In this article, we discuss the 5 best stocks of 2021. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks of 2021.
5. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 50
Year-To-Date Gain: 179%
One of the best-performing industries this year has been the energy sector, specially the oil and gas segment. Devon Energy Corporation (NYSE:DVN), an integrated oil and gas firm, has benefited from the increase in demand for oil in the post-pandemic economy, as well as the soaring oil prices as OPEC discusses production increases. Truist analyst Neal Dingmann has a Buy rating on the stock with a price target of $60.
Devon Energy Corporation (NYSE:DVN) stock has climbed further in the past few days after OPEC announced that it would be sticking to a plan to only increase oil output by 400,000 barrels per day, much below high demand, through December. This effectively means that oil prices will remain high in the near-future.
Among the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Adage Capital Management is a leading shareholder in Devon Energy Corporation (NYSE:DVN) with 7.5 million shares worth more than $219 million.
In its Q4 2020 investor letter, GoodHaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“After a rough start to the year our two biggest energy holdings – WPX Energy rebounded materially in the last six months though energy was still our biggest detractor for the year. I’ve previously written about deciding earlier this year to direct new capital towards better businesses versus adding more to the energy sector, but given the material optionality at WPX, we opted to maintain a material exposure. Recently WPX announced an all stock merger with a larger competitor – Devon Energy – which will leave the new company with plenty of cash flow at lower oil prices, less leverage, and material upside to higher commodity prices.”
4. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 55
Year-To-Date Gain: 129%
Ford Motor Company (NYSE:F), the Michigan-based automaker, has pivoted to electric vehicles this year, announcing the flagship all-electric F-150 truck and several other EV models. The stock has been given a further boost by the recent approval of the American Jobs Plan of US President Biden that will increase federal tax credits for EV makers who use union labor to $12,500 from $7,500, incentivizing the production of more EVs.
Ford Motor Company (NYSE:F) has also enjoyed increased interest from the retail investor community that has discussed the new EV models and business strategy of the company at length on internet platforms like Reddit, improving the visibility of the firm to young investors.
At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $2.10 billion in Ford Motor Company (NYSE:F), up from 49 in the preceding quarter worth $2.19 billion.
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
3. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Year-To-Date Gain: 74%
No list about the best-performing stocks of the year would be complete without discussing Tesla, Inc. (NASDAQ:TSLA), the California-based EV maker that has crossed $1 trillion in market capitalization. Wedbush analyst Daniel Ives recently raised the price target on the stock to $1,800 from $1,500 and kept an Outperform rating, noting the expected rise in demand for EVs through next year and potential deals of the firm with ride-hailing and leasing services.
On November 8, PepsiCo, one of the largest beverage firms in the world, announced that it would be taking the first deliveries of Tesla, Inc. (NASDAQ:TSLA) trucks for operations. PepsiCo had ordered 100 Tesla trucks as part of a plan to lower the carbon footprint of the company.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Tesla, Inc. (NASDAQ:TSLA) with 23 million shares worth more than $16 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
2. Atlassian Corporation Plc (NASDAQ: TEAM)
Number of Hedge Fund Holders: 64
Year-To-Date Gain: 83%
Atlassian Corporation Plc (NASDAQ: TEAM) operates as an application software firm. Even though most work-from-home stocks have not performed well in the post-pandemic economy, companies like Atlassian have enjoyed a bull run as remote working becomes practical and feasible for businesses. Oppenheimer analyst Ittai Kidron recently raised the price target on the stock to $500 from $420 and kept an Outperform rating on the shares.
Atlassian Corporation Plc (NASDAQ: TEAM) recently posted earnings for the first fiscal quarter, reporting earnings per share of $0.46, beating estimates by $0.06. The revenue over the period was $614 million, up 33% year-on-year.
At the end of the second quarter of 2021, 64 hedge funds in the database of Insider Monkey held stakes worth $4.1 billion in Atlassian Corporation Plc (NASDAQ: TEAM), down from 67 the preceding quarter worth $3.9 billion.
Here is what Baron Opportunity Fund has to say about Atlassian Corporation Plc (NASDAQ: TEAM) in its Q2 2021 investor letter:
“Atlassian Corporation Plc is a software leader that makes tools that are used by thousands of teams worldwide, thus its ticker TEAM. Atlassian’s tools “help teams collaborate, build, and create together” (quote from Atlassian’s website), with an emphasis on designing, developing, and maintaining software, including JIRA for team planning and project management, Confluence for team content creation and sharing, HipChat for team messaging and communications, Bitbucket for team software code sharing and management, and JIRA Service Desk for team services and support use cases. Atlassian is the recognized market leader for information technology team planning and project management software, and has extended its product offering into tangential areas, such as those listed above. The company is in the midst of transitioning its business model to the cloud, which will help it drive faster product innovation, more seamlessly integrate its product families, and raise the effective price realization for its suite of products. Atlassian is run by its two visionary founders, has strong competitive advantages, and we think it should be able to grow revenue over 25% for many years with best-in-class free cash flow margins.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
Year-To-Date Gain: 136%
No other industry has benefited as much from the increase in demand for goods in the post-pandemic economy as the semiconductor sector. Chip prices have skyrocketed due to supply chain issues and increase in demand for chips by EV makers, crypto miners, mobile and laptop manufacturers, and other industries. NVIDIA Corporation (NASDAQ:NVDA), which makes and sells these chips, has posted market-beating earnings through this period.
With chip demand likely to exceed supply well into the next year and even beyond, the prices of chips will remain high and NVIDIA Corporation (NASDAQ:NVDA) can expect a steady stream of revenue in the coming months.
At the end of the second quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $9 billion in NVIDIA Corporation (NASDAQ:NVDA), up from 80 the preceding quarter worth $6 billion.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and NVIDIA Corporation (NASDAQ:NVDA) was one of them. Here is what the fund said:
“NVIDIA Corp. is the dominant supplier of Graphics Processing Units (GPUs) worldwide. NVIDIA’s GPUs are at the intersection of a number of important computing trends including the movement to the Cloud, artificial intelligence, autonomous vehicles, edge computing, gaming, and more. We previously owned NVIDIA and sold it in the third quarter of 2020 as the price to value gap closed and our margin of safety was reduced. As with all our MVP companies, we continued to follow NVIDIA closely. Since that time, NVIDIA reported excellent results and its value has compounded rapidly. The technology selloff at the beginning of the year negatively affected the stock price while our estimate of NVIDIA’s value per share increased. This happy combination of events created a margin of safety and an opportunity to once again add NVIDIA to the portfolio.”
You can also take a peek at 10 Cheap Dividend Kings with Over 2% Yield and 12 Best Semiconductor Stocks To Invest In Right Now.
