2021 was off to a wild start with the GameStop (NYSE:GME) stock saga creating a frenzy in investing world. But as the markets cool, it is time to look toward the stocks to buy for February.
In any case, investors should have a long-term mindset when making investments as this is historically known to provide the highest returns. But with that said, if you are getting into the investing game this month, or looking to add to your portfolio, there are a number of stocks that are poised for some strong gains.
The companies listed below include a mix of e-commerce, streaming and digital payments. These three sectors are set to thrive in a post-pandemic world. Let’s jump right in:
- Amazon (NASDAQ:AMZN)
- Roku Inc. (NASDAQ:ROKU)
- Airbnb (NASDAQ:ABNB)
- Fiverr International (NYSE:FVRR)
- Microsoft Corporation (NASDAQ:MSFT)
- PayPal (NASDAQ:PYPL)
- Disney (NYSE:DIS)
Stocks to Buy: Amazon (AMZN)
Amazon stock (although pricey) is a buy-and-hold-forever type of investment. The company’s e-commerce prowess remains unmatched by other platforms. And it doesn’t look like this is changing anytime soon.
The remote economy served as a boon for online shopping and experts predict that this trend will continue long after the novel coronavirus pandemic. Amazon stands to gain the most from this, given its 38.7% market share in the U.S. e-commerce market.
Amazon’s e-commerce success is amplified by its high-growth cloud platform, Amazon Web Services (AWS). With remote work now the norm, many businesses have a greater need for cloud solutions. Yet again, Amazon’s strong position in the space generated some hefty returns for the company.
In its most recent quarter, AWS reported a 28% surge in revenue with total revenue amounting to $125.56 billion. This was the highest earnings reported since its inception. With more upside ahead for the company, an investment in Amazon stock is a no-brainer. That’s why it leads the list of stocks to buy for February.
Another noteworthy pandemic trend is the rise of streaming services. Theater closures for much of 2020 resulted in the shift to at-home entertainment. This was a huge boon for the channel-agnostic platform Roku.
After a dip in revenue early last year, the company managed to return a profit in its third quarter with a 73% revenue surge compared to the prior year. This was the result of a spike in subscriptions, which brought the total viewer base to 54 million, with 3 million added in Q3. Since then, the stock has been on an upward trajectory, posting some strong returns.
Unlike Netflix (NASDAQ:NFLX) and HBO that provide on-demand content, Roku offers a selection of channels based on the subscription chosen. This also paves the way for greater ad revenue, which will be a huge growth driver in the future. In 2020, revenue in this segment grew 78% from the prior year, hinting at more upside in 2021. With the streaming revolution expected to take the reins in the entertainment industry, investors can expect some big gains from Roku stock in the coming years.
The road to recovery for the travel industry will be long and arduous, to say the least. The same, however, cannot be said for the online rental marketplace, Airbnb.
After a tough break at the start of the year, Airbnb experienced an uptick in bookings in the latter half of 2020. This resulted in a massive rally in the company’s share price when it went public in December. Although its stock price is down since then, ABNB still has a huge runway for growth.
Going back to the remote-work trend, the ability to work from anywhere in the world incentivized many people to opt for long-term rentals. Airbnb’s socially-distanced homes played perfectly into this trend. By the second half of the year, reservations on the platform were up by 21% with a majority of the bookings for rental properties less than 300 miles away.
Despite operating in a sector that saw one of its worst years in decades, Airbnb’s unique business model helped it end the year on a high note. The ability to thrive in any economic environment makes this one of the stocks to buy for February.
Stocks to Buy: Fiverr International (FVRR)
The gig economy was an emerging trend prior to the pandemic but the rise of remote work catapulted its growth to new highs. With increased furloughs and more free time, many people turned to gig-economy jobs last year.
One of the major players in this space is Fiverr, a platform that connects freelancers to businesses. The company’s business model has a unique premise. When more freelancers use Fiverr, it attracts more businesses to the platform. This in turn means greater spending by the businesses, which then attracts more freelancers.
A hamster-wheel of sorts, this model has generated some strong returns for the company over the years.
The pandemic, however, put Fiverr in an even bigger position to serve the gig economy. Recently, the company launched Fiverr Business that provides large companies access to its in-house management tools and to its freelancer pool.
In 2020, Fiverr stock was up 730% along with a revenue jump of 88%. If you are looking for a great gig-economy play, Fiverr is among the stocks to buy for February.
Like Amazon, Microsoft is another buy-and-keep stock.
In addition to its operating software business, the company holds a strong position in the cloud computing market. Microsoft’s in-house cloud platform, Azure is a major player in the space and a close competitor to Amazon’s AWS platform. In the previous quarter, revenue in the sector increased by 48% from the prior year.
A second tailwind for the company is its gaming business. Although this segment only makes up 10% of total revenue, the potential for growth is vast. Gaming has proven to be one of the fastest-growing sectors during the pandemic.
Microsoft’s Xbox hardware and services experienced an 86% uptick in sales as a result.
In the coming years, the gaming segment is expected to be a huge growth driver for the company. With innumerous opportunities in the cloud and gaming sectors, MSFT stock also is one of the stocks to buy in February.
The rise of digital payments as a result of the pandemic was a tailwind for the fintech giant PayPal. Higher traffic on its platform through 2020 culminated in a very successful fiscal year for the company this week.
Revenue was reported at $6.12 billion with earnings per share of $1.08. Both values beat analyst estimates. This revenue comes from the company’s namesake platform and its subsidiary Venmo.
Another major reason for the increase in transaction revenue this quarter is the company’s cryptocurrency venture. PayPal stated that since introducing the currency on its platform last year, customers who purchased it have been logging in twice as much. This resulted in an 11.8% increase in transaction revenue from the previous quarter at $5.7 billion.
Given its initial success with crypto, the company hopes to launch the service in international markets in the coming months. With significant growth opportunities ahead, PayPal stock is a great investment.
Last but not least is the entertainment giant, Disney. Shares of the company dipped at the start of 2020 with park closures and a declining consumer goods business. However, the company was back on its feet once again thanks to its thriving streaming service.
Disney+, a small but growing segment prior to the pandemic, soon became the face of the company. Revenue from this segment increased by 81% to $16.97 billion in the previous quarter.
Looking ahead, the direct-to-consumer business will be the company’s major growth driver. During Investor Day 2020, Disney announced that it will add new Marvel series and additional Star War characters to the platform. This is in addition to Disney original movies slated for release this year.
Adding to this rally, the reopening of parks and theaters with the rollout of Covid-19 vaccines will add to Disney’s bottom line. If you are looking for a great streaming play, this is one of the stocks to buy for February.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Divya Premkumar has a finance degree from the University of Houston. She is a financial writer and analyst who has written stories on various financial topics from investing to personal finance. Divya has been writing for InvestorPlace since 2020.