In less than 24 hours, we'll be ringing in a New Year. But while the official finish line for 2021 is within sight, it doesn't mean all avenues for investing in 2021 are now closed.
For standard investment accounts, today is, indeed, the last day to lock in capital gains and losses for the 2021 tax year. However, for folks with an Individual Retirement Account (IRA), Dec. 31 doesn't have to be the finish line. IRA accountholders, including those with traditional IRAs or Roth IRAs, are free to add funds and make transactions for the 2021 tax year all the way up to Tax Day in 2022 (April 15, 2022).
In other words, it's not too late to add surefire stocks to your retirement portfolio, even though it's the last day of the calendar year. Below are five no-brainer stocks you can consider adding to your IRA for the 2021 tax year.
Although it'll win you no points for originality, there may not be a stock with a greater likelihood of long-term appreciation than Amazon (AMZN -1.09%).
Most people are familiar with Amazon because of its online marketplace. According to a report from eMarketer, Amazon was expected to gobble up more than 41% of all online U.S. market share in 2021. That's more than 34 percentage points higher than its next-closest competitor.
But the real secret sauce of Amazon's e-commerce success is its Prime membership. Because retail margins tend to be razor-thin, Amazon has turned to securing Prime members as a way to buoy margins. The fees collected annually from its 200 million worldwide Prime members help Amazon undercut brick-and-mortar retailers on price. Plus, it doesn't hurt that there's added incentive for members to stay within the Amazon ecosystem of products and services.
What's not as well known is that Amazon is also the kingpin of cloud infrastructure services. Amazon Web Services (AWS) is bringing in almost a third of global cloud infrastructure revenue. Because the margins associated with cloud services are so much higher than e-commerce, it's AWS that could more than double Amazon's operating cash flow over the next four years.
Ping Identity Holdings
When buying no-brainer stocks for your IRA, one of the smartest things to do is focus on trends that offer sustainable double-digit growth. Arguably no growth trend is more sustainable right now than cybersecurity. That's why Ping Identity (PING) can be such a smart buy.
Over the past 25 years, we've watched as cybersecurity shifted from being a luxury to an essential service for businesses of all sizes. Hackers and robots aren't going to take a day off just because the pandemic is ongoing or Wall Street had a bad day. As businesses move more data into the cloud, third-party providers like Ping will be counted on to protect their information.
As its name implies, Ping's primary task is to verify the identity of users attempting to access sensitive information. The company's cloud-based platform utilizes artificial intelligence to grow smarter and more effective over time at recognizing and responding to potential threats. It's particularly effective when layered with on-premises security solutions. Ping's cloud platform takes care of the continuous monitoring that on-premises solutions might lack once a user has access.
Aside from cybersecurity subscriptions generating high margins, Ping has done an excellent job of steering clients toward its software-as-a-service (SaaS) subscriptions. Over the long run, SaaS subscriptions should provide higher margins and lift customer retention rates, relative to term-based license subscriptions.
Another no-brainer company investors can confidently add to their IRAs for 2021 is biotech stock Novavax (NVAX -0.34%).
If the Novavax name sounds somewhat familiar, it's because the company is one of a handful of vaccine developers fighting coronavirus disease 2019 (COVID-19). The company's vaccine, NVX-CoV2373, dazzled in two large-scale studies. In the U.K., Novavax reported a vaccine efficacy (VE) of 89.7%, while in the U.S./Mexico trial the company's vaccine produced a 90.4% VE. Only three COVID-19 vaccines have reached the 90% VE threshold, which gives Novavax an excellent chance to become the No. 3 global player.
The only reason Novavax remains so inexpensive, relative to other COVID-19 stocks, is because it's run into execution issues. The company faced numerous emergency use authorization (EUA) filing delays and dealt with production concerns. However, these worries have been pushed to the back seat. Novavax has already gained a handful of EUA-equivalent approvals and should see a quick uptake of its vaccine in 2022.
Furthermore, the multiple variants of COVID-19 suggest it's going to become an endemic illness. This means Novavax can benefit not only from an initial inoculation campaign, but from booster shots and potential combination vaccines (e.g., influenza and COVID-19) as well.
There may not be a fast-growing industry that offers a more attractive value proposition than U.S. cannabis -- which is precisely why multi-state operator (MSO) Trulieve Cannabis (TCNNF -0.00%) is a no-brainer buy for your IRA.
To clear the air, the federal government doesn't need to legalize pot at the federal level for marijuana stocks to thrive. As long as the Department of Justice allows individual states to set and regulate their own cannabis policies, pot stocks will be just fine.
What sets Trulieve Cannabis apart from most MSOs is the company's focus on the Florida market. Whereas most weed stocks are eager to plant their proverbial flag in as many legalized states as possible, Trulieve has opened 112 of its 159 stores nationwide in the medical marijuana-legal Sunshine State. Having more than a quarter of all operating dispensaries in Florida has allowed the company to gobble up around half of the state's dried flower and oil-related market share.
Additionally, saturating Florida has meant less in the way of marketing costs, which has lifted Trulieve to three consecutive years of profits.
The newest growth venture for Trulieve is its acquisition of Harvest Health & Recreation, which closed in the fourth quarter. Harvest's home market is Arizona, which legalized adult-use weed in November 2020. With its Florida dominance secure, Trulieve will now turn its attention to dominating markets outside of the Sunshine State.
A final no-brainer stock investors can add to an IRA is cloud-based customer relationship management (CRM) software provider Salesforce.com (CRM -1.31%).
In simple terms, CRM software is designed to help businesses build existing client relationships and improve sales. It's often used by consumer-facing businesses to log customer info, handle product/service issues, manage online marketing campaigns, and run predictive analyses to determine which clients might purchase new products or services. Though the service industries are the likeliest to use CRM software, it's gaining plenty of traction in the healthcare, financial, and industrial spaces.
What makes Salesforce a stock to own in your IRA is its unmatched market share in the CRM space. A report from IDC found that Salesforce brought in 19.5% of global CRM spending in 2020. Comparatively, No.'s 2 through 5 in market share didn't even add up to Salesforce's 19.5%. As the clear go-to for CRM solutions, Salesforce's market share dominance is safe for years to come.
CEO Marc Benioff has also done an outstanding job of making earnings-accretive acquisitions that expand his company's ecosystem. Examples include the buyouts of MuleSoft, Tableau, and most recently Slack Technologies. These deals allow Salesforce to cross-sell its products to a broader audience of businesses.