What are the best shares for 2021? 20 ASX stocks to watch | Finder
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What are the best ASX stocks of 2021?

We found 20 stocks worth watching in the year ahead.

Kylie Purcell
Kylie Purcell

&

Patrick Tedesco
Patrick Tedesco

Updated . What changed?

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Important note

There's no single share that's best for all investors as all our needs are different – and what's best for you might not be best for someone else. No-one can say for certain which direction stocks will go; these are ideas only and should not be taken as financial advice.

GameStop and Reddit might be the show-stealers so far this year, but the Australian Securities Exchange (ASX) has been making some pretty big moves itself lately. After a US sell-off drove the Australian share market to its worst session in months in early February, the ASX200 index has since staged an impressive rebound. At the time of writing, the ASX200 index is up more than 5% since February 1.

If you're feeling bullish about the ASX in 2021 but not sure where to start, we've put together a list of ASX stocks that could be worth watching in the year ahead.

How to pick stocks

There's no single winning strategy to filter "good stocks" because the most important consideration is your own circumstances. Besides, the best stocks are those that perform well in the future. And if 2020 has taught us anything, it's that stock market predictions are often wrong.

But that doesn't mean you shouldn't do your homework. Whether you care more about short-term capital gains or long-term dividend growth, it's important to know whether a stock is performing well, making a profit, paying dividends or going backwards.

Stock themes for 2021

Unless you have a crystal ball, it's impossible to say what the next 12 months will look like. But we do know some of the big themes that will probably continue to drive prices in 2021:

Stocks to watch in 2021

With all that in mind, it's not easy picking quality stocks. To help identify stock picks for 2021, we used Finder's proprietary algorithm to filter Australian-listed companies that have strong fundamentals. We take into account historical prices, dividends, revenue growth, (low) price volatility and profit margins, which might indicate a quality stock.

To avoid speculative stocks, we only include companies with a market cap of more than $1 billion. In order to better compare historical data, we filtered out stocks that have been listed on the ASX for less than five years.

This doesn't mean these are the best stocks for you. Always do your own research and chat with a professional when in doubt.

The algorithm was last updated 27 January 2021.

How did we pick this list?

We use a proprietary algorithm that rates ASX-listed stocks based on price performance, profit, revenue and dividends. The information provided is general in nature, not personal financial advice, and your personal objectives, financial situation or needs have not been taken into consideration. The companies displayed on this page may not be the best for you and you’re encouraged to do your own research. Always remember that past performance is no guarantee of future results. Investments can go up and down and we do not guarantee the performance of or returns of any investment. For more information about our algorithm, head to our stock ranking page.

Stocks to watch in 2021

1. Pinnacle Investment Management Group Limited11. Elders Limited
2. SeaLink Travel Group Limited12. HUB24 Limited
3. Mineral Resources Limited13. Breville Group Limited
4. OZ Minerals Limited14. Domino's Pizza Enterprises Limited
5. Champion Iron Limited15. Healius Limited
6. Lifestyle Communities Limited16. Chalice Mining Limited
7. Fortescue Metals Group Limited17. Dicker Data Limited
8. Pilbara Minerals Limited18. Mercury NZ Limited
9. Pro Medicus Limited19. Nine Entertainment Co. Holdings Limited
10. Eagers Automotive Limited20. Washington H. Soul Pattinson and Company Limited

1. Pinnacle Investment Management Group Limited

Pinnacle is an investment management business that provides distribution services and business support.

  • Financial services
  • Dividend yield: 2.10%
  • Price-earnings (P/E) ratio: 40.94
  • Debt-to-equity ratio: 0.1794

2. SeaLink Travel Group Limited

SeaLink Travel Group offers tourism and travel services including ferries, coaches and accommodation packages.

  • Consumer services
  • Dividend yield: 1.67%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 0.6906

3. Mineral Resources Limited

Mineral Resources engages in the mining and processing of minerals including iron ore, lithium and manganese.

  • Non-energy minerals
  • Dividend yield: 2.66%
  • Price-earnings (P/E) ratio: 5.35
  • Debt-to-equity ratio: 0.5699

4. OZ Minerals Limited

OZ Minerals Ltd is a copper-focused international mining company headquartered in Adelaide, Australia.

  • Non-energy minerals
  • Dividend yield: 1.20%
  • Price-earnings (P/E) ratio: 31.04
  • Debt-to-equity ratio: 0.1201

5. Champion Iron Limited

Champion Iron is an iron ore producer and mining exploration company with operations in north-eastern Quebec.

  • Non-energy minerals
  • Dividend yield: 0.00%
  • Price-earnings (P/E) ratio: 7.96
  • Debt-to-equity ratio: 0.3563

6. Lifestyle Communities Limited

Lifestyle Communities develops and manages land-lease communities, such as independent senior citizen housing, lifestyle resorts and entertainment facilities.

  • Finance
  • Dividend yield: 0.44%
  • Price-earnings (P/E) ratio: 30.75
  • Debt-to-equity ratio: 0.5003

7. Fortescue Metals Group Limited

Fortescue Metals Group is one of the world's biggest iron ore manufacturers.

  • Non-energy minerals
  • Dividend yield: 7.43%
  • Price-earnings (P/E) ratio: 10.37
  • Debt-to-equity ratio: 0.3864

8. Pilbara Minerals Limited

Pilbara Minerals is a lithium and tantalum miner with operations in Australia's Pilbara region.

  • Non-energy minerals
  • Dividend yield: 0.00%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 0.4560

9. Pro Medicus Limited

Pro Medicus Ltd provides radiology software and services to hospitals, imaging centres and health care groups.

  • Health services
  • Dividend yield: 0.27%
  • Price-earnings (P/E) ratio: 198.19
  • Debt-to-equity ratio: 0.0378

10. Eagers Automotive Limited

Eagers Automotive is an automotive dealership selling new and used vehicles and vehicle parts.

  • Retail trade
  • Dividend yield: 0.84%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 3.3612

11. Elders Limited

Elders offers financial and real estate services to rural, agricultural and automotive businesses.

  • Process industries
  • Dividend yield: 2.06%
  • Price-earnings (P/E) ratio: 13.44
  • Debt-to-equity ratio: 0.4295

12. HUB24 Limited

HUB24 Ltd offers investment and superannuation portfolio administration services.

  • Financial services
  • Dividend yield: 0.33%
  • Price-earnings (P/E) ratio: 201.95
  • Debt-to-equity ratio: 0.0809

13. Breville Group Limited

Breville Group designs and develops electrical kitchen appliances.

  • Consumer durables
  • Dividend yield: 1.37%
  • Price-earnings (P/E) ratio: 57.37
  • Debt-to-equity ratio: 0.0571

14. Domino's Pizza Enterprises Limited

Domino's Pizza Enterprises engages in the management of retail food outlets and franchise services.

  • Consumer services
  • Dividend yield: 1.29%
  • Price-earnings (P/E) ratio: 57.48
  • Debt-to-equity ratio: 3.7514

15. Healius Limited

Healius Ltd. engages in the provision of healthcare technology solutions.

  • Health services
  • Dividend yield: 0.66%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 0.9050

16. Chalice Mining Limited

Chalice Mining is a mining exploration company.

  • Non-energy minerals
  • Dividend yield: 0.00%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 0.0011

17. Dicker Data Limited

Dicker Data distributes computer hardware. Vendors include HP, Cisco, Toshiba, ASUS, Lenovo and Microsoft.

  • Distribution services
  • Dividend yield: 3.06%
  • Price-earnings (P/E) ratio: 32.04
  • Debt-to-equity ratio: 0.5933

18. Mercury NZ Limited

Mercury NZ Ltd. engages in the generation and distribution of electricity from hydro, geothermal and gas.

  • Utilities
  • Dividend yield: 2.14%
  • Price-earnings (P/E) ratio: 48.38
  • Debt-to-equity ratio: 0.3453

19. Nine Entertainment Co. Holdings Limited

Nine Entertainment is an Australian media and entertainment company specialising in television, live events and online media industries.

  • Consumer services
  • Dividend yield: 2.88%
  • Price-earnings (P/E) ratio: —
  • Debt-to-equity ratio: 0.4891

20. Washington H. Soul Pattinson and Co

Washington H. Soul Pattinson & Co. Ltd. is an Australian investment company.

  • Financial services
  • Dividend yield: 2.15%
  • Price-earnings (P/E) ratio: 6.91
  • Debt-to-equity ratio: 0.2254

Buy shares through an online broker

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Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

Successful vaccine scenario

There's a lot riding on whether a global vaccine rollout is successful. In the best-case scenario, vaccines are delivered to the masses quickly and effectively, borders open and life gets back to normal.

In this case, stocks in the travel, banking and energy sectors are expected to benefit as business picks up again. At the same time, IT stocks that rallied thanks to working from home conditions could slow down as portfolios are adjusted.

Of course, we can all envision the worst-case scenario, but the reality probably lies somewhere in between. Regardless, the outcome will likely have a big impact on which stocks perform the best.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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