Millions of Americans will be receiving an additional $1,400 as part of the Biden stimulus plan after receiving $600 as part of the stimulus bill that President Trump back on December 27, 2020. Many already have.
For many Americans, there is a definite plan for how that money will be spent. And the usual suspects like Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) will likely continue to be busy. However, for other Americans, the money they receive will truly be like finding money. Both scenarios present different thoughts for investors.
You may agree with the payments. You may disagree with them. It really doesn’t matter, they’re coming and now as an investor, the question is how can you benefit from the new spending that will undoubtedly occur as a result of Americans receiving this stimulus?
We have some ideas and we’re sharing them with you in this special presentation. It’s comforting to remember that for many people receiving the stimulus checks will help ease the pressure from desperate circumstances.
Quick Links
- Dollar General
- Target
- Kroger
- Overstock.com
- Activision Blizzard
- DraftKings
- Apple
#1 - Dollar General (NYSE:DG)
Let’s start with what should seem like an obvious choice. Dollar General (NYSE:DG) has been one of the largest pandemic winners. It’s not just about the prices. Like real estate, location matters. And Dollar General has a large footprint that extends into areas that are not always covered by the big box chains. In fact, about 75% of the company’s nearly 17,000 stores are located in small cities defined as those with populations of 20,000 or less.
That’s significant in a world where social distancing and staying home have mattered. What’s also significant is that Dollar General is making a push into areas such as fresh produce and frozen goods. This is helping the company compete more directly in the grocery arena.
Dollar General stock is up about 34% in 2020. And with the stock down about 4% in the last month, DG stock may present an attractive buy-on-the-dip opportunity. To that end, analysts give Dollar General stock a price target of over $225.
About Dollar General
Dollar General Corporation, a discount retailer, provides various merchandise products in the southern, southwestern, midwestern, and eastern United States. It offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, disinfectants, and laundry products; packaged food comprising cereals, pasta, canned soups, fruits and vegetables, condiments, spices, sugar, and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer, and wine.
Read More - Current Price
- $76.40
- Consensus Rating
- Hold
- Ratings Breakdown
- 9 Buy Ratings, 13 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $98.27 (28.6% Upside)
#2 - Target (NYSE:TGT)
Another retail stock that stands to benefit from consumer spending is Target (NYSE:TGT). This shouldn’t be a surprise to those who have been paying attention to the retail sector over the past 18 months. Target was an early adopter of the omnichannel model that now defines the winners from the losers in the retail space. In 2019, Target was considered to be on the ropes as it made a pivot to increase its e-commerce present.
That has turned out to be a brilliant move. As stores were closed for public health concerns, Target was able to cash in. The company was one of the few retailers to see stronger sales during the second quarter, and sales have continued to be strong.
Target stock is up about 38% for the year and is down about 2% in December. Analysts suggest that the stock has room to fall, but those opinions were issued before the news of further stimulus. Target looks to be a solid winner heading into 2021. And the Dividend King (with 52 years of annual distribution increases) is a good stock for growth and value investors.
About Target
Target Corporation operates as a general merchandise retailer in the United States. The company offers apparel for women, men, boys, girls, toddlers, and infants and newborns, as well as jewelry, accessories, and shoes; and beauty and personal care, baby gear, cleaning, paper products, and pet supplies.
Read More - Current Price
- $131.48
- Consensus Rating
- Hold
- Ratings Breakdown
- 15 Buy Ratings, 16 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $160.57 (22.1% Upside)
#3 - Kroger (NYSE:KR)
As a pure-play on groceries, there are few companies that are a better bet than Kroger (NYSE:KR). Traditional supermarket chains have notoriously thin margins and face competition. Both of these act as headwinds for stock growth in normal times.
In an understatement of epic proportions, these are not normal times. And Kroger has proven to be more than up for the challenges of 2020. And as much as all of us would like to wish differently, we’re still going to be dealing with the novel coronavirus for a good bit of 2021, which makes Kroger a good stock to add to your portfolio.
The company posted strong earnings and revenue in the previous quarter including with growth in its digital sales. This is significant because even when the economy reopens in full, many shopping habits have been changed for good. Many Americans will still look to have their groceries delivered. And Kroger has made strategic investments in its online delivery and pickup services which should position it well for whatever comes next.
About Kroger
The Kroger Co operates as a food and drug retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Its combination food and drug stores offer natural food and organic sections, pharmacies, general merchandise, pet centers, fresh seafood, and organic produce; and multi-department stores provide apparel, home fashion and furnishings, outdoor living, electronics, automotive products, and toys.
Read More - Current Price
- $61.85
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $65.43 (5.8% Upside)
#4 - Overstock.com (NASDAQ:OSTK)
Perhaps one of the most unexpected pandemic winners has been the home furnishings category. And a company that has benefited from this growth has been Overstock.com (NASDAQ:OSTK). Furniture manufacturers have had a rough time of it over the last 20 years. But with Americans sheltering in place, many decided it was time that their home décor needed a face lift. And Overstock was more than happy to help them give their homes a facelift.
One catalyst for Overstock is its emerging cryptocurrency trading platform, tZero Markets a retail-oriented brokerage for digitized securities. Some analysts are excited about the potential that this may provide for the company’s earnings.
This may be a reason to hold the stock down the road, but for now, stick to the strength in the company’s core business. OSTK stock is up over 600% in 2020. And the company looks well positioned to continue that growth into 2021. Analysts agree. Overstock has a price target of over $100 which would be a near 100% gain from the stock’s current level.
About Overstock.com
Overstock.com, Inc operates as an online retailer in the United States. It offers furniture, décor, area rug, bedding and bath, home improvement, outdoor, and kitchen and dining items. The company provides its products and services through its internet websites comprising overstock.com, o.co, overstock.ca, and overstockgovernment.com.
Read More - Current Price
- $0.00
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#5 - Activision Blizzard (NASDAQ:ATVI)
Yes, video game stocks were a pandemic winner. And it’s reasonable to expect that companies like Activision Blizzard (NASDAQ:ATVI) will benefit as many Americans remain under varying degrees of mitigation measures due to the pandemic. In fact, ATVI stock is up 56% as 2020 comes to an end.
But that’s missing the bigger story for Activision Blizzard. The company, and others in its sector, have always known that the pandemic surge was a one-off event that will, hopefully, never be repeated. But the company is expanding ways to monetize its business.
For example the company has introduced its popular Call of Duty title into its mobile gaming platform. It’s also using its free-to-play Warzone game as a way to get users into its Call of Duty ecosystem. And what does all that mean? It means that even as society began to re-open in the summer and into fall, player engagement as measured by average hourly commitment remained very high.
About Activision Blizzard
Activision Blizzard, Inc, together with its subsidiaries, develops and publishes interactive entertainment content and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Activision, Blizzard, and King. It develops and distributes content and services on video game consoles, personal computers, and mobile devices, including subscription, full-game, and in-game sales, as well as by licensing software to third-party or related-party companies that distribute Activision and Blizzard products.
Read More - Current Price
- $94.42
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - DraftKings (NASDAQ:DKNG)
A perhaps not so surprising phenomenon of the pandemic was that millions of Americans wanted to gamble with their stimulus money. And the reopening of sports has created a strong environment for the growth in stocks lIke DraftKings (NASDAQ:DKNG).
DraftKings was one of the many companies that went public through a special purpose acquisition company (SPAC). The company debuted in April and the stock is up nearly 350%.
But the question for many investors is what will the stock do in the future? If analysts are to be believed then now would be a good time to jump on DKNG stock. The company is covered by 25 analysts who give the stock an upside of nearly 20%.
Late in 2020, DraftKings announced a partnership with ESPN that makes the company an exclusive provider of daily “fantasy sports” operations. It’s also a “co-exclusive partner for gambling link-outs” at ESPN. This will keep DraftKings top of mind for many current, and potentially future, gamblers.
About DraftKings
DraftKings Inc operates as a digital sports entertainment and gaming company in the United States and internationally. It provides online sports betting and casino, daily fantasy sports, media, and other consumer products, as well as retails sportsbooks. The company also engages in the design and development of sports betting and casino gaming software for online and retail sportsbooks, and iGaming operators.
Read More - Current Price
- $40.35
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 23 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $51.00 (26.4% Upside)
#7 - Apple (NASDAQ:AAPL)
If you’re more interested in something on the tech side of things, you can still look at Apple (NASDAQ:AAPL). First, after the company’s three-for-one stock split in late summer, shares are attractively priced and still up 77% for the year.
Second, the company just launched the latest version of its iPhone (the iPhone 12). And to say the response has been strong is an understatement. In October the iPhone 12 made up 24% of the 5G smartphone market worldwide even though it had only been launched for two weeks. The company was smart and aggressive in pricing the devices and with the addition of 5G technology, plus an established core of users on an upgrade cycle, the match was lit.
New stimulus dollars could very well be the inflection point for even stronger sales. And don’t forget the company continues to gain traction in areas such as wearables and services. The services business alone recorded 16% year-over-year growth in 2020.
About Apple
Apple Inc designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, a line of smartphones; Mac, a line of personal computers; iPad, a line of multi-purpose tablets; and wearables, home, and accessories comprising AirPods, Apple TV, Apple Watch, Beats products, and HomePod.
Read More - Current Price
- $254.49
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 24 Buy Ratings, 11 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $236.78 (7.0% Downside)
Investors can probably add their own stocks to this list. There are many stocks that will benefit from consumers having a bit more purchasing power. However, I should state very clearly that if you are among the millions of Americans receiving a stimulus check, your first priority should be to pay bills and to add to your emergency funds.
This presentation is primarily aimed at higher-income individuals who aren’t going to receive a stimulus check but can profit from the companies that stand to benefit. And it’s also aimed at individuals for whom the stimulus provides them with an opportunity to invest.
Like many events that happened in 2020, this latest round of stimulus is by definition, a stimulant. There are many other reasons to be optimistic about the prospects for equities for 2021. However, additional direct payments to millions of Americans can help get the ball rolling. And by investing in these companies, you can ensure that your portfolio gets off to a strong start.
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