Top stock picks for 2021
Vontier CEO Mark Morelli faces enough pressure without Business North Carolina’s annual stock-picking contest adding fuel to the fire. (Forgive the pun — Vontier owns the No. 1 gas-station pump brand, Gilbarco Veeder-Root.) But three of our five selectors independently chose his Raleigh-based industrial company as a favorite choice for 2021.
Vontier is little-known, having spun off from Everett, Wash.-based Fortive in October. But nearly $3 billion in sales and 40%-plus gross margins impressed our stock mavens. In addition to pumps, it makes auto-repair tools and transportation technologies and software to keep traffic moving.
The investing quintet made their picks in early December with U.S. stocks trading at record levels. The annual feature limits the choices to companies based in North Carolina or having significant operations in the state. This year’s selections reflect an unusually conservative outlook that includes blue chips such as Cisco, IBM and Walmart.
Bobby Edgerton, the co-founder of Raleigh’s Capital Investment Cos., often suggests a small cap with a big upside. But this year, he picked giants Weyerhaeuser, IBM and Walmart. The latter is his favorite because of its vast, undervalued real estate holdings. Walmart has a distribution network that Amazon.com is spending heavily to match, he says.
Honeywell was favored by both Christy Phillips of Franklin Street Partners and John Stamas of Defenders Capital. The Charlotte-based aerospace and industrial products manufacturer is transitioning into more of a recurring revenue business, seeking to be less tied to economic cycles.
As of mid-December, the S&P 500 Index had gained about 14% since Jan. 1, a strong performance given the unexpected recession caused by the COVID-19 pandemic. A similar showing in 2021 would be appreciated, most investors agree.
Tale of the tape
Looking at last year’s results, stock pickers Ann Zuraw and Frank Jolley made the best choice by picking lithium producer Albemarle Corp. The Charlotte-based company nearly doubled through mid-December, buoyed by increased enthusiasm for electric vehicles powered by lithium batteries.
Christy Phillips had the most consistent performance, with Lowe’s, Honeywell and Kontoor Brands each showing double-digit stock gains. She accurately predicted that Lowe’s CEO Marvin Ellison’s strategic plan would increase sales, though no one could have expected the boost provided by the pandemic.
John Stamas scored with Honeywell, but LendingTree proved disappointing. Shares of the Charlotte-based online marketplace have been stuck in a trading range for the last three years after soaring at an astounding pace between 2014 and 2017.
Bobby Edgerton enjoyed success with Honeywell and Weyerhaeuser, while Cisco Systems barely moved. He picked the giant paper company again this year because he thinks its massive landholdings are undervalued and the soaring price of lumber will eventually benefit shareholders.
With 20/20 hindsight, our gang would have picked these three N.C.-based stocks that more than doubled in the last year: Bandwidth, Live Oak Bancshares and Cree. Albemarle came close.
We thank the participants for their wisdom and wish everyone good luck investing in 2021.