These Are John Buckingham’s Stock Picks For 2021

The economy remains in distress, although there are signs of recovery underway. John Buckingham of Kovitz, editor of The Prudent Speculator newsletter, has found that value stocks typically outperform coming out of economic downturns. Thus, he argues that this is an excellent time to be a value investor.

During a webinar with ValueWalk, Buckingham gave his stock picks for 2021, which focus on several themes.

(Click on image to enlarge)

John Buckingham Stock Picks

“A shot in the arm”

The first theme he mentioned was economic recovery. He noted that we’d had nine months of social distancing, limited travel, and lockdowns, but now a handful of effective COVID vaccines are setting the stage for a return to normal. Buckingham expects economically sensitive stocks to report much better results and believes investors will probably reward many of last year’s laggards for their favorable earnings comparisons.

He also noted that the federal government has been doing all it can to support the economy, driving a $2 trillion increase in U.S. deposit accounts in the first six months of last year. Much of that increase found its way onto the balance sheets of the country’s biggest banks, including JPMorgan Chase, Bank of America, and Citigroup. Buckingham sees strong upside potential for bank stocks as the firms sit flush with cash. He also expects their caution in extending credit last year to reverse.

Buckingham also noted pent-up demand for travel and leisure companies like Royal Caribbean, aviation support firm World Fuel Services, and Delta Air Lines. He also expects struggling retailers with staying power to benefit from pent-up demand, such as Kohl’s, Tapestry, and Foot Locker.

Stay-at-home trends

Buckingham also sees several beneficiaries from the stay-at-home trend. For example, tech companies benefited from the work-from-home theme, like Microsoft and its Teams platform, which saw record adoption rates. Cisco Systems, Intel, and NetApp also benefited because they produce hardware and software needed to make enterprise collaboration work. Buckingham noted that Cisco has a reasonable valuation and a big dividend yield of over 3%.

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