We’re at the mid-way point of 2021 and it’s been a roller-coaster six months for investors in the US stock market.
Incredibly, stock markets have continued to hit new highs although the tech-heavy Nasdaq did sell off sharply in late February and early March.
Despite all the talk about inflation and interest rates, the S&P 500 is up 16.1% so far in 2021 while the Nasdaq-100 has also advanced – posting gains of 14.7% year-to-date.
Meanwhile, over in Hong Kong, the Hang Seng Index has seen a more tumultuous six month as a crackdown on China’s “Big Tech” firms means the benchmark has only risen 4.9% so far in 2021.
As long-term investors, we should always be on the lookout for “value” where it might exist so here are the top five buys in July that any investor can consider adding to their portfolio.
Although China’s social media and gaming giant Tencent Holdings Ltd (SEHK: 700) seems to have fallen foul of regulators, like fellow tech behemoth Alibaba Group Holding Ltd (NYSE: BABA) (SEHK: 9988), there’s been one key difference.
While Alibaba has an outspoken former founder in Jack Ma – who seemingly cost Ant Group a lucrative IPO – Tencent has a media-shy CEO-founder in Pony Ma.
Beyond that, Tencent’s business continues to fire on all cylinders. In its latest first-quarter 2021 earnings, revenue rose 25% year-on-year to RMB 135.3 billion (US$20.9 billion) while net profit also jumped by 22% year-on-year to RMB 33.1 billion.
Particularly impressive was Tencent’s Fintech and Business Services division – which includes its dominant WePay payments arm – with its revenue soaring 47% year-on-year to RMB 39 billion.
With Tencent’s share price basically flat so far in 2021, and down about 25% from its all-time high earlier this year, this Chinese growth machine is trading at a discount.
Although Peloton Inc (NASDAQ: PTON) became synonymous with the “work-from-home” (or rather “work-out-from-home) theme, the company is showing signs that it has staying power beyond the pandemic.
In its latest earnings release, the exercise equipment and connected fitness specialist reported revenue that grew at an explosive 141% year-on-year to US$1.26 billion and saw strong expansion across a number of key metrics (see below).
Source: Peloton Q3 FY 2021 shareholder newsletter
Traditionally associated with exercise bikes and treadmills, the firm is branching out into new fitness areas such as “Peloton Barre” while it also announced plans to expand into Australia.
Engagement with its connected subscription service looks positive given “Connected Fitness Subscription Workouts” grew 239% year-on-year to 149.5 million.
With shares down 15% year-to-date, Peloton could turn out to look cheap in five years’ time.
The travel and lodging marketplace Airbnb Inc (NASDAQ: ABNB) is a verb in its own right given how closely associated it is with travel, not only in the US but globally too.
While Airbnb went public in only December of last year, its core business has clearly been hit hard by the Covid-19 pandemic.
But given the world is starting to open up after mass vaccinations, Airbnb is also well-positioned to benefit as travel also resumes.
In fact, in its latest quarter revenue rose by 5% year-on-year to US$887 million while gross booking value (GBV) shot up by 52% year-on-year to US$10.3 billion.
Airbnb shares are up 10% year-to-date but at US$153 they still remain about 30% off its all-time high of close to US$220.
4. Brookfield Renewable Partners
Canada-based renewable power generator Brookfield Renewable Partners LP (NYSE: BEP) has seen its shares fall around 13% so far in 2021.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be.
In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.