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We are now into the fourth quarter of the year.
With the election, the battle over the Supreme Court, and the continued struggle against the coronavirus pandemic, we should see an interesting end to 2020.
It is also the time of year when we begin to hear talk and predictions about which stocks we want to own to get the best results in 2021.
If this year is like every other year, we will hear all sorts of guesses involving turnarounds, emerging technologies, and wild guesses about how the markets will play out in 2021.
I love turnarounds and emerging technologies as much as the next guy. If I can find those opportunities throughout the year, I'll bring them to you right away.
However, for the core of our 2021 portfolio, we want to own the stocks with the very best fundamentals and powerful tailwinds from existing long-term demographic, economic, and social trends.
Best Stocks: Three of the best stocks to consider buying today - these picks belong in every portfolio. Learn more...
These are the stocks that should deliver substantial gains no matter what new brand of madness the world brings us in 2021.
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Best Stocks for 2021 No. 3
One of the strongest trends that has developed is the idea of remote working and learning.
The economic shutdown poured gas on a slowly developing trend as millions of Americans were forced to work and take classes from home.
Even as states begin to attempt to open back up, it is clear that this trend will not reverse.
Many companies are encouraging work from home. Many school systems are still using remote learning exclusively.
The ultimate remote work and learn stock is Cisco Systems Inc. (NASDAQ: CSCO).
Cisco makes all the networking switches, routers, and complementary products that make all of this possible.
It is also one of the biggest providers of cybersecurity products that will become increasingly important as the world becomes more digital and remote.
Cisco Systems is in outstanding fundamental condition as 2020 nears a close.
The company has enormous profit margins, and its return on equity is over 30%.
As of the end of the second quarter, Cisco had almost $30 billion of cash on hand.
The company is very unlikely to run out of cash anytime soon, as it's generating more than $10 billion of free cash flow a year.
Cisco shares yield 3.7%, and Cisco has been raising the payout by about 12% a year.
Best Stocks for 2021 No. 2
No matter who wins the White House, 2021 we will see an increased demand for infrastructure spending.
I also expect to see infrastructure programs used to provide jobs to get the economy back on track.
As an aggregate and cement supplier, Martin Marietta Materials (NYSE: MLM) is well-positioned to be a significant beneficiary of these tailwinds.
It helps even more that it has a strong presence in states like Texas, Colorado, North Carolina, Iowa, and Georgia that have a big need for infrastructure spending. I expect the company will get a boost from new residential construction in 2021 from these states.
MLM also has decent state economies and budgets that make cash available to get started as we enter 2021.
The company is in fantastic fundamental condition as we move toward 2021. It has high gross margins that I expect to expand over the next year.
Best of all, the firm increased its dividend last year while continuing to buy back its own stock. And I expect both will increase again in 2021.
Martin Marietta Materials has been remarkably disciplined about its finances. I would not be shocked to see that prudence produces an additional dividend increase in the next year.
Best Stocks for 2021 No. 1
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.