December is usually one of the quietest months in the stock market, but this year was a little different. Most of the time, there isn’t much news for the company, earnings season is late and everyone is settling into vacation mode.
We didn’t have that luxury in 2021. The ongoing global pandemic and big economic news led to huge gains and losses in various industries – including the five industries listed below – even though individual companies didn’t say much about their business.
1. Providers of healthcare plans
The top five stocks in the US healthcare plans market had an amazing December for shareholders.
The combined market capitalization of these stocks is around $850 billion, so they have had a significant impact on the major indices in general.
These types of movements are usually a signal that something strange is happening. Value stocks outpaced growth stocks by about 4% in December, which may explain what we’re seeing happening in the healthcare plans industry. UnitedHealth is the most expensive of the bunch, and the forward P/E ratio is just 23. Health plans aren’t immune to downturns, but their cash flow tends to be less cyclical than most other companies.
The major health insurers provided stability and modest growth in cash flows for the most part. Some have even increased their dividends over the past few months. There is nothing particularly exciting going on here, but investors are looking for safety and profits.
2. Cruise line operators
The travel industry has suffered a true epic throughout the pandemic, and cruise lines may be the most dramatic part of the industry. carnival (NYSE: CCL)And Royal Caribbean (NYSE: RCL), And Norwegian Cruise Line Holdings (NYSE: NCLH) All have a good month in December.
Cruise operators have to spend huge amounts of money on maintaining their ships, and they usually have debt-laden capital structures. This means that things can quickly get ugly if there is a sudden drop in cash flow, as is the case with the travel ban due to the pandemic. November was a difficult month for cruise lines, with cases of coronavirus soaring worldwide. The reason for the December reversal was optimism about the relatively mild symptoms associated with the new omicron variant, along with promising news about a highly effective treatment from Pfizer (NYSE: PFE).
These stocks lost tons of value when COVID-19 shut down the world, and they haven’t fully recovered. As it stands, Carnival’s price is roughly equal to its total sales from 2019, and only 7 times its profits from that year. There should be more room for ups and downs as the global health situation changes.
3. Beverage giants
old rivals Coca Cola (NYSE: KO) And PepsiCo (NASDAQ: PEP) The months were huge, up 13% and 9.5%, respectively. Both companies released impressive earnings reports in October, beating analyst estimates as they navigate supply chain challenges. However, this news dates back several months, and nothing noteworthy happened in the meantime.
This seems like another example of investors moving toward value and stability. Coca-Cola and PepsiCo both own a diverse portfolio of global brands, and tend to perform well in any economic conditions. Both stocks are dividend aristocrats with a long history of consistent dividend growth. Investors seem eager to have dividend income in their portfolio. The stocks are paying higher returns than many other consumer goods leaders, but their returns are among the lowest they have been in years.
4. Payment Processors
Visa (NYSE: V) And Master Card Credit Card (NYSE: MSc) They are another pair of happiest contributors in December. MasterCard increased by 14%, followed by Visa by 12%. The surge in credit card applications helped spur that optimism earlier in the month.
There is no doubt that incumbents in the payment processing industry are feeling some competitive heat as blockchain technology is transforming financial technology. With that said, Visa and Mastercard have a wide moat right now, and they’ve shown a willingness to transform themselves through acquisitions to keep up with the turmoil. Since investors look for value rather than growth, these stocks can provide a combination of dividend cash flow along with growth potential.
5. Bitcoin Stocks
It’s been a rough month for stocks related to Bitcoin (CRYPTO: BTC)The cryptocurrency markets suffered huge losses. to forbid (NYSE: SQ) fell 22.5%, Coinbase Global (NASDAQ: currency) decreased by 20%, micro . strategy (NASDAQ: MSTR) lost 24.5% and Robinhood Markets (NASDAQ: HOOD) It decreased 31.5%. All of these companies own large amounts of Bitcoin or generate revenue based on Bitcoin trading.
All of these stocks have more complex business than a simple one-to-one connection to the cryptocurrency markets, but we should expect their prices to reflect fluctuations in the cryptocurrency and blockchain sectors.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.