3 Large-Cap Stocks That Could Gain Up to 60% in 2021

Companies such as Enbridge and Barrick Gold are trading at a massive discount right now.

| More on:
A person suffering

Image source: Getty Images

When it comes to investing in the stock market, you always want to beat the broader indexes. The S&P 500 Composite Index has generated annual returns of around 10% in the past five and a half decades, which means you would ideally want to beat these returns over the long-term.

With the equity market trading near record highs, it might be difficult for investors to generate outsized gains. However, if you look closely, you might be able to identify companies that are trading at a discount.

Here, we look at three large-cap stocks that you should buy for market-beating returns in 2021.

Enbridge

The oil industry has been impacted by lower-than-expected demand amid COVID-19. This has meant several companies in the energy sector lost significant market value to trade at a lower multiple in the last year.

Canada’s energy giant Enbridge (TSX:ENB)(NYSE:ENB) saw its stock price decline from $57.32 at the start of 2020 to a multi-year low of $33 in March last year. ENB stock is currently trading at $44.25, which indicates a tasty forward yield of 7.6%.

This means a $5,000 investment in ENB stock will help you generate $375 in annual dividend payments. The energy heavyweight recently increased its dividends by 3% amid a sluggish macro environment which was its 26th consecutive year of dividend growth.

Further, the company expects to increase distributable cash flow between 5% and 7% on an annual basis going forward which will help it support future dividend increases as well. Enbridge has a resilient business model and generates a significant portion of its EBITDA from its regulated assets.

Analysts tracking ENB stock have a 12-month average target price of $51.31 which is 16% above the current trading price. After accounting for its dividend yield annual returns may surge to 23.5%.

Barrick Gold

The second stock on the list is mining company Barrick Gold (TSX:ABX)(NYSE:GOLD). One of Canada’s largest companies, Barrick Gold owns mines with over 10 years of productive life remaining. The company has also managed to deliver total cash per ounce that is in the lower half of the industry’s cost curve, allowing Barrick to generate sustainable profits.

Barrick aims to produce at least five million ounces of gold each year through 2029. Due to its low cost nature, the company should reduce its all-in anticipating costs from US$1,000 an ounce in 2020 to US$800 an ounce in 2024.

Barrick Gold has also reduced its debt over the years and strengthened its balance sheet making it one of the top picks right now. Analysts tracking Barrick Gold stock have a 12-month average target price of US$32 which is 61% above the current trading price.

Zoom Video

One of the top-performing stocks in 2020, Zoom Video (NASDAQ:ZM) has lost significant momentum recently. Investors are concerned over its steep valuation after it rose from $107 per share in February 2020 to a record high of $588 in October. ZM stock is currently trading at $372 right now.

In the last three quarters, the company’s sales were up by a massive 307% year over year at US$1.77 billion. Comparatively, its net income rose by 11 times to US$630.3 million. Zoom now expects sales to rise by 314% in fiscal 2021 while earnings growth is forecast between 726% and 731%.

Analysts tracking Zoom stock have a 12-month average target price of US$466, which is 25% above the current trading price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Tom Gardner owns shares of Zoom Video Communications. The Motley Fool owns shares of and recommends Enbridge and Zoom Video Communications. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Dividend Stocks

Dividend Stocks

Here’s the Next Dividend Stock I’m Going to Buy

As the fear of recession increases, panic increases. At times like these, a dividend stock can mitigate your portfolio's downside.

Read more »

worry concern
Dividend Stocks

Housing Market in May 2022: Buyers and Sellers Are in a Bind

Many homebuyers are re-evaluating their options due to rising inflation and mortgage rates, but sellers hope they would change their…

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

3 Low-Yield Stocks to Buy for Decent Growth Potential

A low yield doesn't always mean that the company is a miser with its payouts. Sometimes, it's the result of…

Read more »

edit Safety First illustration
Dividend Stocks

3 of the Safest High-Yield Dividend Stocks in Canada

Not all high-yield stocks are inherently dangerous, but it’s still a good idea to play it safe and choose companies…

Read more »

A stock price graph showing growth over time
Dividend Stocks

RRSP Investors: 2 Oversold TSX Stocks to Buy for Dividend Growth

The market pullback is giving RRSP investors a chance to buy some top TSX dividend stocks at cheap prices.

Read more »

stock research, analyze data
Dividend Stocks

Buy the Dip: 2 Top TSX Dividend Stocks on Sale

These top TSX dividend stocks look cheap to buy today for a portfolio focused on passive income.

Read more »

grow money, wealth build
Dividend Stocks

2 Top TSX Growth Stocks That Also Pay Investors Tasty Dividends

Growth stocks on the TSX such as goeasy and Brookfield Renewable also provide investors with tasty dividend yields.

Read more »

money cash dividends
Dividend Stocks

Dividend Stocks: The #1 Way to Earn Passive Income

Earning passive income from dividend stocks could be enjoyable. Here are a few tips to simplify your process.

Read more »