3 stocks that I want to buy at current prices in 2021
This market always surprises me. Throw an arrow, pour some cash into this growth stock and watch the gains come in. It really seems that simple these days. I have a buddy who basically did that and who worked great for him. He’s even lucky with penny stocks.
Some people probably feel like the next Warren Buffett these days. Take a look at his portfolio, who would this want to belong to? There is no growth, you can see it being said on Twitter. Musk mentions a share or bitcoin on Twitter and things fly, or to the moon some would say. Haha
Right now it seems like you shouldn’t even be into traditional blue chip stocks, nobody wants these. Get a game stop or Amc and Hodl .. (I hate to see Hodl, it’s so stupid – keep it spelled.)
I think I’m old school, but most of our portfolio is based on high quality blue chip stocks. While the market continues to turn green and some of the high quality blue chips have risen in price, there are still a few bargains to be found. These are the 3 stocks I want to buy more of in 2021 at their current prices.
Lockheed Martin – LMT
With tax time approaching and we can file it as early as February 22nd, this will most likely be our purchase for the month.
As usual, I plan to find out how much tax we are getting back and use a line of credit to invest more in our rrsp before the 2020 deadline. (Mar 1, 2021) Play around with numbers until they basically break even on your entire tax return and the amount we owe on the line of credit. This is a great game of making more money work for you, faster, but you need to be disciplined to repay that loan once you get that tax refund! If you want to learn more about this approach, here is what we did a few years ago.
Lockheed Martin would be a new position for us, but I think it’s safe to say this stock is a great buy right now. It is a large collection of moats operating in an industry that has not changed for a long time. LMT is massively backward on projects, and while it is believed that the Democrats will cut military spending, I just don’t see it.
There were basically no wars while Trump was in office, and now we see tension with Taiwan and China. It sounds bad, but I really think there will be more missiles launched in the next 5 years than in the last 5 years. If I’m wrong – Great, I’d rather not see wars. The country will still spend a lot of money on defense.
I’m going to buy this stock because it’s a broad moat stock that is not going anywhere and is cheap right now. Based on Yahoo Finance, we can see that 7 analysts rate it as a strong buy and the price is basically at the bottom of the analyst target. The share price will gain 21.10% to meet the analyst average target price at current prices, or 32.5% to get to the top of the range. Not much disadvantage, much advantage.
What about that dividend?
At current prices, the starting yield is a solid 3.05% while they have an average 5 year return of 2.54% and a payout ratio of 40%. Any big numbers and with an initial yield well above their 5 year average imply they could be undervalued.
They’ve increased their dividend consistently for 18 years and have a 5-year dividend growth rate of 9.8%. Very nice!
TC Energy – Trp.to.
But Rob, why energy? You just canceled the Keystone pipeline.
This is to show you how valuable existing pipelines are! Companies that have these pipelines are big investments. While everyone and their grandmothers think that green energy comes overnight. It is not. Demand for oil could fall in the future, but natural gas will only pick up in my opinion. Nuclear power too. We’ll need even more energy from power plants to power all of these electric cars.
Tc Energy checks all of these boxes. They have many pipelines in place, both oil and natural gas. They are increasing their exposure to renewable energies, owning or in some cases owning 10 power plants (Nuclear & Natural Gas) and have 118 billion cubic feet of natural gas storage facilities. I think they’ll be fine without a keystone.
If anything, Keystone News just gave us a great price to get even more stock!
Out of 15 analysts, 13 recommend a buy or a strong buy. The current price is actually below the low range of their goals. You made a 12.72% gain just to hit the lower end of the range. 24.67% profit to get the average price and finally 38.18% profit to get to the top of this range.
We know the oil and gas sector has collapsed, but wow, those numbers look good. They also have a very healthy dividend.
Currently, Tc Energy has an initial yield of 5.95% and is expected to increase that dividend next week with earnings. Their average 5 year return is 4.46%, which in turn creates the impression that they may be undervalued. Tc Energy has had a 20 year dividend growth streak with an excellent 5 year dividend growth rate of 9.3%.
So you’ve got a massive starting yield, great dividend history, and a stock that is actually below analysts’ bottom target price. It actually sounds too good to be true. I think you have to ask yourself do you think oil and gas are dead? If not, this is a bargain.
Algonquin Power & Utilities – AQN.TO.
One thing we all know about the next 10 years – renewable energy is going to be massive. Every country would like to have more clean energy in the future. This industry has the tailwind on its side. The problem is, a lot of the green energy games have hit overbought territory in my opinion.
As we can see above, Algonquin is no different, but it has been very generous with its dividend growth and has many projects under construction. You also get a starting yield of 3.53%, which is pretty good considering how much the stock has risen compared to other renewable energy companies.
Now it should be noted that Algonquin is not a pure green energy game. They are also in the natural gas, water distribution and wastewater businesses. Great diversification in areas that will only be in greater demand in the future.
The stock isn’t a bargain right now like the other 2 above, but it’s in an industry that you definitely want to be in for the future. You can see that the price is actually higher than analysts forecast and the return is below their 5-year average of 4.33%.
They have a 10 year dividend growth streak and an average 5 year dividend growth rate of 10%. Algonquin Power also offers a 5% drip discount which is incredible if you want your stocks to drip like me.
This stock has been one of our best performers and while it may not be the cheapest today, I think that in 5-10 years I will be glad that we continued to add to our position as they continue their impressive growth. Algonquin tends to issue more shares from time to time when it finds a great acquisition or for future projects. That was a great time in our experience to buy them on the go. Look out for times like this.
Now that you have 3 stocks that I want to buy in 2021 at current prices. Tc Energy and Lockheed Martin are definitely top of the list, but I’d love to get more Algonquin sometime in 2021, and I really wouldn’t mind paying current prices for them.
While the market continues to chug, there are still some values. Are there any stocks that you really want to add at current prices?
Hey, I’m Rob, the creator of Passive Canadian Income.
In 2011, my wife and I had nearly $ 60,000 in debt and $ 7,000 in negative net worth. We paid for it all through hard work and financial education. Now we are focusing on increasing our passive income streams to make the money work for us. Follow the journey by clicking the social media links below or signing up to be notified of new posts in the sidebar.