Now that at least two coronavirus vaccines are on the horizon, and the end is in sight (if it isn’t right around the corner), it’s the perfect time to look ahead at some of the big opportunities 2021 has to offer.
Looking ahead, it’s a safe bet that recovery from this pandemic will impact stocks left and right. Some stocks won’t do so well as society and the economy open back up, but others, like the one we’re going to look at today, will most definitely do better with COVID-19 in the rear-view mirror.
As “unique” (trust me, that’s the politest word I can think of) as this year has been, we can still use the Money Calendar to draw some conclusions and make predictions about what stocks are likely to do in the year ahead.
Let’s dive in and make some money…
This Might Be 2021’s “Safest” Bet
Maybe a little too expensive.
So the Money Calendar looks at the top 250, the 6.5% of equities that are the best of the best.
It crunches millions of data points, looking over 10 years of performance to find repeatable, tradeable, bankable patterns in them.
Cisco Systems Inc. (NASDAQ: CSCO) was one name that popped on my screen right away.
Cisco has had a tough 2020; even though it’s up 24% from the March crash lows, it’s still down around 14% on the year as the bullishness that’s swept other stocks along to new highs passed Cisco over.
That sounds strange on the surface, considering Cisco is a networking company and plenty of IT departments have been building out their networks for telecommuting, but that hasn’t been putting gas in Cisco’s tank.
Cisco had one of the original, leading videoconferencing solutions in Webex… but as it turned out, most of the world seems to have broken for Zoom Video Communications Inc.’s (NASDAQ: ZM) product instead.
Still… Cisco’s in better shape than it should be, and when onsite IT activity (that’s “spending” to you and me) gathers steam throughout 2021, Cisco will benefit, which turns the stock’s current troubles from “bummer” to “big opportunity.”
The Money Calendar shows Cisco has closed out nine of the past 10 years higher; this is the only year it might not be likely to do that. It’s also telling me Cisco is trading around 40% below fair value, and the company recently reported it expects to grow EPS by 4.8% by the second quarter of 2021. I’d buy CSCO shares at market levels right now and hang onto it for a year as you collect a 3.5% dividend… and double-digit gains to boot.
Like I said, you could buy the stock here and you’d be A-OK, but if you want to own the shares for even less than they’re going for now, you could do like the Money Calendar suggests is the smart move, and sell a put, like the CSCO Dec. 18, 2020 $38 put. You can sell 100 for $141 right now, and you’d pick up the obligation to buy CSCO at $38 if it’s trading there by Dec. 18.
Would I spend $38 to pick up a company that could be trading at $50 a year from now? I’d do it all day long!
— Tom Gentile