It’s been a bumpy year for Mr. Market and many traders are probably looking forward to ringing in 2020. That’s led many investors to lean toward safer investments that are unlikely to nosedive at the first sign of trouble.
For investors searching for growth, large-cap stocks are often overlooked in favor of their smaller peers. However, as the risk associated with buying a large-cap stock is considerably lower than that of their small-cap peers, investors may want to consider these five large-cap stocks that look poised to deliver impressive growth next year and beyond.
Large-Cap Stocks: Amazon (AMZN)
E-commerce giant Amazon (NASDAQ:AMZN) is looking like a great buy right now with a price tag near $1,720. The firm has been bogged down by worries about the impact of the trade war as well as a rise in regulatory concerns regarding data privacy. However, that has created an excellent buying opportunity for investors who have wanted to add the tech titan to their portfolios.
Of the 47 analysts covering AMZN stock, all 43 rated the stock as a “buy” while the remaining four gave Amazon an “overweight” rating. The lowest price target, $2,080, represents an 18% upside from where AMZN is trading today. That’s because Amazon is top dog in two very lucrative industries — e-commerce and cloud computing. Plus, AMZN’s connected home devices are gaining momentum as the firm adds more functionality to its Alexa smart speaker.
Now is a great time to pick up AMZN stock before its share price rebounds. The firm’s share price is likely to make its way above the $2,000 mark over the next six months, but that’s probably only the beginning of the growth investors will see throughout 2020.
International Business Machines (IBM)
This year we’ve finally seen International Business Machines (NYSE:IBM) stock start to show some signs of life, but the firm has a lot further to rise as its recovery takes hold. It’s taken a solid five years for Big Blue to turn its business around, but 2020 looks like the year that IBM stock finally makes its way back to being a leader in the tech space.
IBM’s cloud computing arm has been making significant strides — with revenue from that arm up 8% compared to the previous year. That cloud growth is about to go into overdrive as the firm’s Red Hat acquisition starts to pay off. Cross-selling and added functionality should boost IBM’s cloud sales and carve out a larger slice of the cloud computing market for IBM.
Right now, the expenses associated with IBM’s Red Hat purchase are still weighing on the firm’s results, but 2020 should be a bit brighter as the benefits of the acquisition become more visible.
Charter Communications (CHTR)
It’s been a bumper year so far for Charter Communications (NASDAQ:CHTR) stock. In fact, it’s been a bumper decade for the communications firm. Charter has delivered to its investors since it emerged from bankruptcy back in 2009. So far this year the stock is up 50% and it isn’t showing signs of slowing.
The firm has a solid position as the second-largest cable provider in the U.S. and its strategy — offering competitive cable network connections as relatively low prices — has given it a competitive edge and driven its market share upward. Charter has been able to pick up the slack from competitors like AT&T (NYSE:T) and Verizon (NYSE:VZ), whose focus has been on wireless connectivity rather than fixed lines.
CHTR has been steadily increasing its market share over the past five years which, although expensive in the near term, will pay off in the future. Plus, Charter’s existing networks could eventually power wireless connectivity in the future, so the firm’s ever-expanding footprint is even more valuable.
Vertex Pharmaceuticals (VRTX)
Investors who pick up Vertex Pharmaceuticals (NASDAQ:VRTX) stock have to be ready to take on some volatility, but the biotech offers a great deal of long-term growth to those who are willing to sit through the bumps. However, Vertex’s position in the biotech market is an impressive one.
VRTX stock’s number-one driver has been its cystic fibrosis treatments which allow the firm to target roughly half of CF patients. However, the drugs that VRTX has coming up in its pipeline are predicted to increase that figure to roughly 90%. Vertex will launch a new CF treatment in 2020. That makes now a good time to add the stock to your portfolio.
As it stands, VRTX’s CF drugs are patent-protected over the long term which should mitigate the risk of competing generic drugs. Vertex has proven itself as a leader in new-drug discovery. Although its business is heavily dependent on cystic fibrosis now, diversification isn’t out of the question. It was a hepatitis C drug that put VRTX on the map. And the firm is capable of expanding its portfolio elsewhere in time.
When you’re talking about growth, you can’t really have a conversation without including China. Right now there’s a huge opportunity for patient investors when it comes to Chinese stocks and JD.com (NASDAQ:JD) stock is a great way to play that opportunity.
JD is China’s second largest e-commerce firm, but the company has a distinct advantage because of its logistics network. What’s important about that is that JD, unlike some of its competitors, has gotten the “grunt-work” out of the way. The firm has already spent on warehouses and trucks, now it’s ready to reap the benefits of those assets.
The growing Chinese middle class represents a huge opportunity for the firms serving them and JD stock is capitalizing on that by growing its high-margin businesses (third-party selling and advertising) at the same time.
The trade war is casting a shadow over JD stock right now. But a resolution or even deescalation would take some of that pressure off. Plus, it would allow the market to shift its focus to the underlying business.
As of this writing, Laura Hoy was long AMZN.