3 Stocks to Buy January 2021 for Growth, Value and Dividends

Start 2021 right with these stocks to buy for January

Hey Bow-Tie Nation, Joseph Hogue here with the Let’s Talk Money channel and an update to our 2021 portfolio, already up 32% and we’re just getting started on the year!

We put on shares of energy and financials at exactly the right time but today I’m adding three more stocks that could take the portfolio even higher.

In this video, we’ll review the nine stocks already in the portfolio, stocks with gains as high as 58%, and why I think some of these can keep going. I’ll then reveal those three stocks to buy for January 2021 to add growth, value and dividends to your portfolio!

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2021 Portfolio Update – Up 32%

Here we are on Stockcard.io and to see the portfolio, just go over here to Stock Picks in the menu. That’s going to take you to the portfolios and scroll down here to our 2021 Bow-Tie Nation.

Here’s the portfolio page and you can click this bell to get email updates anytime I buy or sell from the portfolio. It’s totally free to follow and get those updates and you see, we’re posting a 32% gain in the two months and beating the S&P 500 by 27% so far.

I want to update you real quick on the current portfolio, show you what’s in there and why before we get to those three stocks I’m adding this month!

Citigroup, ticker C, was one of the first stocks added in October and all you out there in the Nation know, I really like the financials sector for 2021…in fact, I’m adding another bank stock today.

Citigroup offers a great mix of capital markets business, which have been doing well this year, plus the commercial banking business that’s lagged because of interest rates but could rebound next year. Shares are already up 34% and pay a 3.4% dividend yield.

Another one of our early picks and one of my favorites, CVS Health, ticker CVS. The company has had a tough time over the last five years but this is a great value play trading at just 11-times earnings and pays a 3% dividend yield.

CVS has already started distributing the COVID vaccine and that could be a big boost to 2021 earnings. That combined with the fact that the company has a lock on the healthcare distribution system, I really like this one and shares are up 16% since adding it.

We added shares of Anthem, ticker ANTM, last month and while it’s up 13% in that time, it’s not beating the market like these others so that’s a little disappointing.

Still though, the company is an excellent pick in healthcare with its Blue Cross partnership and trading at just 13-times earnings and a $360 per share analyst price target so another 16% potential from here.

Another stock we added last month, utility provider FirstEnergy, ticker FE, and this one has also just kept up with the market but could have 20% upside if the company clears up some of the recent legal risks. It’s paying a 5.2% dividend while we wait and has that stability in utilities cash flow so we’ll hold on from here.

We added Emcor, ticker EME on the rebound in commercial services and the shift to green building. Shares have jumped 30% since then, beating the market by 24% and the company just announced last week that it’s boosting the dividend by 63% to $0.13 per share.

This one’s right around the target price though so I’ll have to reevaluate if we want to keep it longer or sell, so make sure you’ve got updates set to get that notification.

We added shares of Lyft, ticker LYFT, early last month, ahead of a rebound in services and…I probably should have held on a little longer. I took profits after the quick 42% jump in the shares and they’ve continued to run another 35% from there.

I still like the long-term in Lyft, especially as self-driving becomes a reality, I think its very well positioned to take advantage of that. Sometimes though, my inner value investor just takes over and it’s tough not taking profits when a stock runs 42% in less than a month!

All you in the Nation know, I started watching energy stocks early and think this is one of the best sectors for the coming year. Shares of Diamondback Energy, ticker FANG, were some of the first added to the portfolio and are up 57% since, beating the market by 52% over the period.

Diamondback has one of the lowest cost structures in exploration and I think this one can keep running so I’m holding on to probably around $55 or $60 a share.

We added shares of Devon Energy, ticker DVN, around the same time but I sold this position after the 54% return. Shares are up another 10% since then but it’s getting really close to the fair market value and I wanted to cut our energy exposure a little after that massive run. Basically, just in case energy stocks come down, we aren’t too overexposed.

Renewable Energy Group, ticker REGI, was one we added last month but where I also took profits pretty quickly. I do like the company and wanted that exposure to renewables for 2021 but the shares are up 193% this year and we booked a 30% return in less than two weeks, so again…my value investor spidey sense tingling a little.

3 Stocks to Buy for January 2021

That’s where we’re at so far with the portfolio but I wanted to start the year with three more names, three stocks to buy that give us growth, value and dividends in the portfolio.

For our growth pick, United Microelectronics, ticker UMC, the world’s second largest semiconductor foundry for chipmakers like AMD and Xilinx.

Most of the names in the semiconductor space have had a really good year with the iShares Semiconductor ETF, ticker SOXX, up 46% since January and it’s all in that ramp up to 5G and Internet of Things technology, just an explosion in demand for chips and RF filters.

But I’ve been researching a trend in the market recently that makes me think one segment of the semi space could continue to surge higher.

That demand for chips has caused a shortage for the components but especially in the 200mm wafer size. A lot of the high-tech demand has shifted to the newer 300mm and even 450 sizes over the last couple of years but a lot of your IoT products and 5G are still built on 200mm wafers. BUT because most of the chipmakers transitioned their fabrication to the larger, newer wafer sizes…that’s left a ginormous shortage in the smaller ones and an opportunity for those with production in that 200mm size like UMC.

Now I actually wanted to add Semiconductor Manufacturing International, ticker SMICY, because the stock hasn’t surged as much as others but it’s on that Chinese companies restricted list so that concerns me. While I think those restrictions come down eventually, it may not happen in 2021 so I’d rather be in something like a UMC instead.

Shares are trading above 30-times on a price-to-earnings basis but actually below the average for the semiconductor industry. The company has a great balance sheet with more cash than debt and grew free cash flow by 85% over the last twelve months so lots of financial flexibility to reinvest and still return cash to shareholders.

For our second pick, a value stock, I’m adding Wells Fargo, ticker WFC. Nation, you know financials is one of my favorite sectors for this next year and the Fed just confirmed it with an announcement last week.

The Fed is loosening its restrictions on banks, allowing them to start repurchasing shares again, after prohibiting it in the last stress test, and the last stress test was the strictest I’ve ever seen, even worse than anything we saw in the financial crisis so a lot of the banks just got hammered.

But now, not only are the banks being allowed to free up some of that capital, but we just got the new stimulus that’s going to help more businesses avoid loan defaults, we’ve got a better economic picture. If we get rates just a little bit higher next year, it’s going to be a very, very good year for the banks, especially the commercial banks like Wells.

Shares are trading at a price-to-book value of just 0.75-times, which is a discount of 42% from the 1.3-multiple where it traded last December. The bank has put aside $10 billion in loan loss reserves, more than double what it held last year, and I don’t think it’s going to need it. I think by the third quarter of 2021 at the latest, you see the banks moving those loan loss reserves back onto the income statement and some huge earnings surprises.

Next here, telecom giant and dividend leader AT&T, ticker T, for its 7.3% dividend yield.

Now those of you in the Nation for a while know, I haven’t been a fan of AT&T’s acquisition strategy over the last few years. They’ve basically been on a buying spree to create a complete media and telecom giant but I really don’t see a lot of synergies between the segments.

Management is making some good strategic decisions now though, the valuation is good at 8.7-times on a PE basis and that dividend just keeps coming.

The studio segment, Warner Bros. announced that the entire 2021 slate will hit theatres and stream on HBO Max at the same time. It peeved off the cinema operators but I think it was a smart move that gets the company back to making money on those movies instead of just waiting on theatres to open.

The dividend hasn’t grown a lot recently, just a 2% annual increase over the last three years, but it’s hard to beat a 7.3% yield. The 5G rollout should benefit the telecom side as well as streaming so some upside catalysts over this year and next. The company has paid down $5 billion in debt this year, so relieving my worries about too much debt from that acquisition strategy.

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2021 could be another double-digit year for returns or it could leave your portfolio flat on high-priced stocks going nowhere. Look for the sectors and stocks with further to run next year and the stocks to buy in January for dividends, growth and value!

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