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Dec. 16, 2020, 2:35 a.m. EST

Why toys, cannabis and fast food could be winning stock themes for 2021, say these analysts

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By Barbara Kollmeyer

More volatility seems to be the theme for 2021, as investors wait to see how those vaccines will roll out.

Research and trading group MKM Partners, in its outlook for the year ahead, is leaning positive though: “We expect strong, above-trend growth for 2021 as vaccines and better therapeutics bootstrap reopening efforts across the nation.”

For our call of the day , we’re focusing on a handful of stocks that MKM sees as decent bets for 2021.

Those include a well-known social media giant. “We believe Facebook’s /zigman2/quotes/205064656/composite FB -1.39% innovation pipeline in adjacent and incremental revenue opportunities such as commerce, payments, virtual reality, and cryptocurrency will enable it to have durable growth (>20%) for the foreseeable future,” said Rohit Kulkarni, analyst at MKM.

His 12-month price target for Facebook is $330, which implies 20% upside from Monday’s closing price of $274. Risks for investors include increased regulatory pressures and slowing engagement.

Read: U.S. regulators order Facebook and other social media companies to disclose how they gather information

Toy maker Hasbro /zigman2/quotes/201249319/composite HAS -2.37% also gets the nod, as analyst Eric Handler sees the industry entering 2021 with low inventory, therefore little excess supply. And COVID-19 vaccine rollouts should spur more Hollywood films, helping Hasbro sell related merchandise.

“The combination of having full toy production capabilities combined with catalysts associated with feature film releases, eOne [Entertainment One, which Hasbro acquired in 2019 ] synergies and videogame development should fuel record results in 2021 for both revenue and EPS [earnings per share],” said Handler.

His 12-month price target of $104 per share implies upside of 15% from Monday’s close of $90.11. The speed at which entertainment gets back to normal is one risk for Hasbro.

Another pick is fast-food giant McDonald’s /zigman2/quotes/203508018/composite MCD -1.37% . “We look for its current recovery and growth to come from menu, operations, convenience and digital initiatives, after the recent years of revolutionary changes, across its asset upgrades, technology introductions, and delivery initiatives,” said analyst Brett Levy.

Levy’s 12-month price target of $255 implies 20% upside from Monday’s close of $211.

MKM is also bullish on oil-and-natural-gas company Diamondback Energy /zigman2/quotes/201200230/composite FANG +5.42% . Analyst John Gerdes notes “superior” operating cash margin and lower expenses among other positives, and his 12-month share price target of $66 implies around a 43% gain from Monday’s close of $46.

A final pick is Curaleaf /zigman2/quotes/203485866/delayed CA:CURA -2.51% , which fits into MKM’s preference in the cannabis arena for multistate operators. Analyst Bill Kirk has an CA$18 one-year price target on Curaleaf, which implies a roughly 24% gain from Monday’s close of $14. Big growing operations in New Jersey and New York are among its pluses, he says.

Read: 20 of analysts’ favorite large-cap stocks for 2021, including GM, Facebook and Salesforce

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/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 255.41
-3.59 -1.39%
Volume: 15.51M
March 3, 2021 4:00p
P/E Ratio
25.28
Dividend Yield
N/A
Market Cap
$737.55 billion
Rev. per Employee
$1.47M
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/zigman2/quotes/201249319/composite
US : U.S.: Nasdaq
$ 93.03
-2.26 -2.37%
Volume: 617,494
March 3, 2021 4:00p
P/E Ratio
57.61
Dividend Yield
2.92%
Market Cap
$13.09 billion
Rev. per Employee
$800,718
loading...
/zigman2/quotes/203508018/composite
US : U.S.: NYSE
$ 205.82
-2.85 -1.37%
Volume: 3.49M
March 3, 2021 4:00p
P/E Ratio
32.65
Dividend Yield
2.51%
Market Cap
$155.58 billion
Rev. per Employee
$96,039
loading...
/zigman2/quotes/201200230/composite
US : U.S.: Nasdaq
$ 74.44
+3.83 +5.42%
Volume: 3.67M
March 3, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
2.15%
Market Cap
$11.98 billion
Rev. per Employee
$3.84M
loading...
/zigman2/quotes/203485866/delayed
CA : Canadian Securities Exchange
$ 20.96
-0.54 -2.51%
Volume: 657,413
March 3, 2021 3:59p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$14.69 billion
Rev. per Employee
N/A
loading...

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