It might be hard to believe, but in just seven weeks, we’ll be saying our goodbyes to 2019. Although investors have endured a couple of short-lived rough patches, it’s been an exceptionally strong year for the stock market. The broad-based S&P 500 is up 23%, the iconic Dow Jones Industrial Average has gained 18%, and the tech-heavy Nasdaq Composite has returned almost 27%.
But, top investors say, despite all that year-end good news, now is not the time for complacency. Soon, 2019 will be over and everyone’s returns will reset to zero as the New Year kicks off. So, with that in mind, here are some of their recommendations of stocks to watch in 2020.
Exxon Mobil (NYSE:XOM) is by far the largest company on this list, and while it went up only about 1% in 2019, the experts say that this “big dog” will hunt in 2020. Why’s that? The oil market seems to be nearing a turning point since the 2014 crash in oil prices. All the attention may be on proposed new regulations, including a potential national fracking ban if certain Democratic candidates are elected. While that’s a concern for smaller players, for Exxon, a major turnaround is brewing regardless. It has oil supplies from around the globe, and is bringing new major projects online from various areas such as Guyana. All in all, Exxon is aiming to double earnings and cash flow over the next five years or so.
2. Innovative Industrial Properties
Yes, cannabis real estate investment trusts (REIT) are a real thing, and they can be quite lucrative! Innovative Industrial Properties (NYSE:IIPR), the best-known marijuana REIT on Wall Street, is already profitable and growing at a lightning-quick pace. After beginning 2019 with 11 medical marijuana-growing and processing properties in its portfolio, it now owns 38 properties in 13 states that span 2.8 million square feet of rentable space. As long as marijuana remains illicit at the federal level in the U.S., access to capital will be dicey for cannabis cultivators. That makes Innovative Industrial’s acquisition-and-lease model a veritable green rush gold mine for 2020.
Smaller shopping sites such as Wix and Shopify are starting to give giant online retailer Amazon, a run for its money. Avalara provides ecommerce management software to such online retailers. It is currently the leading Software-as-a-Service company in this field. Since a Supreme Court decision last year opened the way to far more online sales tax collection, Avalara’s business has taken off. Every quarter, it has been reporting an accelerating revenue growth rate and faster new client sign-ups. It’s now heading into overseas markets as well as it actively broadens its competitive moat. Avalara has partnerships with Wix, Shopify and other such platforms to directly link Avalara’s sales tax software into those commerce engines.
If you missed out on the Facebook IPO and have been kicking yourself for the past seven years, don’t fret. Social media photo-sharing site Pinterest (NYSE:PINS), which allows users to create their own virtual boards based on their interests, could be your second chance to profit. Like most brand-name social media sites, Pinterest has seen exceptionally strong user growth. Monthly active user (MAU) count rose to 322 million by the end of September, up 71 million from the prior-year period. What’s most notable about this growth is that it’s mostly coming from international markets (38% MAU growth vs. 8% in the U.S.). Even though ad-based revenue is minimal in foreign markets, it nevertheless demonstrates that Pinterest has global appeal.
With interest rates and mortgage rates on the rise throughout much of 2018, it looked as if the fun had come to an end for a hot housing market. But following a trio of Federal Reserve rate cuts and a big drop in Treasury yields, the housing industry is hotter than it’s been in more than a year. That, along with low mortgage rates, could be the perfect recipe for online real estate brokerage company Redfin (NASDAQ:RDFN) to double in 2020.
6. Hormel Foods
With Thanksgiving just around the corner, it’s natural to think of mainstay Hormel Foods (NYSE:HRL) products such as turkey and ham. But there’s much more to the company than just traditional meat products. Hormel is now a leader in a variety of more millennial-oriented products, including organic and non-GMO meats, nut butters, ready-to-eat guacamole and Mexican salsas. Why is HRL one of my stocks to buy for 2020? It’s one of the more attractive Dividend Kings (a company that has raised its dividend more than 50 years in a row) at the moment.
It’s shocking how cheap Facebook (NASDAQ:FB) stock remains. With every passing month, the Cambridge Analytica scandal fades farther into the rearview mirror. Yet, FB stock is still priced as though some major business disruption is coming. Sure, margins are down due to all the steps they’ve taken to improve the platform’s security. But earnings are still growing at more than 20% per year, even during this big hiring period. And revenues are growing at nearly 30%.
What do you think of these top 7 stocks to keep an eye on for 2020, are there any others you feel like sharing? Please reply in the comments below.
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