2020 was a challenging year for financial markets worldwide. On March 9, the Dow Jones Industrial Average (DJIA) dropped by 7.79% to 23,851.02 points. It was the worst single-day drop in the index in US history and delivered significant losses to investors around the globe. The stock market has been recovering slowly since, and vaccine roll-outs have helped bolster investor confidence.

As we head into 2021, the biggest question for investors is which sectors they can invest in? Which are the best stocks to buy? In this article, we will review the sectors most likely to witness growth as the global economy recovers from the Coronavirus.

1.     Consumer Staples

If you are worried about the Coronavirus-induced recession hurting your investments in 2021, consumer staples are a safe choice. Thanks to the consistent demand for these products, the companies in this sector remained profitable during the pandemic. With demand expected to remain stable in 2021, investing in this sector can help you avoid any unnecessary risks.

Consumer staples companies also thrive in a growing economy, so even if the economy takes a turn for the better, you can still expect to earn a profit.

Currently, the largest consumer staples companies in the US include Walmart, Coca-Cola, Procter & Gamble, PepsiCo, and Costco Wholesale. If you want to invest in consumer staples, these are the best stocks to buy.

2.     Energy

The energy sector suffered heavily in 2020 when the demand for oil fell. In April 2020, the price of crude oil dropped below zero for the first time in history. Oil prices have recovered since, and currently, crude oil is priced at $58 per barrel.

As the economy reopens, demand for oil is likely to come back to normal. The growing emphasis on green energy is expected to bolster the energy sector too.

If you want to invest in the oil industry, Chevron is probably your best bet. It has a healthy dividend yield of 5.7%. You can also consider energy exchange-traded funds (ETFs). These securities are still subject to volatility in oil prices. However, they diversify your investments and reduce risk.

As far as green energy stocks are concerned, companies like Ormat Technologies, NextEra Energy Partners LP, and Fusion Fuel Green PLC are delivering the best returns.

3.     Banks

Like the energy sector, banks also accumulated significant losses in 2020. However, investment banks like Goldman Sachs worked hard to diversify their revenue streams during the pandemic, and it appears to have paid off. The bank reported $44.56 billion in revenues in 2020, which was 22% higher than 2019.

Its stocks are currently at $302 and have made an impressive recovery in the last year. Other bank stocks that appear to be promising include Bank of America and Morgan Stanley. Bank of America reported $5.5 billion in net income last year, and its stocks performed better than predicted. If the economy recovers, the bank could see further growth.

The same applies to Morgan Stanley. The banking giant reported $13.6 billion in net revenues for Q4 2020. Previous estimates had predicted its revenues to be around $11 billion. The company strengthened its portfolio and holds over $3.3 trillion in assets. If you want to invest in the banking sector, then Morgan Stanley stocks could prove profitable.

4.     Healthcare

With COVID-19 vaccinations underway, healthcare organizations could see a rapid increase in surgeries and other treatments that were put on hold during the Coronavirus pandemic. Surgeries typically have the highest profit margins for hospitals and are critical to sustaining operations. Pent-up demand for delayed surgeries could help healthcare organizations normalize operations and improve their bottom-line.

HCA Healthcare, Bio-Rad Laboratories, Biogen Inc., and CVS Health Corporation are among the best stocks to buy in this sector. Among these, Bio-Rad Laboratories stocks are the most expensive. They are valued at $643. If you plan to buy and hold stocks, Bio-Rad could be a good option for generating long-term earnings.

However, if you want to trade stocks quickly to generate profits, we recommend something a little less costly with growth potential. CVS Health Corporation could benefit you here. These stocks are priced at $76 and may increase in value during the year.

5.     Technology

Unlike the other contenders on our list, the technology sector had a stellar year. Companies such as Zoom Video saw record-high profits in 2020 and reported $15.3 million in net earnings. Its net income saw an increase of $10 million compared to its performance in 2019.

Of course, with vaccine roll-outs underway, remote work may curtail, which can hurt Zoom Video. We recommend playing it safe and seeing how Zoom stocks respond to these changes.

Companies with a sound financial history are better option here. If you are looking to invest in the technology sector in 2021, some of the best stocks to buy include Apple, Sonos, Match Group, Adobe, Cisco Systems, and Microsoft.

Apple reported $57.41 billion in net income in 2020. It is the biggest publicly traded company at the moment and has a net worth of $2.2 trillion. Apple stocks are currently at $135, and investors expect the price to go higher in 2021. The company is working to diversify its products and offer more than the iPhone. The smartphone brand is still its biggest earner, though, and the company may increase production by 30% to manage continued demand.

Conclusion

Off-setting the impact of the Coronavirus pandemic will take time. As the economy recovers, various sectors that suffered losses during the pandemic are expected to become profitable again. These include the energy, healthcare, and banking sectors.

Some of the best stocks to buy in these sectors include Chevron, Ormat Technologies, Goldman Sachs, Morgan Stanley, Bio-Rad Laboratories, and CVS Health Corporation.  

We can also expect technology and consumer staples companies to earn big during 2021. Thanks to stable product demand, companies such as Walmart, Coca-Cola, and Apple are likely to remain some of the most profitable firms in the US.

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