Today’s economy and market provide the opportunity to make strong returns in 2021. Low interest rates, economic recovery, and emerging consumer demand means we could see a surge like that of the Roaring ’20s. So, let’s look at three strong stocks under $40 that could deliver superior returns this year and beyond.
Shares in Canopy Growth (TSX:WEED)(NYSE:CGC) continue to fluctuate based on the headlines. However, for those looking for a strong opportunity decades from now, this stock still gives you the best chance. The company’s foothold in the United States is one you cannot ignore come federal legalization in the next few years.
The $16 billion market cap company currently has a price-to-book ratio of 4.3, making is a solid buy, though not exactly undervalued. Sales are expected to increase year over year by about 41% through 2023, with the last five years delivering a compound annual growth rate (CAGR) of 144%! Shares are up 192% in the last year after falling in January, so investors still have plenty of room to grow in the short and long term. It also boasts a CAGR of 176% growth in EBITDA in the last five years, with the company’s expansion and acquisitions proving that this should continue.
Kirkland Lake Gold (TSX:KL)(NYSE:KL) has been growing through acquisitions over the last few years, creating a worldwide diverse portfolio to keep shareholders happy. This diversity means it can deliver substantial returns. It currently trades at a EV/EBITDA of 4.7 and a P/B ratio of 1.7.
The company recently reported record results for 2020, with its Detour Lake deal accounting for about 40% of free cash flow for the year. Its other growth projects continue to run on schedule, with expected guidance between 1.3 and 1.4 million ounces produced in 2021. After a shares slump, the price is now climbing back up — an increase of 37% in the last year and a CAGR of 30% in the last three years. Yet investors still can get in on a dip from August highs and claim a 2.21% dividend yield.
The acquisition of Husky Energy by Cenovus Energy (TSX:CVE)(NYSE:CVE) was a solid move for this company. Cenovus became the third-largest producer in Canada, and while debt is now high due to COVID and the acquisition, management believes that should change rapidly. Synergies alone will claim $1 billion from the transaction.
Cenovus continues to aim for $2.1 billion in upstream and downstream production for 2021. With oil and gas prices on the rebound, management believes 2021 will be the year of mass production after cutting costs by 43% and reducing production in 2020 to hoard cash. Cenovus has a long way to go, but shares are incredibly cheap. You could double your shares easily in 2021 from this stock alone. Shares are already up 154% in the last year, with more to climb to reach 2012 all-time highs. And the company is still incredibly cheap with a 0.7 P/B ratio.
In a rebound, you want stocks that can perform. These three stocks can get you there, and not just in 2021 but far beyond. So, add them to your watchlist and see if these three stocks under $50 are right for you.
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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.
Fool contributor Amy Legate-Wolfe owns shares of Canopy Growth.