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11 Best Stocks To Buy For The Rest of 2021

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·12 min read
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  • EPD
  • O
  • XOM
  • NUE
  • COP
  • U
  • TMO
  • NVDA
  • MSFT

In this article, we discuss the best stocks to buy for the rest of 2021. You can skip our detailed analysis of the stock market and go directly to read the 5 Best Stocks To Buy For The Rest of 2021.

Financial markets are slowly returning to normal. SPDR S&P 500 ETF Trust (SPY) is up 15% year to date. In the month of October, the benchmark index reached an all-time high, gaining 6.9%, its biggest monthly win in 2021. Forbes reported that some of the emerging industries for 2021 include AI, renewable energy, cloud computing, and cybersecurity. This comes in agreement with a report by FactSet, which states that analysts are mainly optimistic about energy, information technology, and healthcare, as these sectors have continued to gain Buy ratings on average from the analysts in the past.

However, with inflation at a 13-year high and continuing supply chain issues, investors are worried about the future of their investments. However, the third-quarter earnings of many companies have shown a positive picture of the broader market. According to a report published by Forbes, over half of the companies in the S&P 500 have released their Q3 earnings, 82% of which have reported solid quarters and earnings beat. Moreover, the U.S. GDP is also expected to grow by 6% quarter-over-quarter in Q4 2021, as reported by Merrill Lynch, which will further boost the confidence of overstrung investors.

Some of the most notable stocks analysts and hedge funds are bullish on include Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Exxon Mobil Corporation (NYSE: XOM), Microsoft Corporation (NASDAQ:MSFT), Thermo Fisher Scientific Inc. (NYSE:TMO), and NVIDIA Corporation (NASDAQ:NVDA).

Our Methodology:

Let's analyze our list of the best stocks to buy for the rest of 2021. We took into account hedge fund sentiment, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.

Amid inflation and economic uncertainty, we mentioned several stocks that pay consistent dividends.

11 Best Stocks To Buy For The Rest of 2021
11 Best Stocks To Buy For The Rest of 2021

Photo on Unsplash

Best Stocks To Buy For The Rest of 2021

11. Realty Income Corporation (NYSE:O)

Number of Hedge Fund Holders: 23

Realty Income Corporation (NYSE:O) is a real estate investment trust that invests in single-tenant commercial properties. The company has a portfolio of over 6,700 commercial properties and clients in over 58 industries.

Realty Income Corporation is one of the most popular monthly dividend stocks, with a yield of over 4%.

In Q3 2021, Realty Income Corporation (NYSE:O) posted an FFO of $0.91, in line with the estimates. The company reported revenue of $491.1 million, presenting a 21.6% year-over-year growth. In September RBC Capital initiated its coverage on Realty Income Corporation (NYSE:O) with an ‘Outperform’ rating and a $79 price target. The firm’s analyst showed confidence in the company’s high-quality asset base and consistently strong returns.

As of Q2 2021, 23 hedge funds tracked by Insider Monkey have positions in Realty Income Corporation (NYSE:O), up from 18 in the previous quarter. These stakes are valued at $221.7 million.

Like Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Exxon Mobil Corporation (NYSE: XOM), Microsoft Corporation (NASDAQ:MSFT), Thermo Fisher Scientific Inc. (NYSE:TMO), and NVIDIA Corporation (NASDAQ:NVDA), Realty Income Corporation (NYSE:O) is also gaining investors’ attention in 2021.

10. Enterprise Products Partners L.P. (NYSE:EPD)

Number of Hedge Fund Holders: 28

Enterprise Products Partners L.P. (NYSE:EPD) is an American midstream and natural gas and crude oil pipeline company. The company is also a producer of refined products and petrochemicals. With a yield of over 7.97% and 22 years of consistent dividend growth, Enterprise Products Partners L.P. (NYSE:EPD) is one of the best stocks to buy for the rest of 2021.

Recently, BofA reinstated Enterprise Products Partners L.P. (NYSE:EPD) with a ‘Buy’ rating and a $32 price target.

As of Q2 2021, 28 hedge funds tracked by Insider Monkey have positions in Enterprise Products Partners L.P. (NYSE:EPD), up from 26 in the previous quarter. These stakes are valued at over $246 million.

ClearBridge Investments mentioned Enterprise Products Partners L.P. (NYSE:EPD) in its Q1 2021 investor letter. Here is what the firm has to say:

“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) Enterprise Products Partners LP. We are positive on this company’s strong balance sheets, competitive positions and exposure to an economic recovery.”

9. Unity Software Inc. (NYSE:U)

Number of Hedge Fund Holders: 29

Unity Software Inc. (NYSE:U) is a software company that offers graphic tools to monetize content for mobile phones, tablets, PCs, as well as for virtual reality devices.

In Q3 2021, Unity Software Inc. (NYSE:U) posted an EPS of -$0.06, beating the estimates by $0.01. The company’s revenue for the quarter stood at $286.3 million, presenting a 42.6% year-over-year growth.

In the past year, Unity Software Inc. (NYSE:U) delivered a 72% return to shareholders.

As of Q2 2021, 29 hedge funds tracked by Insider Monkey have positions in Unity Software Inc. (NYSE:U), compared with 39 in the previous quarter. These stakes are valued at over $7.2 billion. With shares worth $4.4 billion, Silver Lake Partners is the company’s largest shareholder.

8. Nucor Corporation (NYSE:NUE)

Number of Hedge Fund Holders: 32

Nucor Corporation (NYSE:NUE) is the largest steel producer in the U.S., specializing in structural steel, carbon steel plate, and sheet steel products. As of 2020, the company has over 26,000 employees. The stock has gained about 112% year to date.

In August, Argus lifted its price target on Nucor Corporation (NYSE:NUE) to $140, while keeping a ‘Buy’ rating on the shares. The firm’s analyst noted the company’s strong balance sheet and growth across its all segments. In Q2 2021, Nucor Corporation (NYSE:NUE) posted a GAAP EPS of $5.04, beating the estimates by $0.32. The company’s revenue for the quarter stood at $8.79 billion, showcasing a 103% growth from the prior-year quarter.

As of Q2 2021, 32 hedge funds tracked by Insider Monkey have stakes in Nucor Corporation (NYSE:NUE), up from 25 in the previous quarter. These stakes are valued at over $196.4 million.

Madison Funds mentioned Nucor Corporation (NYSE:NUE) in its Q1 2021 investor letter. Here is what the firm has to say:

“This quarter we are highlighting Nucor (NUE) as a relative yield example within the Materials sector. NUE is a leading manufacturer of steel and steel products. It is the largest steelmaker in the U.S. based on production volume with a vertically integrated business model. The company has a low fixed-cost position due to its use of electric arc furnaces, which are cleaner, less labor and energy-intensive than blast furnaces, and this results in low total costs per unit of steel produced. Our view is that a low cost position is an important attribute in a commodity business. NUE’s historical financial record supports this view as it has been profitable every year except for one over the past fifty years, unlike many steel producing peers. In addition, the company has a diverse product and mill portfolio that takes market share over time. We believe its scale, low fixed-cost position, consistent record of profitability and diverse mill portfolio result in a sustainable competitive advantage versus peers.

Our thesis on NUE is that it should benefit from higher steel prices as the U.S. economy recovers from the downturn caused by the Covid-19 pandemic. The company may also be a beneficiary of on-shoring, where manufacturing returns to the United States. These two dynamics should drive growth this year, and if the United States Congress passes new infrastructure legislation, that will provide another avenue for growth longer-term.

Importantly, NUE has a strong balance sheet and flexible capital spending model that can quickly adjust to changing economic

conditions. If economic growth slows, NUE can quickly reduce its cost structure, something it has done successfully in prior cyclical downturns. The company has low financial leverage as its net debt/adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was only 0.9x at the end of last year, and it consistently generates positive free cash flow. These favorable characteristics differentiate NUE from other steel producers and help the company gain market share through disciplined capital allocation.

The fund purchased NUE at $56 in January, 2021, after it reached a low valuation with an attractive dividend yield and relative dividend yield versus the S&P 500. At the time or purchase, the stock yielded 3.3% and had a relative dividend yield of more than 2x the S&P 500, which was the high end of its historical range as shown in the bottom pane in the graph. The company is also a Dividend Aristocrat that has raised its dividend annually for 48 years. We expect continued dividend increases going forward.

Risks to the thesis include a prolonged economic downturn, lower steel prices and increasing steel import volumes that could hurt NUE financial performance. We believe these risks are manageable as economic growth is expected to be well above average this year. Specifically, Goldman Sachs is forecasting U.S. gross domestic product (GDP) growth of +8% in 2021, which would be the fastest pace of growth since 1950. Strong growth is likely to result in higher manufacturing activity, which we believe would be supportive of higher steel prices and limit risks to the thesis.”

7. ConocoPhillips (NYSE:COP)

Number of Hedge Fund Holders: 50

ConocoPhillips (NYSE:COP) is one of the largest exploration and production companies engaged in the exploration of hydrocarbons. The company is the largest producer of crude oil in Alaska. ConocoPhillips (NYSE:COP) has a track record of 5 years of consistent dividend growth and pays an annual dividend of $1.84 per share. The stock's dividend yield currently stands at 2.51%.

Recently, Royal Dutch Shell, a multinational oil and gas company, sold its Permian Basin Assets to ConocoPhillips (NYSE:COP) in a deal worth $9.5 billion. Through this deal, the company will be able to add nearly 200 MBoe/d of production. In September, Raymond James lifted its price target on ConocoPhillips (NYSE:COP) to $90, while maintaining a ‘Strong Buy’ rating on the shares.

The firm’s analyst John Freeman appreciated the company’s acquisition of Shell’s Permian Basin Assets, which will allow the company to add approximately $1.9 billion in free cash flow for 2022. In Q3 2021, ConocoPhillips (NYSE:COP) posted an EPS of $1.77, beating the estimates by $0.25. The company expects the total production to reach 1.48 to 1.52 MBoe/d in 2021. Since the beginning of the year, the stock has delivered an 83% return to shareholders.

As of Q2 2021, 50 hedge funds tracked by Insider Monkey have positions in ConocoPhillips (NYSE:COP), compared with 51 in the previous quarter. These stakes are valued at over $1.15 billion.

ClearBridge Investments mentioned ConocoPhillips (NYSE:COP) in its Q1 2021 investor letter. Here is what the firm has to say:

“While reducing in health care and consumer staples, we increased our exposure to high-quality names in economically sensitive areas of the market. We added to low-cost, high-quality energy names (including) ConocoPhillips. We are positive on the company’s strong balance sheets, competitive positions and exposure to an economic recovery.”

6. Exxon Mobil Corporation (NYSE: XOM)

Number of Hedge Fund Holders: 68

Exxon Mobil Corporation (NYSE: XOM) is an American multinational energy company that is engaged in the exploration, production, and transportation of crude oil and natural gas. With the energy sector gaining ground among investors, the company remains one of the best stocks to buy for the rest of 2021.

Recently, Saudi Basic Industries Corp. has announced its joint venture with Exxon Mobil Corporation (NYSE: XOM) for a petrochemical JV startup near Texas, U.S. This new partnership will develop the world’s second-largest ethane-fed cracker at 1.8M metric tons per annum. In Q3 2021, Exxon Mobil Corporation (NYSE: XOM) reported revenue of $73.7 billion, presenting a 59.7% year-over-year growth and beating the market consensus by $1.74 billion. This October, Morgan Stanley set a $149 price target on the stock while keeping an Overweight rating on the shares. In the past year, Exxon Mobil Corporation (NYSE: XOM) gained 70%.

Exxon Mobil Corporation (NYSE: XOM) pays an annual dividend of $3.48 per share.

As of Q2 2021, 68 hedge funds tracked by Insider Monkey have positions in Exxon Mobil Corporation (NYSE: XOM), up from 65 in the previous quarter. These stakes are valued at over $3.69 billion. With shares worth $1.6 billion, First Eagle Investment Management is the company’s leading shareholder.

In addition to Amazon.com, Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT), Thermo Fisher Scientific Inc. (NYSE:TMO), and NVIDIA Corporation (NASDAQ:NVDA), analysts and investors are also paying attention to Exxon Mobil Corporation (NYSE: XOM) in 2021.

First Eagle Investment Management mentioned Exxon Mobil Corporation (NYSE: XOM) in its second-quarter 2021 investor letter. Here is what the firm has to say:

“Leading contributors in the First Eagle Global Fund this quarter included Exxon Mobil Corporation. The continued recovery in oil prices as economies reopen helped fuel another strong performance across the energy complex, including shares of Exxon Mobil. Exxon Mobil recently lost a proxy fight with an activist investor that took three of the company’s 12 board seats. While the press was focused on the investor’s concerns over Exxon Mobil’s long term energy transformation strategy, other factors fundamental to shareholder returns—like capital discipline and balance sheet management—were also at play.”

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Disclosure. None. 11 Best Stocks To Buy For The Rest of 2021 is originally published on Insider Monkey.