These 3 actions would have doubled your money last year
As a rule of thumb, doubling your money in one year on a stock would give you serious bragging rights. But over the past year, we’ve seen many stocks quadruple or even five times investor money – especially stay at home. technological actions it skyrocketed whenever news suggested COVID-19 would keep us stuck in the house longer than expected.
Many of the household stocks that have generated breathtaking returns over the past year are coming back to earth. But these three stocks would have doubled your money in the past year, and they still have strong momentum.
Loans are cyclical, so the past year has been pretty bad since financial stocks. But parts of Ally Financial (NYSE: ALLY), which focuses primarily on auto loans and leases, are up 185% year-over-year.
Although vehicle sales fell last year in April and May, they rebounded remarkably in the second half of 2020, with people avoiding ridesharing and public transportation due to the pandemic. In 2020, Ally made a record $ 19.3 billion in used vehicle loans. Total adjusted revenue reached $ 6.7 billion, a 5% increase from the previous year.
Meanwhile, Ally has set aside $ 1.4 billion for credit losses. Management said during the fourth quarter earnings call that they expect write-offs to peak in the third or fourth quarter of 2021. But in 2020, auto loan write-offs actually fell. from 32 basis points to 0.96%.
Ally still has decent growth potential outside of the vehicle finance space. Its Ally Home saw a 74% year-over-year increase in mortgage initiations – but with just $ 4.7 billion in home loans, it’s a smaller drop in market share , given booming refinancing activity and home sales. The total net assets of clients through its trading platform, Ally Invest, also increased by 71% in 2021.
Both Lowe’s (NYSE: LOW) and his rival Home Depot (NYSE: HD) were gaining shares in the home. Home Depot is still the most profitable retailer. But only Lowe’s would have doubled your money last year. As of March 29, its shares were up 117%, compared to Home Depot’s 59%.
In the fourth quarter of 2020, Lowe’s comparable store sales increased 28.6% compared to the prior year period. Online sales soared 121%. But Home Depot has also seen similar growth. For its latest quarter, comps grew 25% year-over-year, while online sales increased 83%. The widespread surge in home improvement spending is unlikely to continue, as vaccinations become mainstream and people spend less on DIY projects once they can safely leave their homes.
Lowe’s is focused on gaining market share as the home improvement business contracts. In addition to making improvements to lowes.com and store layout, it is focusing more on its Pro offerings for professional entrepreneurs. According to Lowe’s 2020 Investor Factsheet, professional entrepreneurs only make up 20% to 25% of sales, but they make up about half of its estimated total market. Growth in this segment could pay off for Lowe’s as DIY sales slow down.
Like just about every retailer in 2020, Target saw digital sales explode in 2020. Online sales grew 145% – but what’s remarkable is that 95% of online sales are made in-store. , either by employees or drivers of Shipt, the delivery service Target acquired in 2017. Target estimates that in-store fulfillment is about 90% cheaper than shipping orders from a traditional warehouse. The retailer plans to add 30 to 40 small-format stores per year, which will put the chain within reach in areas that cannot accommodate a full store, such as around college campuses and in large urban areas.
Target recently made investors nervous by announcing plans to invest $ 4 billion in capital expenditures such as new stores, renovations and supply chain improvements for each of the next few years. But keep in mind that while other retailers have seen in-store traffic increase in 2020, Target has actually seen an increase in foot traffic.
The “target effect” – where customers visit stores for a few small purchases and leave with a basket full of items they never intended to buy – is notorious. While people can stock up on less as the pandemic subsides, Target expects them to spend more on things like clothing and beauty products.
Target’s house brands, such as its All in Motion womens sportswear line and Cat & Jack children’s clothing line, are hugely popular. Ten of its internal brands generated $ 1 billion or more in 2020. Its partnerships with brands like Ulta Beauty, Apple, and Disney is expected to continue to attract many customers to the stores.
While Target probably won’t double your money again in 2021, there are plenty of reasons to bet on both its digital strategy and its investment in physical stores.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.