes that—UBER broke out of a year-long post-IPO base in early November, kicking off what we think will be a long period of outperformance.
Michael Cintolo, Cabot Growth Investor, cabotwealth.com, 978-745-5532, December 9, 2020
*Blink Charging Co. (BLNK)
Do you drive an electric vehicle (EV)? Or know anyone who does? Chances are you do. As of August 2020, it was estimated that cumulative sales of EV’s in the U.S. since 2010 is 1 million. All “plug-in” vehicles exceed 1.6 million. This number now tops 2 million globally. You can safely bet on many more soon.
The future of cars is electric. As of late 2019, auto manufacturers had pledged to spend a total of $225 billion developing new EV’s in the near future. Recently, Toyota announced plans to generate half of its sales from electrified vehicles by 2025. Expectations are that there will be 550 EV models by 2022. One prediction for gross vehicle usage by 2040 is that 500 million passenger EV’s will be on the roads globally.
Charging stations will keep them rolling. Blink Charging is a leading owner, operator, and provider of electric vehicle charging. Blink has over 23,000 EV charging stations throughout the U.S., Europe, and the Middle East. Blink stations are conveniently located at airports universities, stadiums, supermarkets, workplaces, and other locations. Invest in Blink as it charges EV’s and boosts your portfolio.
John J. Gardner, ERPE Excerpts, 925-216-4968, blackhawkwealthadvisors.com, December 21, 2021
*Virgin Galactic Holdings, Inc. (SPCE)
Aggressive
Virgin Galactic is the hands-down leader in the race to take paying passengers—space tourists—into space.
The company’s current spaceflight system consists of WhiteKnightTwo, a custom-built carrier aircraft, and SpaceShipTwo, which will hold two pilots and six passengers. More than 700 people from 60 countries have secured a spot on one of the first flights by making a deposit representing half the total fare—and Virgin has an additional 2,500 people on the waiting list.
So, demand is not a problem. What was a problem (a small one) was a glitch with a rocket motor ignition sequence that led the company to abort SpaceShipTwo’s first powered test flight in mid-December. But that led to a 25% sell-off in the stock, which presents a decent entry opportunity for new investors.
The company has adequate cash reserves and the potential for Google-like profit 70% margins as it plans to incrementally lower prices as it scales upward. Eventually, there’s the potential to use the technology in hypersonic point-to-point travel cutting travel time for LA-Tokyo from 11 hours to two hours. As the only pure-play space tourism stock in the public markets, this is your best way to gain exposure to this megatrend.
Timothy Lutts, Cabot Stock of the Week, cabotwealth.com, 978-745-5532, December 8, 2020, December 22, 2020
*JetBlue Airways Corporation (JBLU)
Speculative
JetBlue Airlines, a low-cost airline, has grown to now serve nearly 100 destinations in the United States, the Caribbean and Latin America.
JetBlue’s low fares and high customer service ratings have built strong brand loyalty. Low costs, including its point-to-point route structure, have helped JetBlue produce high margins, particularly relative to the legacy carriers.
While the pandemic has sent the airline industry into a near-term depression, we believe consumers (and eventually business travelers) will return to flying. Good news on Covid vaccines, the continued economic recovery, and pent-up demand are already starting to bring back passengers. To help reduce its $6 million/day cash burn, JetBlue is aggressively cutting its costs and benefitting from significantly lower fuel prices compared to a year ago.
While JBLU shares carry higher risks, their discounted valuation of 13.7x estimated (post-pandemic) 2022 earnings and the strong potential for a post-pandemic travel recovery make this discount airliner’s shares attractive.
Bruce Kaser, Cabot Undervalued Stocks Advisor, cabotwealth.com, 9787455532, January 7, 2021
Top Picks - Financials 837
Financial stocks were challenged last year, gaining just 0.9%, on average.
*U.S. Bancorp (USB)
Conservative
U.S. Bancorp is one of the country’s largest banks, with a focus on business and consumer lending as well as payment services and wealth management. Unlike its larger peers, it has essentially no investment banking or trading operations.
Like many banks, U.S. Bancorp is out of favor, as investors worry about a potential surge in credit losses due to the pandemic
However, U.S. Bancorp is one of the best-run banks in the country. Long known for conservative lending, its non-performing assets are only 0.41% of its total assets, lower than most peers and only modestly higher than a year ago. Unlike the prior cycle, home mortgage lending today is a source of strength. U.S. Bancorp’s capital ratio remains robust, and, importantly, the bank maintains a tight cost control culture. A new $3 billion share buyback program will start this month.
We see little further profit pressure from low interest rates. Any increase in rates could boost profits. USB shares trade at a reasonable 12.1x estimated 2022 earnings and offer a rock-solid 3.4% dividend yield.
Bruce Kaser, Cabot Undervalued Stocks Advisor, cabotwealth.com, 9787455532, January 7, 2021
Banco Santander, S.A. (SAN) | Daily Alert December 21
Established in 1857, Banco Santander is Spain’s largest bank. In Brazil, it chimes in at number three. As with many European banks, the stock price has been badly battered, currently sitting at around $3.00, miles away from when it traded north of $20. Revenue is near its historical peak at almost $80 billion for this enterprise that makes money year after year.
One aspect of the operation that is now different is that it is not paying dividends. The European regulator asked banks not to make distributions given the difficulties caused by—you guessed it—the pandemic. However, with the strong results in the past quarter, this financial institution would like to recommence paying them. Once that is approved, it should buoy the share price. In 2014, about $0.64 in payouts were achieved.
Picking a banking leader when it is down and out is a strategy that has worked exceedingly well at Contra the Heard in the past, like when we purchased Bank of America at $6.76. It felt yummy and vindicating when we were selling at $33.75. It would not surprise us to see the same kind of percentage gain with Santander.
Benj Gallander, Contra the Heard Investment Letter, 416-410-4431 gall@pathcom.com, contratheheard.com, December 9, 2020
*Signet Jewelers Limited (SIG)
Conservative
Under its previous leadership, easy credit terms boosted sales but led to large losses in Signet Jeweler’s in-house credit operations. That leadership also neglected to update the company’s merchandising and marketing, had an ineffective e-commerce strategy and had tolerated a toxic culture.
With capable new leadership since late 2017, Signet is now making impressive progress in reversing all of these problems. Even with the pandemic, third-quarter same store sales rose 15% as positive physical same store sales were bolstered by surging (+71%) online sales. Adjusted operating profits were $47 million compared to a $29 million loss a year ago. The company appears to be in sync with what its customers want while operating with much greater efficiency. Signet’s previously-onerous debt burden is now arguably too low. With the shares trading at only 10x forward earnings, the market hasn’t yet recognized that Signet’s turnaround has further to go.
Bruce Kaser, Cabot Turnaround Letter, cabotwealth.com, 978-745-5532, January 7, 2021
Wells Fargo & Company (WFC)| Daily Alert January 15
Speculative
Wells Fargo & Company is a valuable and diversified major bank with extensive retail and commercial banking, mortgage lending, credit card and investment management operations.
Now led by highly-credible CEO Charles Scharf, the bank’s operations and leadership are undergoing a complete overhaul. We are starting to see early indications of a tighter compliance culture, better strategic focus, and more efficient operations. Scharf has indicated that cost-cutting could reach $10 billion. Combined, these improvements should produce significantly higher earnings. Wells Fargo’s capital level and credit reserves are robust.
Wells Fargo’s unusually low valuation, at only one times tangible book value and 9.9x estimated 2022 earnings, combined with its turnaround progress, make this a worthy stock.
Bruce Kaser, Cabot Turnaround Letter, cabotwealth.com, 978-745-5532, January 7, 2021
Top Picks - Healthcare 837
COVID-19 boosted many healthcare stocks in 2020, giving the industry an average 12.5%.
Cassava Sciences, Inc. (SAVA) | Daily Alert December 28
Cassava Sciences, Inc. is a clinical stage biotechnology company that develops drugs for nervous system disorders. Its lead therapeutic product candidate is PTI-125 which has completed a Phase 2b clinical trial for Alzheimer’s, with very significant results. It it actually appeared to improve the symptoms of the disease, not just halt or slow the progress of the disease.
The company just raised $75 Million in November to fund their third phase trials, which, if successful, could result in a billion dollar Blockbuster Drug.
Cassava also has a blood based diagnostic product to detect Alzheimer’s disease in the works.
We bought the stock on 12/17/20 at $8.42 along with the SA VA January 152021 7.5 Calls @ $1.46.
Joseph Cotton, Cotton’s Technically Speaking, cottonstocks.net, 727-289-4436, December 18, 2020
Berkeley Lights, Inc. (BLI) | Daily Alert December 30
Aggressive Pick
Berkeley Lights is arguably the most attractive pure-play company in the cell-based product market. The company’s technology can measure tens of thousands of single cells in parallel. That means it can find the best cell out of millions, and do so quickly.
Moreover, Berkeley’s platform enables functional characterization quickly without killing cells. In contrast, competing solutions often work slower and with high cell death rates. That crushes the ROI of the biopharma company using those solutions.
This is why biopharma companies, CROs and CDMOs are increasingly turning to Berkeley Lights. Its platform helps them do everything they need to find therapeutic candidates faster and cheaper, often shaving three to five months off the process, boosting yields and reducing manufacturing costs. It’s a win-win-win.
While not a huge revenue base today—estimated 2020 revenue is just $60 million, up 6% over 2019—Berkeley’s growth should take off as it places more systems in the market and starts to generate more significant recurring revenue from subscriptions and consumables. Looking into 2021 revenue could jump by 50% to $90 million and adjusted EPS loss could be cut by 25% to -$0.78.
With a market cap near $6 billion, a high valuation and a relatively recent IPO (July 17) Berkeley lights isn’t without risk. But the many merits make a stake in this company attractive for risk-tolerant investors. Adjust your position size based on your own risk profile.
Tyler Laundon, Cabot Early Opportunities, cabotwealth.com, 978-745-5532, December 17, 2020
*Anavex Life Sciences Corp. (AVXL)
Anavex, which is working on a number of CNS (central nervous system) diseases, more than doubled in 2020 on more good trial results in Parkinson’s disease dementia (PDD) and Rett syndrome. Meanwhile, it’s Phase 2b/3 Alzheimer’s trial is nearing full enrollment, and recently reported phase 2 PDD success on dementia was encouraging in this regard. In fact, the PDD trial results were accepted and presented at an Alzheimer’s conference.
Clinical trial results to date for Anavex 2-73 (oral) in all of these diseases have been very positive.
$10 billion is a reasonable estimate for sales of an Alzheimer’s drug that actually works (nothing on the market really does so far). And if the shares traded at just 2 times revenues, that would be a market cap of $20 billion, not counting success with Rett or PDD. And even using 50% more shares than are outstanding today, that works out to $200 a share.
The company has to continue to table data in late stage trials that is only as good as it has reported so far. Of course, a big pharma would acquire Anavex along the way, but with continued clinical success there is big potential here. The shares remain a Buy.
Nancy’s Notes: Please note that Mr. Bishop has withdrawn his previous Top Pick, Horizon Therapeutics Public Limited Company (HZNP), which was published in our January 13 Daily Alert.
Tom Bishop, BI Research, biresearch.com, January 12, 2021
Medexus Pharmaceuticals Inc. (MDP.V/MEDXF) | Daily Alert January 8
In the micro-cap world, it’s possible to find tiny companies growing at 40% per year trading at just 10x earnings.
Medexus Pharma is a Canadian specialty pharma company that is growing at a rapid clip. Its drugs treat chronic conditions, and as a result, its business had limited headwinds from COVID-19.
In March 2020, it completed a transformative acquisition of a drug call XINITY, which treats hemophilia. The transaction was transformative because Medexus acquired all the gross profits that the drug generates but only had to hire a few additional employees to support it. As a result, Medexus instantly transformed from a break-even company to a wildly profitable one.
Revenue is growing at 44% per year, and the company is on pace to generate $8 million of free cash flow. As such, the stock is trading at 11.6x free cash flow, an incredibly cheap valuation for a rapidly growing company. On an EV/Revenue basis, MEDXF trades at 1.1x while slower-growing peers trade at 3.6x.
When cheap, fast-growing micro caps get discovered by larger institutional investors, it’s very easy to get multi-baggers. If Medexus traded in line with peers, it would be a $15 stock, implying almost 200% upside from its current price.
Rich Howe, Cabot Micro-Insider, cabotwealth.com, 978-745-5532, January 6, 2021
MannKind Corporation (MNKD)| Daily Alert January 14
My Top Pick for 2021 is once again MannKind. The company’s lead product, Afrezza (a form of ultra-fast acting mealtime insulin that is inhaled rather than injected), is finally starting to make some inroads with both type 1 and type 2 diabetics (and their doctors), and I expect this trend to start accelerating as we get further into the year.
In addition, the company has licensed its drug delivery platform (Technosphere) to United Therapeutics (UTHR), and United Therapeutics is moving forward aggressively with plans to commercialize a form of treprostinil for the treatment of pulmonary arterial hypertension (PAH) and PAH associated with interstitial lung disease (ILD) using this platform (MannKind will receive royalties on sales if/when the drug is approved).
Along with this agreement, the company has also licensed the platform to a private company called Receptor Life Sciences that is using it to develop cannabinoid-based pharmaceutical products. After being the target of short sellers for the past few years, this group seems to finally be moving on, as the short interest, though still large, was essentially cut in half during 2020. MNKD is a strong buy under $5 and a buy under $10.
Nate Pile, Nate’s Notes, NotWallStreet.com, 707-433-7903, January 3, 2021
*Sorrento Therapeutics, Inc. (SRNE) and Inovio Pharmaceuticals, Inc. (INO)
Weeks ago I selected Sorrento as a pick of the year for 2021; because of the company’s ‘wide portfolio’ of solutions, focusing on Covid testing, treatment and even ‘salvage’ (Advanced Respiratory Distress Syndrome) drug approaches. By the time you read this its EUA request to the FDA may already be approved for one of 3 tests, so all that matters here is the outcome of the pending EUA’s and of course the capacity to manufacture (or a partner). will be considered.
Because of the nature of vaccines AND treatments being complementary, I’ll split our favorites into two picks.
In December I did a Covid-related update optimistically comparing perhaps the ‘best in class’ future biotechs; speculatively so far, but about to mature. That’s Inovio and Sorrento.
Both had been clobbered since earlier media hype, and both can jump significantly based on their complementary products. That’s as Inovio’s DNA vaccine easily stored or transported (room temperature as well as long-shelf life, means a lot globally) or these low-dose Sorrento antibody therapeutics, as well as its 2-minute test.
We project both INO and SRNE will likely have leading-edge roles as the 2nd generation of everything defeating Covid; and both have other programs going on besides Covid-19.
While for sure speculative, the world is about covid right now. So, for the sake of humanity if both succeed, expect probably INO to double on a go forward, and actually I’d be disappointed if SRNE didn’t more than double or triple in weeks/months ahead.
Gene Inger, The Inger Letter, ingerletter.com, December 26, 2020
Top Picks - Technology 837
The #1 sector last year, tech stocks averaged 33.9% returns.
Pinterest, Inc. (PINS) | Daily Alert December 22
Facebook and Twitter are the go-to social media players in real life, but in the stock market, there’s been a shift. Wile those two will still get a huge portion of ad dollars, more and more money is shifting to newer platforms that allow advertisers to get in front of a consumer at a different stage of the process.
That’s the big story with Pinterest, which has one-of-a-kind story that features picture and video boards of ideas and products—a site where people go to get ideas (everything from ideas to arrange a new home office to new recipes to gift ideas).
The movement of ad dollars to Pinterest’s site (along with improved search and marketing tools) is now showing in the results—sales boomed 58% in Q3 while earnings were well into the black, and analysts see 30%-plus growth for many quarters to come.
PINS built a year-long IPO base, broke out in September and has acted well since then. Near-term potholes aside, it’s likely PINS has just started a major advance as it joins the market’s group of new leadership.
Michael Cintolo, Cabot Top Ten Trader, cabotwealth.com, 978-745-5532, December 9, 2020
Alphabet Inc. (GOOGL) | Daily Alert January 6
Alphabet has been on the Focus List for 52 months, more than twice the tenure of the next longest holding, Microsoft (MSFT). During that time, the shares have more than doubled, reflecting consistent sales and profit growth.
We don’t expect the move away from traditional advertising toward digital to reverse, and YouTube—Alphabet’s most profitable advertising market—continues to gain popularity with younger audiences. Demand for cloud services is also on the rise.
Much has been made of the company’s “moon shots,” massive investments in unproven businesses such as autonomous cars and drone delivery. So far, none of these has paid off. However, the core business continues to do the heavy lifting, and if one of those special projects blossoms into a big winner, so much the better.
After a profit decline this year, analysts target a return to roughly 20% growth in 2021 and 2022.
Richard Moroney, CFA, Dow Theory Forecasts, dowtheory.com, 800-233-5922, December 21, 2020
*trivago N.V. (TRVG)
trivago’s platform allows travelers to search for hotels and accommodations to find the least expensive options on more than 100 websites, including Expedia, Booking.com, Priceline, Trip.com, VRBO, and Airbnb.
trivago’s platform is available through 54 localized websites and apps in 32 languages, and offers access to some 5.0 million hotels and other types of accommodations around the world.
Revenues and earnings in 2020 were crushed by the coronavirus pandemic, but the good news, the availability of vaccines should get the economy rolling again by mid-year (hopefully!), which will radically change the path of the travel industry’s—and trivago’s fortunes. Analysts expect the company’s earnings to grow by 98.8% in 2022 and at an annual rate of 33.44% over the next five years.
Despite the precipitous drop in revenues last year, trivago managed to post a positive EBITDA in the third quarter, as most of its expenses come from marketing, which, of course, has been a non-starter during the pandemic. The company also trimmed fixed costs, eliminating its regional offices.
That should put it in a good place as the pent-up demand for travel explodes following mass vaccinations.
Nancy Zambell, Wall Street’s Best Digest, cabotwealth.com, 978-745-5532, January 6, 2021
*Fanuc Corporation (FANUY)
Fanuc is the world’s leading manufacturer of computerized numerical control (CNC) devices that are used in machine tools and also serve as the “brains” of industrial robots.
Fanuc offers investors a pristine balance sheet with zero debt and a whopping $7 billion in cash. Profit margins are impressive.
Fanuc should benefit from robust demand from developed markets as well as China as its manufacturing wages continue to increase and manufacturers look to robots to increase productivity. In addition, the Japanese market is in a strong uptrend going into 2021.
Fanuc claims to be the only company that uses robots to make robots.
Fanuc is building a new factory near Tokyo to double its domestic output capacity of machine tools to produce parts of smartphones.
As for Fanuc’s stock, it’s also in a nice uptrend. With its conservative management, quality balance sheet, and penchant for maintaining high margin and quality products makes it a fine conservative core holding.
Carl Delfeld, Cabot Global Stocks Explorer, cabotwealth.com, 978-745-5532, January 3, 2021
*Nuance Communications, Inc. (NUAN)
Nuance develops conversational AI solutions that can understand, analyze and respond to human language.
Nuance is completely focused on its two strongest markets—Healthcare Solutions and Enterprise Solutions—as well as migrating to the cloud, new product development and international expansion.
The Healthcare segment includes clinical speech and language understanding solutions, which help clinicians, radiologists and care teams accurately capture clinical information. Roughly 90% of hospitals and 80% of radiologists rely on Nuance Healthcare solutions daily.
The Enterprise segment offers intelligent engagement solutions that help companies communicate with customers. Nuance’s Enterprise solutions are used by 85% of the Fortune 100, including 19 of the top 20 financial organizations and the top 10 telecommunications providers outside of China.
Look for revenue to be down around 8% this year (remember the spin out and pandemic are big 2020 headwinds) then expand 7% in 2021 and accelerate toward 10% growth thereafter. Nuance is profitable now and should deliver adjusted EPS of around $0.76 this year, then grow profits slightly faster than revenue.
The 2020 market crash hurt, but NUAN jumped back to its pre-pandemic high of 23.5 in June. Since then, it’s been blazing higher, showcasing a pattern of higher lows and higher highs.
Tyler Laundon, Cabot Early Opportunities, cabotwealth.com, 978-745-5532, December 17, 2020
Top Picks - REITs 837
Shares of Real Estate Investment Trusts lost 5.9% last year, but 2021 looks attractive for real estate.
Innovative Industrial Properties, Inc. (IIPR) | Daily Alert December 18
Conservative
The North American Marijuana Index is up 305% from its March low, while the average stock in my portfolio is up more than 400%.
Even if they’re not cheap, however, there are still stocks that are not overbought, and that have great potential to grow as this dynamic young sector evolves, and one of them is my choice as we head into 2021. Innovative Industrial Properties is the leading landlord for the medical marijuana industry in the U.S., with 64 properties in 16 states, totaling 5.2 million square feet, that are 99.3% leased using triple-net leases.
Operating as a Real Estate Investment Trust (REIT), the company enables its tenants to use its capital to grow, and then distributes at least 90% of its taxable income to shareholders through quarterly dividends. Today, that amounts to an annual payout of $4.96 per share.
But we’re not in it for the yield, though that does provide some stability to the stock. We’re in it for the growth.
Timothy Lutts, Cabot Marijuana Investor, cabotwealth.com, 978-745-5532, December 8, 2020
Crown Castle International Corp. (REIT) (CCI) | Daily Alert December 24
Crown Castle International is a real estate investment trust that specializes in communications infrastructure, providing services to wireless carriers through 40,000 cell towers, 70,000 small cell nodes, and 80,000 miles of fiber.
The towers segment accounts for 70% of the company’s $5.8 billion in annual revenue. Funds from operations (FFO), the most relevant performance metric for REITs, are expected to rise 8.8% to $6.08 per share this year, and to grow 10.5% in 2021. FFO grew 5.2% last year. In the most recent quarterly report on October 21, funds from operations exceeded forecasts while revenue was lighter than expected.
Management upped profit guidance for the year ahead, and declared a quarterly dividend of $1.33 per share, a 10.8% hike from $1.20 per share last quarter.
At least one insider is bullish: J. Landis “Lanny” Martin, who sits on Crown Castle’s board of directors, gobbled up almost $1.3 million worth of CCI at $161.19 per share. Raymond James recently raised its price target on CCI to $172 per share.
John Dobosz, Forbes Dividend Investor, newsletters.forbes.com, 212-367-3388, December 21, 2020
Top Picks - High Yield 837
These stocks all yield more than 4% annually, generating some steady cash flow.
Walgreens Boots Alliance, Inc. (WBA) | Daily Alert December 29
Walgreens Boots Alliance is a Dividend Aristocrat with 45 consecutive years of dividend increases. (Note from Nancy: A Dividend Aristocrat is a company in the S&P 500 that has paid and increased its base dividend every year for at least 25 consecutive years.)
The stock offers investors an above market yield. The company’s stock never yielded above 3.7% in at least the last 30 years prior to 2020. The company’s 10-year historical average dividend yield is 2.4% for comparison.
Walgreens appears undervalued at current prices. And we expect the dividend to continue to increase as we project 5% annualized earnings-per-share growth for this blue-chip corner store pharmacy.
Walgreens offers investors a high yield, a bargain valuation, likely continued dividend growth, and dividend safety based on its reasonably low payout ratio of just 39% using fiscal 2020 adjusted earnings-per-share.
Ben Reynolds, Sure Dividend Newsletter, suredividend.com, support@suredividend.com, 800-531-0465, December 15, 2020
*Altria Group, Inc. (MO)
Altria (MO) - the Covid/tragedy has sped up many a-thing. Just look at technology; we have had 10 years of advances in 1 year in 2020—by necessity. This will also be true of Pot as the tax/revenue starved state governments (and Uncle Sam in D.C.) search desperately for new revenue streams. I believe the legalization of pot will also be accelerated. Every referendum on the ballot about pot in November passed. It’s just a matter of time before you can buy the “Willie-Nelson/Reds” right next to the Marlboros at 7-11.
The obvious beneficiary of pot legalization is the tobacco companies. Ah, but I hear you say, “they don’t grow any pot.” Well, they don’t grow any tobacco either!
It’s another sin-tax for the government and will be treated as such, and available soon at retail/outlets like 7-11. Right now, legal pot costs about 2 times as much as illegal pot, and at some point, the “twain” will meet. My guess had been 2025, but with the government badly needing tax revenues, I expect this to be accelerated quite quickly now.
Altria will have a new revenue stream by 2025, and likely before that. It will mean huge (new) profits for MO and the stock already yields 8%+. The chart is looking much better. I note MO is one of the few companies that raised the dividend this year. The stock is a bargain under $45 with exciting upside potential.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, January 5, 2020
Top Picks - Income 837
This contributor likes income opportunities better than stocks for 2021.
U.S. Floating Rate Notes | Daily Alert January 4
What is the one investment that is shunned and denigrated as a waste for your money? Cash. No one advises owning cash or short-term U.S. T-bills because they provide little in the way of interest income.
In 1980-1982, U.S. T-bills were at the top of every investors buy list and that was the time when one should have sold them and bought stocks and bonds. Now, stocks and bonds are at the top of every investors buy list and now is the time to own the safest investment possible.
The government offers 2-year U.S. Floating Rate Notes (FRNs), which pay interest that is pegged to the 13-week T-bill and adjusts quarterly to the auction rate. The main reason to hold FRNs now is to escape the risk of losing principal. With long rates at their lowest levels in the history of the United States, if interest rates soar, bond investors will lose money.
With stocks more overvalued than at any time since at least the dot.com mania, if stocks enter a bear market, stock investors will lose money. FRNs are a safe alternative and are at the top of our list. Your bank or broker can buy FRNs, or you can buy them through Treasury Direct.
Nancy’s Notes: Here’s the Treasury Direct website.
Steven Hochberg and Peter Kendall, The Elliott Wave Financial Forecast, Customercare@elliottwave.com, elliottwave.com, 770-536-0309, December 29, 2020
Top Picks - Resources & Energy 837
Gold saw significant advances last year, but Energy stocks suffered, coming in last of all sectors, and losing 28%. The waning of the coronavirus should help push them up in 2021.
Newmont Corporation (NEM) | Daily Alert December 23
Large-cap gold mining company Newmont Corporation offers the potential for significantly higher dividends as the prices of gold and silver move higher. Newmont started a dividend policy paying a significant portion of added free cash flow as dividends.
In September 2020, following this policy, based on a $1,500 reference price, the NEM dividend was boosted by 60% to $0.40 per share. For a mining company, almost 100% of increased gold prices drop to the bottom line. If gold moves to $3,000, the NEM share price and dividends should provide total returns that are multiples of the gain in gold.
Tim Plaehn, The Dividend Hunter, yn345.isrefer.com/go/cabmdpc/cab/, December 16, 2020
Kirkland Lake Gold Ltd. (KL)| Daily Alert January 19
Kirkland Lake Gold just signed a strategic alliance with the largest gold major, Newmont Goldcorp, to work together to resume mining for the yellow metal at the open pit Holt Mine which KL resumed excavating early in 2019 under a new royalty agreement. KL then suspended its work in July, 2020 over covid-19 risks to miners, which clobbered its stock.
The duo will also work on reviving Newmont properties near Timmins, Ontario. The main reason I am buying KL, which trades under that ticker both on the NYSE and in Toronto, is that it upped its quarterly dividend to 18.75 US cents from 12.5¢ (50%) last Wednesday, something it would not have done without some good reason, like finding more gold in these very old Canadian mines.
Kirkland actively bought back its shares for about $618 million (US) and paid dividends of $2.71/sh through the first 3 quarters of this year. Before the Covid shutdown it earned $2.06/sh, 42% up from prior year and free cash flow topped $500 million, up 92% from 2019 thanks in part to Australian tax breaks. It has zero debt, unusual for a goldmine.
Vivian Lewis, Global Investing, global-investing.com, 212-758-9480, December 20, 2020
*Barrick Gold Corporation(GOLD)
We think Barrick, the world’s second-largest gold mining company, is well positioned to benefit from a continuation of gold’s long-term bull market and will be a big winner in 2021.
The metal’s improving fortunes allowed the company to deliver 125% per-share earnings in 2020, while revenue (up 28% for the year) has been trending higher since 2018. What’s more, higher gold prices have also made growth through M&A attractive for miners once again, with Barrick merging with Randgold Resources in 2019
Barrick forecasts all-in sustaining costs (a key metric for miners) at around $966 per ounce as of Q3, well below current prices, and giving the firm plenty of room to take on additional projects. Consequently, analysts are predicting even more top- and bottom-line growth in 2021. The company is disposing of non-core assets, rapidly paring its long-term debt and has announced a 10-year plan to become the world’s most valued bullion company. All told, Barrick has every reason to be optimistic about its future.
Clif Droke, cabotwealth.com, 978-745-5532, January 7, 2021
*Energy Transfer LP (ET)
Energy Transfer provides energy-related services. It owns and operates approximately 9,400 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and 12,500 miles of interstate natural gas pipelines.The company also owns and operates natural gas gathering and natural gas liquid (NGL) pipelines, processing plants, and treating and conditioning facilities in Texas, New Mexico, Pennsylvania, Ohio, Oklahoma, Kansas and Louisiana. And it owns approximately 4,500 miles of NGL pipelines, NGL and propane fractionation facilities, and NGL storage facilities with working storage capacity of approximately 50 million barrels (MMBbls).
Morgan Stanley upgraded the stock from Equal Weight to Overweight. We do not own the stock, but we like it.
Joseph Cotton, Cotton’s Technically Speaking, cottonstocks.net, 727-289-4436, December 18, 2020
*NextEra Energy, Inc. (NEE)
Conservative
This pick is partially defensive (I think that after 2020’s strong finish, a substantial market correction—or worse—is likely) and partially offensive, in that I think this sector has some very good growth coming in the years ahead.
NextEra is the largest electric utility in the U.S., with Florida Power & Light its largest division. The company has a firm growth trend in place today (average annual revenue growth over the past five years was 3%), but I expect that to accelerate in the years ahead as demand from the electric vehicle market grows. And as costs fall (NEE is big into renewable energy, where scale is bringing costs down), profits should mushroom!
Valuation is a little high now based on the past five years’ average, but technically the stock’s uptrend is solid, though given a choice, I’d wait for a pullback to the 50-day moving average.
Timothy Lutts, Cabot Stock of the Week, cabotwealth.com, 978-745-5532, December 8, 2020
Top Picks - Low-Priced Stocks 837
These shares are more speculative than our other picks, so please relegate the to a small portion of your portfolio.
Energy Fuels Inc. (UUUU, EFR.TO) | Daily Alert January 12
As evidenced by Energy Fuels—whose share price more than doubled in 2020—the nuclear energy sector has been on fire.
But that’s nothing compared to what’s to come.
With the initial funding of a domestic “uranium reserve,” the company can restart uranium production in a meaningful way.
Energy Fuels will prosper in other ways as well.
1) Backed by a recent $1 billion appropriation (going to the E.P.A.), Energy Fuels is poised to be the main (if not only) company hired to clean up the long-blighted Four Corners area of the S.W. United States. It has the only licensed conventional uranium mill in the country that can process these materials; and 2) White Mesa Mill in Utah has also distinguished itself as being able to produce rare earth element concentrates; yet another key part going forward of America regaining self-sufficiency in critical minerals and Green Economy areas.
Chris Temple, The National Investor, nationalinvestor.com, 224-308-2587, January 4, 2020
Predictive Technology Group, Inc. (PRED)| Daily Alert January 18
Predictive Technology Group, Inc. was our pick for 2020 and it turned out to be a major loser!
Many things went wrong, and of course, COVID changed everything. The delay in release of the company’s Endometriosis & Infertility test and slowdown of stem cells sales resulted from massive clinic closures.
The shares currently trade on the “grey’s” because of SEC paranoia. The listing is currently being addressed and the company will get off on its own or merge into another entity.
PRED still has a collaborative relationship with Thermal Fisher (TMO) and a developmental collaborative relationship with Atrin (cancer therapy). At present, PRED has been ramping-up its COVID 19 saliva testing (6 days/wk) and stem cells sales continues to recover.
The current market-cap is tiny and does not even attempt to measure the discounted valued and future potential that PRED may offer investors. Looking at current share price is a huge error. We believe investors have the opportunity to 10-30X their initial investment, even though some might be averaging down from last year’s price recommendation.
We rate PRED with our strongest buy recommendation and truly believe that our stock pick for 2021 will take the #1 spot within the 1-year time period.
William Velmer, S.A. Advisory, saadvisory.com, 949-922-9986, January 3, 2021
*Frontier Lithium Inc. (LITOF)
Canada’s Frontier Lithium owns a steadily-growing high grade spodumene-hosted lithium resource in extreme Northwestern Ontario.
I have seldom seen any resource company so efficiently and inexpensively build such a considerable asset as is Frontier’s significant existing lithium resource as has that company’s management, who I have known for years. Now—with an arm of global metals and refining giant Glencore working with Frontier to develop a marketable lithium hydroxide product—Frontier is set to begin monetizing its substantial lithium resources along what is becoming its district-scale project, now dubbed “Electric Avenue.”
Though this sector has garnered renewed investor attention, Frontier’s shares remain ridiculously cheap given the value of their resource already.
Chris Temple, The National Investor, nationalinvestor.com, 224-308-2587, January 4, 2020
Top Picks - Funds & ETFs 837
These Funds and ETFs offer a diverse group of strategies, including income, cybersecurity, robotics, and marijuana.
DoubleLine Income Solutions Fund (DSL)| Daily Alert December 31
The DoubleLine Income Solutions Fund closed-end fund is our 2021 Top Pick for income investors seeking a high payout income fund.
At the recent price of $16.36, the closed-end fund trades at a -7.0% discount to net asset value of $17.59. This discount to net asset value provides investors some margin of safety against unexpected changes in interest rates and credit quality.
The closed-end fund pays a monthly distribution of $0.11, or approximately $1.32 per year. This represents a distribution yield of more than 8.0% annually at the current market price. The fund seeks high current income with capital appreciation.
Robert M. Brinker, CFS, Brinker Fixed Income Advisor, brinkeradvisor.com, 303-688-2555, December 29, 2020
ETFMG Prime Cyber Security ETF (HACK) | Daily Alert January 5
2021 looks good for Cybersecurity stocks. Cybersecurity spending will increase as more companies plan to protect assets, following the recent SolarWinds hack, that compromised state agencies and corporations.
Long term investors should go ahead and purchase this popular ETF. It has risen dramatically in 2020, up 38% year-to-date with a low of $30.29 on March 16. From that low it is up some 90% toward the end of 2020.
Therefore, it is prudent for the short-term investor to look for a better buy point, perhaps in the 40s. An economic rebound could prove to be exciting for this ETF as companies scramble regarding their Cybersecurity. Investing in this important sector makes perfect sense in this crazy environment.
Sean Christian, The Personal Capitalist, 9524 East 81st Street, Suite B #1715, Tulsa, OK 74133, December 31, 2020
Global X Robotics & Artificial Intelligence ETF (BOTZ) | Daily Alert January 7
Our 2021 TOP Pick is Global X Robotics & Artificial Intelligence ETF. The use of robots widely is at the explosion/of use-stage.
Because many of these (very) high tech stocks have high risk, and sell for high multiples, my suggestion would be to buy Global X Robotics & Artificial Intelligence ETF.
The current-net assets are just over $2 Billion and this ETF trades about 1 million shares a day, so the liquidity is about $33 million per day.
The ETF’s holdings are the leaders in this revolution, and the top 10 holdings make up about two-thirds of the portfolio, so this is high risk, but also the potential for high reward.
That said, the time for the robotics makers to start showing much higher earnings is here—right now, today, in my opinion.
Bob Howard, Positive Patterns, P.O. Box 310, Turners, MO 65765, 417-887-4486, January 1, 2020
ETFMG Alternative Harvest ETF (MJ) | Daily Alert January 20
I’m extremely bullish on the entire marijuana sector in 2021. And the best way to gain access to that sector is via the ETFMG Alternative Harvest ETF.
Marijuana stocks have nearly tripled in the last nine months, and yet are still trading at less than half their peak values from three years ago.
Retail sales of medical and recreational cannabis in the U.S. are expected to top $15 billion in 2020 (results not out yet), which would be a 40% improvement from 2019 and a 50% improvement from 2018. In the next four years, legal marijuana sales in the U.S. are expected to triple. And those estimates came before Arizona, Montana, New Jersey, and South Dakota all voted to legalize marijuana in November.
Because the industry is still in its adolescence, individual companies can be unpredictable and, as a result, volatile. However, by picking a basket of marijuana stocks, at a time when the group as a whole is priced nearly 60% below its peak from three years ago despite the prospect of tripling sales by 2024, you’re betting on the marijuana sector as a whole, not just one stock.
The Alternative Harvest ETF—the first marijuana ETF in the U.S., and the largest—gives you the safest, most reliable access to this exploding industry. It’s up 59% since the March 2020 bottom, and 27% in the two months since the election.
Chris Preston, cabotwealth.com, 978-745-5532, January 4, 2021
Energy 837
Our only non-Top Pick, this company operates in the alternative energy sector, one that should fare well under the new administration.
Plug Power Inc. (PLUG)| Daily Alert December 17
Plug Power (PLUG) entered the relative strength rating in our November 12th edition at the #21 position. Currently, it holds down the # 26 spot. After building a base since the start of the year, trading in a tight range, the stock began to move higher mid-June as it established a textbook stair-case pattern. It rallied over 400% to its recent high at 26.87 on November 23. Since then, it has come under some selling pressure, declining 11% to its current price at 23.85. It remains comfortably above both its 50 and 200-day moving averages.
The company provides alternative energy with hydrogen and fuel cell technology used for the material handling industry. Its products are designed to increase productivity, lower operating costs, and reduce carbon footprints in a reliable and cost-effective way. It provides power to vehicles, such as forklifts, using fuel cells to replace traditional lead-acid batteries. Among its customers are Home Depot, Amazon, Walmart, and Fed-Ex.
Dan Sullivan, The Chartist, thechartist.com, 900-942-4278, December 3, 2020
Top Picks - Updates 837
*AT&T Inc. (T)
Conservative investors: we still like AT&T in the mid-to-high 20’s with the 7%+ dividend we see as solid.
Gene Inger, The Inger Letter, ingerletter.com, December 26, 2020
*Inovio Pharmaceuticals, Inc. (INO)
Inovio Pharmaceuticals became a “hot stock” after it entered the ray to develop a Covid-19 vaccine. The company also just recently received a $71 million contract to scale up manufacture of its CFILLECTRA 3PSP Smart Device for administering the vaccine. We sold our position on 6/29/20 at $28.32, because we wanted to be sure to book the huge profits. The stock could double from here, but we’re not sure.
Joseph Cotton, Cotton’s Technically Speaking, cottonstocks.net, 727-289-4436, December 18, 2020
*Turning Point Brands, Inc. (TPB)
My 2020 pick was Turning Point Brands (TPB), and I still have it. Have not sold a bit.
Timothy Lutts, Cabot Marijuana Investor, cabotwealth.com, 978-745-5532, December 8, 2020
*EnLink Midstream, LLC (ENLC)
EnLink focuses on providing midstream energy service in the U.S. The stock is a casualty of the oil crisis. It has reduced the dividend to conserve cash. We don’t see the stock moving appreciably higher until the oil crisis abates. We do not own the stock.
Joseph Cotton, Cotton’s Technically Speaking, cottonstocks.net, 727-289-4436, December 18, 2020
*Amarin Corporaton plc
Amarin tanked, when the company lost a patent litigation, but it will be ok and the Vascepa drug is best for taking care of your heart.
Gene Inger, The Inger Letter, ingerletter.com, December 26, 2020
*The Walt Disney Company (DIS)
My 2020 pick was DIS. I recommended selling Feb 18th at 139 after stock sold off after earnings—but if anyone held through the crash, they’d have a profit now!
Timothy Lutts, Cabot Marijuana Investor, cabotwealth.com, 978-745-5532, December 8, 2020
Investment Index 837
The next Wall Street’s Best Digest issue will be published on February 18, 2021.