Most of us rang in the new year in a socially distanced way -- often, from our couches. We toasted with friends -- eggnog glasses virtually touching -- via video calls. And we were happy to put 2020 behind us. But when planning where to invest in 2021, it's important to keep that window to last year open. To be successful now and beyond, we shouldn't forget all that happened in the difficult year of 2020.
In 2020, investors faced an entirely new and unexpected situation: The coronavirus pandemic. Its effect on the stock market was temporary -- the market crashed, then recovered. But its effect on how companies do business and how consumers operate continues. And the crisis itself continues. So, understanding this, let's talk about the best way to invest $100,000 right now. (And if you don't have that amount, you can scale down this plan to suit your budget.)
Image source: Getty Images.
The ongoing crisis
First, I would invest $50,000 in a basket of companies that won't be hurt by the ongoing health crisis. In spite of the launch of a vaccination program, COVID-19 cases are on the rise in the U.S. Even if you're investing for the long term, this element is important. Why? Because we don't know how long the situation will last -- and we don't know the full effect it will have on companies that are suffering the most.
Considering this, I would invest $10,000 each in Abbott Laboratories (ABT -1.47%), Teladoc Health (TDOC 2.53%), Vertex Pharmaceuticals (VRTX -0.74%), Amazon (AMZN 1.28%), and Target (TGT 1.34%). The U.S. Food and Drug Administration (FDA) has granted Emergency Use Authorization (EUA) to eight of Abbott's coronavirus tests -- including a new, rapid, inexpensive at-home test. With President-elect Joe Biden's support of testing, we should expect rising revenue there. Teladoc, a leader in virtual medical visits, saw quarterly revenue soar in the triple digits last year. And importantly, the trend continued even at times when medical offices reopened and coronavirus cases declined.
Vertex specializes in cystic fibrosis treatments. In fact, the company predicts it will continue to be the leading player in this market until at least the late 2030s. Even during the coronavirus, Vertex managed to start new patients on its treatments, and in the most recent quarter raised its full-year product revenue forecast. The market leadership and strength in times of trouble make me confident about Vertex for the long term.
Rewarding investors
Amazon and Target both won last year on their ability to serve customers online with essentials like grocery and cleaning products as well as general merchandise. Amazon's delivery system and Target's same-day pick-up and drive-up sealed the deal. The consumer's move to online shopping wasn't temporary, though. Analysts expect online retail sales to gain steadily in the coming years -- with or without coronavirus. So, these companies -- and their shares -- will continue to win.
Now, let's add some dividend stocks to the mix. Here, I'm looking for Dividend Aristocrats, or those companies that have increased their dividends annually for at least the past 25 years. That track record indicates they have the ongoing financial strength and the will to reward investors -- important factors when we're looking for steady income from a stock. Abbott and Target, which we've already chosen, are both Dividend Aristocrats. I would also add Clorox (CLX -2.02%) and McDonald's (MCD 0.56%), with an investment of $10,000 in each.
CLX Dividend data by YCharts
Clorox's sales soared in 2020, led by demand for its cleaning products. That level of demand may not last beyond the health crisis. But I expect revenue and profit to continue to gradually climb. Both metrics have gained in most years during the past decade. As for McDonald's, the company's strength in drive-thru should help it as consumers continue to favor contactless experiences.
Two bets
Next, I would make two bets -- on the maker of a coronavirus treatment and on a carmaker. While coronavirus vaccine makers soared last year, companies developing treatments lagged behind. Regeneron (REGN 0.34%), for instance, climbed 29%. (By comparison, vaccine developer Novavax (NVAX -2.23%) surged more than 2,000%.) In November, the FDA granted Regeneron's antibody co*cktail an EUA for the treatment of certain coronavirus patients. Regeneron may gain as its co*cktail adds to revenue in the near term, and in the long term, its seven commercialized products may boost revenue and, eventually, the share price. I would invest $10,000 in Regeneron.
Tesla's (TSLA 2.53%) share price keeps on climbing. But so does demand for its cars. Revenuehas been increasing for about six years, and the annual loss is gradually narrowing.
TSLA Revenue (Annual) data by YCharts
And even in a 2020 pressured by the coronavirus outbreak, Tesla managed to deliver about 500,000 vehicles, meeting its guidance. Once the health crisis eases, demand and production are likely to climb higher. So, I would invest $10,000 in this stock now.
And finally, we're left with $10,000. I would keep this cash available for buying opportunities that may arise in the coming months. As we know, the world of investment is full of surprises -- so it's a good idea to have funds ready for action at any moment.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adria Cimino owns shares of Amazon and Vertex Pharmaceuticals. The Motley Fool owns shares of and recommends Amazon, Teladoc Health, and Tesla. The Motley Fool recommends Vertex Pharmaceuticals and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.
