If you're a growth investor, you probably did pretty well in 2020. Congratulations on crushing the market. Just don't get too cocky. Not every stock that was a winner over the past year is going to stay on top in 2021.
That said, I think Freshpet (FRPT -2.67%) and DraftKings (DKNG -1.13%) will keep winning in the year ahead. I also think that Sirius XM Holdings (SIRI -0.94%) -- a surprising sinker -- is going to bounce back. Here's why I believe they're the three best stocks to buy in 2021.
Image source: Getty Images.
Freshpet
A lot of the stay-at-home winners' share prices have started to slip in recent weeks. Investors are coming to the conclusion that the next new normal won't involve quite as many videoconference calls, home workouts, and evenings of binge streaming. People also adopted pets in record numbers in 2020, but we're not giving back our new furry friends.
So we're going to keep taking good care of our dogs and cats, and these days, for many pet owners, that means feeding them fresh and natural food as opposed to the once-popular dry kibble. Freshpet will make the most of having 12 full months of feeding pets that were taken in throughout 2020. Within its niche, Freshpet stands out with its branded refrigerators -- 22,371 and growing -- in most major supermarket chains and mass-market retailers.
Freshpet cracked the code. It made refrigerated pet food available at the places where consumers go shopping all the time. Business has accelerated sharply for four consecutive years, and by the summer of 2022, it will have a new kitchen facility open that will allow it to dramatically increase its production.
Image source: Getty Images.
DraftKings
It's fair to say that 2020 was a strange year for sports. Leagues shut down in March when the pandemic interrupted just about everything. And when popular sporting events resumed in the summer, they did so with new safeguards, few people in the stands, and shorter competitive seasons. Still, fans were happy to be able to get back to rooting for their favorite teams, and DraftKings was there to cash in on the process.
The leader in fantasy sports wagering and a growing player in more traditional sportsbook gambling saw its pro forma revenue climb by 42% in its latest quarter, despite the wacky new normal with shorter seasons and so many games nixed because of COVID-19 outbreaks. The year ahead should get far more predictable, and in the meantime, DraftKings didn't lose sight of its opportunity to grow its access. The company has teamed up with media networks, leagues, and individual franchises to become their exclusive fantasy sports partner. All of the attention will make it that much easier to ramp up its more lucrative online sportsbook operations as regulations on gambling continue to loosen up in the months and years ahead.
Image source: Getty Images.
Sirius XM Holdings
The only game in town when it comes to satellite radio is experiencing something that it hasn't since 2008. It will close out the year lower on a dividend-adjusted basis in 2020, ending an 11-year streak of delivering gains to investors.
It's easy to see why Sirius XM initially fell out of favor. Satellite radio is something consumed mostly by drivers during their work commutes or errand runs, and we didn't do a lot of driving this year. Car sales also slipped during the first half of 2020. There are signs of life now on the automotive sales front, though, and the situation will only continue to improve in 2021 as we claw our way out of the recession and get the COVID-19 pandemic under control. Sirius XM stock may be down nearly 10% year to date heading into 2020's final trading day, but the chances are good for it to bounce back and begin a new winning streak in 2021. Churn is starting to stabilize for its flagship product, and the company has acquired or established significant stakes in streaming, social music, and podcasting platforms to make sure it reaches eardrums outside of people's cars.
Freshpet, DraftKings, and Sirius XM are winning growth stocks. They didn't all hit it out of the park in 2020, but they should round the bases and score in 2021.
