Well, we told you to buckle up at the start of this year’s first quarter. At the time, investors were mostly concerned about U.S.-China trade tensions and the effects of an impending Brexit. Our contributors — and readers — made their picks for InvestorPlace.com’s Best Stocks for 2020 contest with these global events in mind.
But the start of 2020 has brought far more chaos than anyone anticipated. In the very first days of the year, the U.S. military struck and killed Iran’s top general, Qasem Soleimani. For a few weeks, the world was caught in unease. Would President Donald Trump escalate to a point where there was no going back?
And just as suddenly, Iran has fallen to the back of investors’ minds. Although the novel coronavirus began its attack on China right as the ball dropped, most American investors weren’t in panic mode until early March. But once the panic started, it didn’t stop.
Our Best Stocks for 2020 participants chose equities that should have performed well this year. Now, though, the stock market is channeling the Great Recession. Americans are filing for unemployment benefits in unprecedented numbers. Major market indices have fallen into bear-market territory. And most importantly, no clear end to the virus is in sight. So what does this mean?
Our readers picked the current front-runner, Apple (NASDAQ:AAPL), to win out over the competition this year. Its current year-to-date return is a loss of 18%. Most would agree that it’s winning a very sad race.
So as the year unfolds, look for the virus to ease, or for greater clarity on an effective vaccine. These signals of a return to normalcy could reset the playing field and help investors find 2020’s best stock.
The following 10 stocks are in order, from worst to best, of year-to-date performance through the first quarter.
Best Stocks for 2020: Energy Transfer (ET)
Investor: Charles Sizemore
Year-to-Date Change: -64%.
Charles Sizemore is still rooting for Energy Transfer (NYSE:ET). And he knows that ET stock has been here before. It rebounded from a similar first-quarter loss to win the Best Stocks contest in 2016. What’s stopping it from a similar performance this year?
Granted, Sizemore acknowledges that energy and oil names were in a bad place to begin with. Environmental, social and governance investing, combined with the rise of alternative energy sources, is pressuring fossil fuels.
Those moral headwinds were bad enough. Then, as Sizemore writes, disaster hit energy stocks. After Russia refused to agree to OPEC-sponsored production cuts, Saudi Arabia retaliated. After flooding the market with low-price crude oil, it was only fair to begin calling it an oil price war.
That combination is hurting ET stock, and it’s down 56% for the year. But at the end of this past week, Trump signaled that Russian and Saudi officials were ready to hit the negotiating table again. A set production cut could send Energy Transfer up for the year. It’s just too early to tell.
Aimmune Therapeutics (AIMT)
Investor: Matt McCall
Year-to-Date Change: -60%
According to InvestorPlace analyst Matt McCall, the selloff in Aimmune Therapeutics (NASDAQ:AIMT) is overblown. And he maintains that 2020 — and the rest of the Roaring 2020s decade — will still center around biotech stocks. That bodes well for AIMT’s performance in the Best Stocks contest.
So what’s happened? The first quarter wasn’t too bad, fundamentally, for AIMT stock. The U.S. Food and Drug Administration granted the company approval for its Palforzia drug, making it the first on the market to treat pediatric peanut allergies.
And food allergies broadly are a big market. As Aimmune Therapeutics ramps up visibility for Palforzia, it should have had a great quarterly performance. However, the treatment requires six months to be effective. In an age of social distancing and stay-at-home orders, no one will be getting six months of non-essential, in-person treatments.
But the coronavirus isn’t wiping out peanut allergies. Keep a watchful eye on this biotech name to see how FDA approval will impact it in Q2.
Investor: Eric Fry
Year-to-Date Change: -52%
Copper miner Freeport-McMoRan (NYSE:FCX) is also off to a rough start this year, but InvestorPlace analyst Eric Fry thinks it has a secret weapon. What is that weapon, you ask? Well, scientists around the world agree that copper is an antimicrobial substance, capable of killing coronavirus germs.
Although that tailwind hasn’t helped FCX stock yet, Fry is still confident. The world is focusing on masks, gloves and face shields. When it turns to copper, Freeport-McMoRan should be first in line to benefit.
And in the meantime, he writes that there’s still a lot to like about the struggling industrial name. Its biggest catalyst is demand from the electric vehicle and battery industries. EVs, like Tesla’s (NASDAQ:TSLA) vehicles, are copper intensive. And wind and solar power also suck up copper much faster than traditional sources.
Right now, alternative energy isn’t anyone’s main focus. But it was growing in popularity before the pandemic struck, and it will keep growing when the pandemic clears up. For those reasons, Fry thinks FCX stock is a great one to keep watching.
Investor: Jason Moser
Year-to-Date Change: -42%
As The Motley Fool’s Jason Moser writes, Wayfair (NYSE:W) is still a fundamentally strong company. When he chose it for the Best Stocks contest this year, he was making a bet on the strength of e-commerce. Not only is e-commerce broadly booming, but online furniture and home decor sales are an ever-growing market.
For that reason, the first quarter of 2020 should have seen Wayfair make major gains. But non-essential consumer spending is down, which is hurting the company’s sales.
However, Wayfair’s last quarterly report was strong. As Moser writes, revenue was up almost 26% year-over-year and active customers were up almost 34% year-over-year. Those are impressive numbers.
When the outbreak clears, he thinks consumers will jump back into long-awaited home improvement projects. If they do, expect W stock to make a nice rebound.
Hercules Capital (HTGC)
Investor: Neil George
Year-to-Date Change: -40%
InvestorPlace analyst Neil George selected Hercules Capital (NYSE:HTGC) for his Best Stocks pick back when it traded near $13. Now the alternative financial is just below $7. That’s quite the haircut.
But instead of worrying about its day-to-day price movement, Neil George is confident that $7 makes a great entry opportunity. Why? Hercules Capital remains a fundamentally strong play.
HTGC is involved in financing startup tech companies, coaching them through their IPOs and helping them make money. It currently has its hands in companies like DocuSign (NASDAQ:DOCU) and Evernote. Both are benefitting from work-from-home trends. This means that Hercules is on the right side of the coronavirus — tech isn’t going anywhere.
Plus, as George points out, HTGC stock is a steal under $7, especially when you factor in its 20.2% annual dividend. As the year unfolds, don’t forget about this discount income name.
PennyMac Financial Services (PFSI)
Investor: Louis Navellier
Year-to-Date Change: -35%
InvestorPlace analyst Louis Navellier’s pick for the contest, PennyMac Financial Services (NYSE:PFSI) is also set to benefit from the coronavirus. Granted, as Navellier writes in his latest Best Stocks update, the real estate sector likely won’t see a V-shaped recovery. But it will see a boom, and PFSI stock will ride high.
Why? Central banks around the world are taking drastic steps to save the global economy. And in the United States, the White House and the Federal Reserve are working together to make a difference.
With unprecedented fiscal and monetary policies rolling out almost every day, the case has never been more bullish for PFSI stock.
The Federal Reserve lowered its federal funds rate to zero, which will have a trickle-down effect on consumer rates. And with lower interest rates should come greater interest in home buying. Navellier writes that consumers that had previously been on the fence about buying a new home will likely choose to buy in this no-rate environment.
Since PennyMac Financial Services is the fourth-largest originator and sixth-largest loan servicer in the U.S., it will benefit from this trend. When it’s safe to go out and start touring properties again, home sales should spike. Expect to see a spike in PennyMac Financial as well.
Investor: Left Brain Investment Research
Year-to-Date Change: -35%
Roku (NASDAQ:ROKU) stock is down almost 40% for the year, but the team from Left Brain Investment Research is still rooting for it. They argue that although the company faces short-term volatility from the coronavirus, it has big long-term growth potential.
But beyond its long-term potential, the attraction of streaming will help it in the short term. It will “gain on the backs” of streaming competitors such as Netflix (NASDAQ:NFLX) and Amazon (NASDAQ:AMZN). Plus, Roku is the leader in the smart TV operating space. Left Brain Investment Research is confident that it will maintain that leadership.
Although it faces cash burn risks, streaming TV is increasingly more popular. More and more consumers will be switching to streaming, or simply spending more time on streaming platforms, while they are stuck inside. All of that TV watching will boost ROKU stock.
At this lower price, Left Brain Investment Research argues that its still set to win the Best Stocks contest in 2020 and is a steal right now.
Investor: John Jagerson and Wade Hansen
Year-to-Date Change: -33.2%
InvestorPlace analysts John Jagerson and Wade Hansen chose Disney (NYSE:DIS) at a time when the world seemed magical. The company’s Disney+ streaming service launched to cheering fans. Its Star Wars and Marvel franchises were booming. New movies were already sparking interest. And its theme parks were anticipating popular new attractions.
Unfortunately, the coronavirus detracts from most of these tailwinds. Theme parks are closed, which steals a lot of Disney’s revenue. Movie theaters are also closed, which is forcing Disney to delay the release of several of its popular new films, like Mulan. The company has even pushed back release dates for a handful of its beloved Marvel movies.
But Jagerson and Hansen are still rooting for Mickey and Minnie. They argue that DIS stock is still one of the leaders in the Best Stocks for 2020 contest because of its subscription model. Stay-at-home and shelter-in-place orders will boost subscription sales. More consumers will embrace its streaming offerings while they are stuck at home.
Although its final numbers for the first quarter aren’t in, Jagerson and Hansen are confident that investors will see a rewarding increase. That’s why they argue it’s an attractive buy right now. Plus, its theme parks will welcome people back as soon as the coast is clear.
Luckin Coffee (LK)
Investor: Larry Ramer
Year-to-Date Change: -31%
Boy, Luckin Coffee (NASDAQ:LK) is off to a rough start. First, the coronavirus hit China hard, leading to reduced sales and shuttered stores. But the virus hit its rival Starbucks (NASDAQ:SBUX), too. InvestorPlace’s Larry Ramer chose LK stock as a contrarian bet, not knowing the outbreak was around the corner. He hoped that easing U.S.-China tensions would bring a rebound of investor interest to Luckin Coffee.
So, the virus was bad enough. It completely dashed all hopes of an immediate trade-war rebound. But battered LK stock got hit again.
Just this week, a few days after the first quarter ended, investors were caught up in Luckin Coffee, after a regulatory filing showed that its COO and other key employees faked sales to the tune of $310 million. That sparked fear, as investors broadly lost confidence in what they thought was one of China’s biggest publicly traded growth stories. LK stock is now down 90% for for 2020.
What does this mean for LK stock in the rest of 2020? Some, like InvestorPlace’s Luke Lango think the selloff was overdone. To Lango, the company’s faked sales don’t detract completely from its growth. For example, investors can find solace in knowing it really is expanding its brick-and-mortar footprint.
However, it’s unclear. Will Luckin Coffee be headed for bankruptcy or a major rebound?
Investor: Readers’ Choice
Year-to-Date Change: -18%
Apple had an amazing year in 2019, leading the Dow Jones Industrial Average with its stunning performance. And InvestorPlace.com’s readers were confident AAPL stock would be one of the best in 2020, too.
It was certainly on track to outperform, until the coronavirus posed supply chain problems in China. That alone caused Apple to rescind its guidance early in February. Then, fear of contagion in the U.S. shut down its retail locations.
But Apple is fundamentally a strong company. Its iPhones and Air Pods are incredibly popular. Plus, its stepping up to support healthcare workers and the Centers for Disease Control and Prevention. That’s right. Apple is rolling a new app and website designed to give its users accurate guidance on the coronavirus. The app also records real-time health information, helping the CDC track the spread.
In conclusion, the second quarter is uncertain for Apple. But if the company releases its 5G-enabled iPhone models later in the year, it looks like a likely winner for the Best Stocks contest. Don’t give up on this name just yet.
Sarah Smith is a Web Editor for InvestorPlace.com. As of this writing, she did not hold any of the aforementioned securities.