Opportunities to create wealth in the stock market are ever-present. The challenge, of course, is knowing which stocks to buy -- and when to buy them.
To point you in the right direction, here are five excellent companies that are poised to reward their investors handsomely in 2021. Their stocks are all compelling buys today, and each of them can help you earn fortune-building returns in the year ahead.
Lemonade (LMND -1.82%) is using artificial intelligence and a customer-friendly approach to disrupt the massive insurance market. People can use Lemonade's AI-powered app to create personalized insurance plans in as little as 90 seconds. Filing claims can take as little as three minutes. And customers often enjoy significant savings compared to traditional insurance companies.
These time and cost savings are helping Lemonade rapidly gain share in the homeowners, renters, and pet insurance markets. The disruptive upstart also plans to enter the $800 billion term life insurance market in the coming months, which should help to accelerate its growth, as well as its shareholders' profits.
Square (SQ -4.25%) is giving small businesses the tools they need to survive and thrive during the coronavirus crisis. Credit card processing, website building, and business financing are just some of the services Square provides that are in high demand during the pandemic. And as Square helps its merchant customers grow their businesses, its own profits are increasing alongside theirs.
Square's massively popular Cash App is another powerful growth driver. More than 30 million people use Cash App to send money to friends and family. A growing number of people are also using it to buy and sell stocks and even cryptocurrency.
With the coronavirus accelerating the trend away from cash transactions, and Cash App establishing itself as a leading digital payments platform, Square and its shareholders are poised to benefit.
3. Advanced Micro Devices
Strong sales of personal computers and the struggles of a key competitor are fueling Advanced Micro Devices' (AMD -3.28%) growth. With more people working and learning from home during the pandemic, worldwide PC shipments climbed 13% year over year to over 300 million in 2020, according to IDC. At the same time, AMD's archnemesis Intel is dealing with production challenges that have delayed the launch of some of its most advanced chips.
AMD, in turn, is rapidly growing its share of the booming PC semiconductor market. That's helped to drive the chipmaker's sales and profits sharply higher. AMD's revenue rose 56% year over year to $2.8 billion in the third quarter, while its adjusted net income soared 129% to $501 million.
AMD also produces chips for Sony's PlayStation 5 and Microsoft's Xbox Series X consoles. With both of these gaming systems selling out quickly in many locations -- and with the PC market expected to remain strong -- investors can expect AMD to deliver another strong operational and financial performance in 2021.
While many businesses struggled in 2020, Moderna (MRNA -4.97%) had a blockbuster year. The biotechnology company proved the effectiveness of its messenger RNA (mRNA) technology and developed a vaccine that could have a large role in slowing the spread of COVID-19.
Moderna is now using the cash it's generating from its coronavirus vaccine to fund the development of 24 other drug candidates, including potential vaccines for the seasonal flu and human immunodeficiency virus (HIV). If even a few of these projects are successful, Moderna could become a far larger company while delivering handsome gains to its investors along the way.
5. Walt Disney
If you're looking for a way to profit from the eventual end of the coronavirus pandemic, look no further than Walt Disney (DIS -0.70%). Disney will reopen its parks and resorts that were forced to close during the COVID-19 crisis once it's safe to do so. Many people who have been forced to shelter at home for months will flock to Disney's popular theme parks, thereby providing a welcome boost to the entertainment titan's revenue and profits.
And as you're waiting for the pandemic to subside, Disney+ provides investors with another powerful way to profit. Disney's streaming service is growing at a torrid clip. Already more than 86 million people subscribe to Disney+, and management sees this figure rising as high as 260 million by 2024. For context, Netflix expects to end 2020 with roughly 201 million global subscribers.
With these catalysts potentially helping to drive its earnings sharply higher in the years ahead, Disney is a great stock to own in 2021 and beyond.