Last year was challenging in many respects. The coronavirus disease 2019 (COVID-19) halted normal societal habits and completely transformed the way we work and buy goods. Meanwhile, from an investment perspective, equities were taken on a historically wild ride. Though patient investors probably ended the year higher, it was anything but a typical year.
If there was one consistency on the investment front in 2020, it was that innovative brand-name companies generally outperformed the broader market. As we dig our heels into a new year, the following four companies stand out as no-brainer stocks to buy.
In the social media space, most investors flock to Facebook. But up-and-comer Pinterest (PINS -1.93%) should offer a sustainably higher growth rate and potentially more impressive return potential in 2021.
Pinterest was already growing its monthly active user count by an annual average of 30% between 2017 and 2019. It's accelerated even more since the COVID-19 pandemic hit. With people stuck in their homes and Facebook enduring a temporary advertising boycott over the summer, Pinterest was a clear beneficiary.
In particular, the company has been gaining most of its new users from overseas markets. Although these users tend to generate much lower ad revenue for Pinterest than U.S. users, there's incredible built-in potential to double this average revenue per user in international markets many times over this decade.
Pinterest also happens to be the perfect platform to connect motivated consumers with small businesses. As of the end of September, the Pinterest platform featured 442 million monthly active users who willingly shared their interests. Pinterest simply has to supply merchants with the tools they need to be successful.
The utility sector is filled with slow-growing, debt-burdened, defensive income stocks that are typically only noteworthy when the stock market has a bad day. However, electric utility stock NextEra Energy (NEE 1.06%) isn't like most of its peers.
NextEra, which has generated a positive total return for its shareholders in each of the past 12 years, separates itself with its focus on renewable energy. No U.S. utility is currently generating more capacity from solar or wind power. NextEra has aggressively apportioned $50 billion to $55 billion to tackle infrastructure projects through 2022, the vast majority of which entails adding renewable capacity. Looking out a bit longer, the company also plans to install 30 million solar panels in Florida by 2030 to boost its generating capacity another 10,000 megawatts.
Though these projects are costly, they've resulted in a tangible decline in electricity generation costs. These lower costs have propelled NextEra Energy's growth rate to the high single digits over the past 15 years in an industry known for low single-digit growth.
What's more, the incoming administration in Washington, D.C., will be considerably more likely to promote green energy projects. NextEra is already way ahead of the curve, and may benefit from future legislation from the Biden administration.
Another no-brainer stock that can make investors a lot richer in 2021 is Singapore-based Sea Limited (SE -1.98%). Sea has three separate operating segments that are growing like weeds.
For the time being, digital entertainment is Sea's biggest driver of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). People seeking out things to do while COVID-19 keeps them at home have turned to gaming. Sea's quarterly active users stood at 572.4 million at the end of September (up 78% year-over-year), with quarterly paying users hitting 65.3 million (up 124%). More paying users, and higher average revenue from those users, make a formula for success.
But what has investors excited about Sea is the company's online shopping platform, Shopee. The top-ranked downloaded app in the shopping category in Southeast Asia and Taiwan saw gross orders catapult 131% in Q3 2020, with gross merchandise value more than doubling to $9.3 billion. Southeastern Asia has a burgeoning middle class, and Shopee is just scratching the tip of the iceberg in terms of e-commerce potential in the region.
Lastly, Sea has digital financial services. Considering how underbanked Southeastern Asia is, Sea's mobile wallet solutions could provide it with a third high-growth operating segment.
Don't be surprised if Sea's 2021 sales crush Wall Street's forecasts.
As long as investors remain selective, U.S. marijuana stocks can be no-brainer buys in 2021, too. More specifically, multistate operator (MSO) Cresco Labs (CRLBF -6.09%) has the ability to make its shareholders richer.
Like most MSOs, Cresco has retail operations. This company currently has 20 open dispensaries, 10 of which are in recreational marijuana-legal Illinois. What's notable about the Land of Lincoln is that it's a limited license state. In 2020, it only handed out 75 adult-use retail licenses. By maximizing its retail presence in Illinois at 10 stores, Cresco Labs is ensuring it secures significant market share in what should become a billion-dollar pot market by 2024.
Where Cresco Labs really differentiates itself is the company's focus on wholesale cannabis. Though wholesale cannabis usually leads to lower margins, Cresco has an inside track to insane amounts of volume. By purchasing Origin House in early 2020, Cresco gained access to Origin's cannabis distribution license in California. This allowed the company to place an assortment of pot products into more than 575 dispensaries throughout the Golden State.
Furthermore, California is slowly but surely working through a sea of red tape that should lead to new dispensaries opening. That could well mean new retail opportunities for Cresco in the most lucrative pot market in the world.