Best Stocks to Buy for 2020
It has been a fantastic year for the stock market, particularly for the S&P 500 which has risen by a massive 25% this year alone. Sectors such as tech have done well while some other dawdlers like the big banks have also made improvements this year and we could say that this is due to the rate of investments in these sectors. Well that was then but the big question now is what are the best stocks to buy in 2020.
However, knowing that things have gone well is not enough because the year is almost over and a new year is about to begin. This means that all that has happened in the past year has gone with the past year, leaving all that is to come as fresh information – sort of like a reset button. Just make sure you settle every retirement plan contribution, every tax-loss sale, and anything else that needs squaring away before the end of the year.
Once this is done, the next thing to take into consideration is the stocks to buy for 2020. The momentum of some stocks continues over to the next year and sometimes, the market switches focus from one position to another as the calendar changes. With this in mind, here are some of the best stocks to buy in 2020, even though some of them did not win many performance awards in the previous year.
JD. Com (JD)
JD. Com (NASDAQ: JD) recently announced another great quarter with strong cash flow generation, increasing growth, and solid margins. This was an impressive feat because JD thrived during the time of economic struggles in China. JD has been able to maintain its market shares and keep business moving forward in spite of bad economic situations.
The stability of JD puts them in a good position, especially when the Chinese economy eventually stabilizes. For now, relations have been heading in the opposite direction, which could provide a compelling buy and dip opportunity in JD stocks making it one of the best stocks to buy in 2020.
Hormel Foods (HRL)
When it comes to Thanksgiving as well as other festive seasons, it is only natural to think about the mainstay products of Hormel Foods (NYSE: HRL) such as ham and chicken. But there is more to the company than the production of meat products. Hormel is now a leader in a variety of millennial oriented products like nut butter, Mexican salsas, ready-to-eat guacamole and non-GMO meats.
To top it off, Hormel has recently made a big move with its Happy Little Plants range which are plant-based protein products. The company had initially wanted to buy out a rival plant-based company but exclaimed that it was cheaper to create their own brand themselves. This idea went from concept to the market within three months, highlighting Hormel’s robust distribution and R&D capabilities.
So, what makes HRL one of the best stocks to buy in 2020? It is one of the few companies that have consistently raised their dividends for the past 50 years in a row – making it one of the attractive dividend kings.
Even with concerns like the African Swine Fever which has impacted the global supply of pigs, causing investors to worry, and has hit Hormel’s profit margins on products like Black Label Bacon and SPAM, it is still a good stock to buy in 2020. This is because these concerns are only temporary and once they pass – which will be pretty soon – HRL stocks could easily make a 30% run-up in share prices or more as peers like Hershey and Procter & Gamble already have. Finally, as the Beyond Meat bubble continues to deflate, money should flow back into the traditional protein-centred companies.
At the moment, only 78 of the S&P 500 companies are in negative territory, and with the market going higher every day, most of the individual stocks should be in the green. Down by just 1% through 2019, Exxon Mobil is by far the largest company not to advance in 2019. Nevertheless, do not make the mistake of counting them out as they are still one of the best stocks to buy in 2020. Why is this the case?
The oil market is getting closer to a turning point since the crash of oil prices in 2014. This is because the simplicity that made dozens of small E&P firms enter the market is gone, leaving many of them bankrupt and out of the market. Compared to the way things were, the shale oil revolution has run out of juice as it has become more difficult to produce cheap oil. To top it all off, there are political regulations which make it difficult to drill new oil resources as easily as before.
The political atmosphere has become more intense as the election of certain Democratic candidates is likely to bring about new regulations, including a potential ban on national fracking in the US. While this is a major blow for the small players in the industry, for Exxon, there is a major turnaround coming. This is because the company has oil supplies from all over the world and is preparing new major projects from different regions. Given that Exxon is already one of the most profitable companies in the world which pays a generous 5% dividend yield, it is safe to say that any major growth would send their shares flying through the roof, making it one of the best stocks to buy. The changes in oil prices are said to kick start in 2020, which would provide a major boost for all that are involved with the company as well.
Over the last couple of months, the e-commerce space has seen a big shift. Amazon (NASDAQ: AMZN) stocks have dropped as investors continually question its retail strategies alongside other issues. On the other hand, other e-commerce platforms like Shopify (NYSE: SHOP) and Wix (NASDAQ: WIX) have been enjoying rapid growth.
So, what is the common factor amongst these new e-commerce stores and why are things suddenly getting better for them? The thing is that they tend to empower smaller web entrepreneurs and businesses to get into the e-commerce sector in a big way. Now, these small operations are not set up to handle all the big accounting and back-office operations like Amazon, but they can handle ordinary but important tasks like reporting and managing the collection of sales taxes.
Since the decision of the Supreme Court in 2018, which paved the way for more online sales tax collection, Avalara has hit a major business breakthrough in the market. Avalara is one of the best stocks to buy as it has been reporting a quarterly accelerated growth rate in revenue, as well as faster new client signups. The company is now heading into the overseas markets, increasing its competitive channel in the process. Avalara also has partnerships with e-commerce sites like Shopify, Wix and many others which have linked Avalara’s sales tax software to their commerce engines. This creates a big avenue of clear growth for Avalara as companies like Wix and Shopify signup more users every day.
At a market cap of $6 billion, Avalara is still a relatively new player who has a lot of potential for growth – that is if a major tech company does not buy it out first. Even though the AVLR stock got beat this fall on the SaaS stock selloff and is still down by 15% from its highs, this is a discount that is not going to last for long as AVLR stocks are going to be one of the best stocks to buy in 2020.
Unilever (UL) (UN)
Unilever (NYSE: UN) (NYSE: UL) is one of the best stocks to buy for investors that are income-focused. Unilever is a colossal assortment of personal hygiene brands and consumer foods. They are known for products like Ben & Jerry ice cream, Axe, Lipton tea, and Hellman’s mayonnaise. Many of these sorts of consumer staple companies have traded up fast with Procter & Gamble (NYSE: PG) and Hershey (NYSE: HSY) posting huge gains over the years and now trade around 25x earnings. Unilever, on the other hand, has not gone up as much yet and has not enjoyed the same passive money flows that have increased US stocks. European stocks, on the other hand, have not experienced good performances with Brexit concerns and an overall economic weakness keeping investors away.
Be that as it may, Unilever now sell stocks at 20x forward earnings which is a huge discount compared to similar peer companies. The company is growing revenues at more than 5% annually, which is a big achievement amongst consumer staple companies at the moment.
The company dividend at 3.1% is also a stand out factor particularly since the company tends to hike it at a high single-digit rate most years. Finally, we would like to point out that Unilever has two listings: UN and UL stocks. These stocks have the same economic interests in Unilever; however, the UL shares operate under British jurisdiction which means it has dividends paid to American shareholders without any foreign withholding tax, making it one of the best stocks to buy for most US based holders.
It is shocking that despite how well Facebook is doing, their stocks (NASDAQ: FB) remain cheap. With every passing month, the Cambridge Analytica Scandal, which almost tarnished the image of the company is slowly fading. Yet, FB stocks are still priced as though some major business turbulence is coming.
How else can we logically explain why FB stocks are selling for just 21x forward earnings despite showing growth in earnings at a similar rate. Or the fact that revenue growth came in at a shockingly fast 29% over the past year? Many even said that regulatory problems with Facebook would lead to a massive problem in Facebook’s business, but this has not been the case.
Even with the margins that have gone down a little due to the steps taken to improve the security of the platform, earnings are still growing at more than 20% every year. Revenues are also growing at almost 30% with other counterparts to the platform like WhatsApp and Instagram still growing in popularity. With all the factors highlighted, you do not have to overthink things as Facebook is one of the best stocks to buy in 2020.
Even with the bad situation tobacco is in at the moment with intense media and regulatory scrutiny taking its toll on the industry, the Trump administration is open to allowing flavoured e-cigarettes sales again in the country. This would be a big win for Juul and the extension company Altria (NYSE: MO) which has large stakes in Juul.
Furthermore, the company received an additional boost with information that the Food and Drugs Administration has dropped plans to reduce the amount of Nicotine in cigarettes. With all the positive information, Altria stocks have bounced back from $40 to $48. Even though this is down from $75 in 2017 and $58 recently, Altria stocks still yield about 7%, making it one of the best dividend players in the market today and one of the best stocks to buy in 2020.
In conclusion, this list consists of some of the best stocks to buy in 2020 and with the year quickly coming to an end, taking out time to look at the best investment options for the year is something you must do. 2020 is a year that has a lot to offer and many investors are looking to get some of the best stocks that would not only kickstart the year but also would help them make as much profit as anticipated.
Our content should be used for informational purposes only. It is important to do your analysis before making any investments based on your personal circumstances. You should take independent financial advice from a professional or independently verify any information you find here which you choose to rely upon whether for making an investment decision or otherwise.