Fortune - USA (2020-12)

INVESTOR’S GUIDE • STOCKS FOR 2 021 FORTUNE DECEMBER 2020 /JANUARY 2021^52

China and North America businesses have

been recent bright spots. Like other consumer

goods behemoths, Unilever held up well as

shoppers filled their pantries during the pan-

demic. If consumers stay loyal, its stock could

have room to run, since it trades at a modest

21 times forward earnings, compared with the

U.S. consumer staples average of nearly 26.

Some of those Unilever products may well

reach customers via Canadian National Rail-

way, a freight-only railroad whose lines run

through the U.S. and Canada and link major

ports on the Atlantic, the Pacific, and the Gulf

of Mexico. CNR transports a diversified mix

of oil, metals, minerals, and forest products,

and its consumer goods shipping business saw

a particularly sharp recovery as the COVID

crisis played out. CNR continued making

improvements to its rail network during the

pandemic. Schoenstein says that efficiencies

from those investments, plus relatively low

fuel prices, should position CNR to do even

better once other economic locomotives start

gaining speed again.

have the same hegemony of market outperfor-

mance” as investors grow more confident in

non-U.S. names. Another confidence-booster

for Asian and European stocks: A Biden ad-

ministration will be more predictable than its

predecessor on trade issues.

One stock that Nuveen’s Malik believes

will continue its upward trajectory is Taiwan

Semiconductor Manufacturing Co. (TSMC),

the world’s largest contract chipmaker. The

company makes chips that are central to the

buildout of 5G worldwide. And semiconduc-

tor titan Intel’s recent manufacturing woes are

“certainly going to indirectly, if not directly,

benefit TSMC,” Malik argues, as Intel may sub-

contract more of its own chips to TSMC. But

the stock still comes at a reasonable price tag,

trading at around 23 times forward earnings.

Jensen’s Schoenstein favors Unilever, the

multinational beauty and food giant that’s

currently consolidating its headquarters in

London. Unilever’s brands, which include

Dove soap, Lipton tea, Breyers ice cream, and

Vaseline, are sold in 190 countries, and its

PICKS

JetBlue

(J BLU, $15)

Ta iwan

Semiconduc-

tor Manu-

facturing

(TSM, $99)

Un ilever

(UL, $61)

Canadian

National

Railway

(CNI, $109)

PRICES AS OF 11/16/2 0

tremendous strain but

rewarded those that

adapted nimbly. Ta rg et

staffed up to keep its

stores open and clean,

and stole market share

from rivals; it has

returned 53% since last

year. The work-from-

home trend, meanwhile,

boosted Home Depot, as

homeowners renovated,

repaired, and traded

up to make the best of

their round-the-clock

domestic surroundings.

CASH OUR CHIPS

Our tech picks included

Alphabet and Micro-

soft, which had great

years. But our top tech

performers were little-

known chip specialists.

Shares in Synopsys,

whose software is used

by semiconductor-

HOW

FORTUNE

DID

When It Pays to

Be Cautious

While no one could have
predicted the insanity
of 2020, Fortune writers
Rey Mashayekhi and
Anne Sraders did antici-
pate a year of iffy growth
and political tension. The
27 stocks and ETFs they
picked in “The Yellow-
Light Portfolio” put an
emphasis on prudent, re-
silient companies—and
it beat the S&P 500 over
the ensuing year, with
median returns of 20.6%,
including dividends, to
the market's 19.5%. Here
are some highlights.

design wizards, and

Dutch chip-component

maker ASML returned

63% and 61%, respec-

tively. Each stock

soared (along with their

industry) as global

demand for digital hard-

ware increased.

CAN’T WIN ’EM ALL

Our portfolio included

five “bold bet” picks,

companies with higher-

risk profiles. Tesla and

Nidec paid off. British

retailer Burberry (down

19%) did not, as luxury

brands got crushed

by COVID. The fallout

from past scandals,

meanwhile, clobbered

Wells Fargo (down 52%),

though our team is bet-

ting this year that better

times are coming for the

battered bank.

ELECTRIFIED

Whatever you think of

Elon Musk—and we

think he’s the Business-

person of the Year (see

the story in this issue)—

there’s no denying Te s l a

had a torrid 2020. The

electric-vehicle maker

ironed out its produc-

tion kinks, fought its

way to profitability, and

earned a spot in the

S&P 500. The stock has

returned 505% since we

picked it, making it by

far our best performer.

Another winning pick in

a related field: Nidec (up

51%), a Japanese maker

of EV motors.

SAFE SHOPPING

The pandemic has

put retailers under