Billionaire investor Bill Gross says the 'Teslas of 2020' may struggle in 2021 and reveals his top sector pick for the new year

Reuters

  • Billionaire investor Bill Gross said 2020’s growth stocks “may struggle” in 2021 and said his current favorite market sector is the natural gas pipeline group in his latest Investment Outlook letter titled “Little Bit Softer Now.” 
  • The PIMCO co-founder said that stocks like Tesla, which skyrocketed 740% in 2020, won’t repeat the performance in 2021. 
  • Gross said investors should ‘take a look” at Magellan Midstream Partners, BP Midstream Partners LP, and Enterprise Products Partners L.P.
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Billionaire investor Bill Gross said 2020’s growth stocks “may struggle” in 2021 and revealed his favorite sector pick for the new year in his latest Investment Outlook letter. 

According to the PIMCO co-founder, stocks that soared in 2020, like Tesla and certain SPACs, won’t repeat the performance in 2021.

Tesla was up over 740% in 2020, with most Wall Street analysts predicting either a decline or only slight increase for the EV maker’s stock price in the next 12 months. Meanwhile, the top performing SPAC according to Nasdaq, QuantumScape, flew over 1,115% in 2020. 

Read more: Buy these 30 stocks that handily beat the market in 2020 and are poised for the best global returns in 2021, RBC says

For returns in 2021, Gross is eyeing natural gas pipeline stocks within the energy sector of the market. He said the market sector yields between 9% and 12% for investment grade stocks with certain tax advantages. Gross told inventors to “take a look” at Magellan Midstream Partners, BP Midstream Partners LP, and Enterprise Products Partners L.P.    

“TSLA? In the hands of the Robinhood gods I’m afraid it’s definitely overvalued,”he added. 

The billionaire investor also commented on what’s behind the sky-high asset prices in the market.

“This market is driven – yes – by intense speculation, but also by fiscally pumped, central bank-primed corporate earnings, which when discounted to present value by near zero nominal and in many cases negative real interest rates, produce record stock prices,” Gross said. 

Read more: Jeremy Grantham predicted the past 2 financial meltdowns. Now he says these 3 signals are foreshadowing a crash in another bubble being created by stocks and SPACs.

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