What are the most popular stocks of 2021?
Here are the top traded stocks in 2021, according to broker VantageFX
Contracts for Difference (CFDs) are derivatives contracts that enable investors to speculate on the rising or falling prices of a particular asset.
A CFD is an agreement between two parties to pay the difference between the current price of the asset and its price when the contract is settled. If the price moves in the direction expected by the buyer, the seller pays up the difference. If it goes in the opposite direction, then the buyer pays the difference to the seller.
CFD trading is commonly done in currencies and commodities such as iron ore, oil, gold and wheat. CFDs are also used to trade futures, cryptocurrency and stock market indices. But increasingly, CFD trading in individual stocks is becoming more popular.
One reason is that for CFD trading an investor can trade on margin and sell if they think the price is likely to fall without having to actually own the stock. The instrument is also well suited to the rising volatility in the stock markets, since they allow trading on markets that are heading down as well as up.
Stock CFDs can also be used to hedge an existing physical portfolio. Let's say you already have a portfolio of physical shares and think some of the shares may lose value in the near-term. You can hedge your exposure by using CFDs and potentially making a profit from the short-term downtrend to offset losses in the physical portfolio.
Here are the top traded stock CFDs so far in 2021 - according to leading CFD broker VantageFX - and a brief look at what is behind their popularity:
Tesla (NASDAQ: TSLA) - The electric vehicle maker's stock has ballooned since it went public in 2010. The searing stock rally has now made Tesla the most valuable car company in the world and helped its stock join the coveted S&P500 Index. In 2020, Telsa beat Wall Street forecasts to post consecutive profitable quarters, produced more than 50,000 vehicles and began sales of its fifth vehicle, Model Y, ahead of schedule.
Investors believe Tesla still has further to run as its production capacity will grow substantially this year thanks to new manufacturing plants in Berlin, Germany and Texas. In addition, demand for Tesla's cars is expected to increase as countries adopt green energy policies and consumers become more conscious about climate change. But most of all, the US car maker is poised to reap gains in its home market as the new Biden administration makes US$100 billion available for EV rebates and moves ahead with a plan to install 500,000 charging stations across the country, as part of its US$2.25 trillion infrastructure plan.
Netflix (NASDAQ: NFLX) - Video streaming giant Netflix has taken the world by storm with its strong content and original series including House of Cards, Money Heist and Orange is the New Black available in more than 190 countries. Netflix has consistently grown its global subscriber base over the past several years while investing heavily in local-language original content production across the world. It ended the March quarter with more than 200 million subscribers, with US and Canada accounting for a third of the base.
Investors have been gung-ho about Netflix's future after it announced this year that it no longer needs external financing and will stop relying on debt for growth. Demand for its service is expected to remain strong as the coronavirus pandemic continues to rage across the world, shutting down alternative entertainment options such as movie theatres, live music and sports. Meanwhile, the company is also set to benefit after inking a major content deal with studio giant Sony that will start in 2022.
Apple (NASDAQ: AAPL) - Apple is one of the most successful companies thanks to a winning streak of innovative products such as the iMac, iPod and iPhone. The current major driver of Apple's success is the iPhone, and the company debuted the iPhone 12 series last October to much fanfare and strong sales.
Investors are betting that new growth is likely coming from two businesses – services and wearables – that have been boosting Apple's sales and profits in recent quarters. Another major contributor could be the new 5G iPhones that will result in bumper sales and open up price sensitive markets like India. Apple is also setting up dark horse products as its pillars if future growth - such as self-driven electric cars, augmented reality tools and Bluetooth trackers.
Flight Centre (ASX:FLT) - Flight Centre shares have recouped two-thirds of its losses since a slump in March 2020 when the coronavirus pandemic forced Australia to shut its international and domestic borders, bringing travel and tourism to a standstill. This year, after subdued sales in January and February, the travel agent achieved record sales during March, with turnover more than $100 million higher than February, and quarterly total transaction value (TTV) back above $1 billion for first time since COVID-19.
As Australia demonstrates its success in curbing the pandemic, opens its domestic borders and establishes safe travel bubbles with other countries, investors have felt more confident in owning Flight Centre shares. The company's gradual shift in its sales mix towards the corporate market and the successful development of COVID-19 vaccines has also boosted prospects for the travel market leader.
Afterpay (ASX: APT) - Afterpay shares have nearly halved from their peak of $160 in February as its sky-high valuation has left investors jittery about the fast-growing but still loss-making company. The stock has been pummelled most recently on growing fears that an increase in benchmark US interest rates will hurt growth in the world's biggest retail market. Rising competition in the buy-now-pay-later market from the likes of global financial heavyweight Paypal as well as Australia's Commonwealth Bank has also dampened investor sentiment.
However, many investors still believe in the company's future. Analysts note that Afterpay is still maintaining eye-watering growth rates in the US market, with app downloads in April almost double that of a year ago. Macquarie analysts recently also said that while there might be overcapacity in the BNPL industry in the near term, there will be consolidation, which should bode well for a market leader like Afterpay.
CSL (ASX: CSL) - Melbourne-headquartered CSL is one of the biggest biotechnology businesses in the world and a blue-chip ASX-listed stock. Its shares have, however, not done that well after coming off a record high in March 2020. They are down 2% this year so far. CSL was tasked with producing the AstraZeneca COVID-19 vaccine but questions over its safety after several cases of blood clotting forced Australia to impose restrictions on its usage.
But many investors still believe CSL is a high quality business that still has a long term future. The destruction waged by the pandemic, a higher conviction of governments to protect their populations, and an ageing population in Australia means healthcare is one sector that may be able to count on rising demand. CSL is investing roughly 10% of its annual revenue in research and development, which could help unlock its next group of products.
How to invest in stocks
To trade shares via CFDs in Australia, you'll need to sign up to a CFD trading platform.
Keep in mind that not all platforms offer the same list of stocks. For example, while some list only US stocks, others, such as VantageFX, let you trade a range of international stocks, as well as forex, cryptocurrencies and commodities.
Trade with VantageFX
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.