Top 5 Stocks For 2021

Among the recession’s dark clouds, there’s a bright spot: the homegrown businesses that continue to make strong profits and reward shareholders

-  Martin Roth

The 2020 year was like no other in the 27-year history of Top Stocks. It makes for difficulty in assessing each company’s latest financial results and making predictions about the future. Certainly, few of the companies in the book, when announcing their latest financial results, were prepared to give guidance on revenues and profits for the 2021 financial year.

A large number of the companies saw their operations affected by the Covid-19 pandemic. Some of them actually benefited. They included retailers like JB Hi-Fi and Harvey Norman, each of which saw a rush of business for home appliances and electronics goods from consumers stuck at home in lockdown. Harvey Norman noted that, with many Australians unable to spend on restaurants and travel, it was gearing up for a buoyant Christmas period.

There were a few surprising beneficiaries as well. Computer wholesaler Dicker Data – in the book for the first time – saw a surge in demand for computer equipment and software from people forced to work from home. Ansell enjoyed buoyant sales of its single-use gloves and personal protective equipment. Telecommunications services provider MNF became a pandemic beneficiary, thanks to its role in providing the temporary telephone numbers needed by companies such as Zoom for video conferencing purposes.

But many companies suffered – from either the pandemic itself or the ensuing economic downturn – with profits falling. Consequently, no fewer than 28 companies from Top Stocks 2020 were excluded from this latest edition, most of them because their return on equity ratio fell below the 10% threshold for the book.