These days, investing in a crystal ball feels like a more rational decision than it should. All jokes aside, it has been a tough time for the economy, including some of our InvestorPlace.com Best Stocks for 2020 contest picks. But despite the continuing threats of the novel coronavirus and the upcoming election, a few clear winners are emerging.
Although the world looked very different back when our contest participants first made their picks, they were onto some influential themes. Biotech, e-commerce and 5G continue to dominate. Now, within the context of the pandemic, these themes are creating even more opportunity.
Where will these themes take investors in the fourth quarter and beyond? And what new themes will emerge? It is hard to answer those questions. However, it is clear that in the face of despair, there are trends so strong that they will keep powering along. As you will see with our current contest frontrunner, one of those trends is e-commerce.
As we dive into the fourth quarter, let’s reflect on our contest picks. The 10 participants include:
- Luckin Coffee (OTCMKTS:LKNCY)
- Energy Transfer (NYSE:ET)
- Hercules Capital (NYSE:HTGC)
- Disney (NYSE:DIS)
- Aimmune Therapeutics (NASDAQ:AIMT)
- Freeport-McMoRan (NYSE:FCX)
- Roku (NASDAQ:ROKU)
- Apple (NASDAQ:AAPL)
- PennyMac Financial Services (NYSE:PFSI)
- Wayfair (NYSE:W)
Let’s look at where each of InvestorPlace.com’s best stocks for 2020 stand today, ranked from worst to best year-to-date performance through the end of September.
Best Stocks for 2020: Luckin Coffee (LKNCY)
Investor: Larry Ramer
Year-to-Date Change: -96%
For Luckin Coffee, the only direction might really be up. At least, that’s what InvestorPlace contributor Larry Ramer thinks.
There really is no denying that the Chinese coffee chain — which in many ways is a rival to Starbucks (NASDAQ:SBUX) — has had an awful year. The company had to navigate a major scandal that saw its stock delisted from the Nasdaq Exchange. Importantly, many investors in the United States have understandably lost trust in a company that faked $310 million in sales. Add in the novel coronavirus and resulting lockdowns, and you have a recipe for disaster.
However, Ramer sees some serious upside.
Luckin Coffee was essentially forced to go back to the drawing board. It has a new management team, including the reappointment of the ousted Sean Shao. After Shao led the initial probe into the accounting scandal, he found himself booted from the board.
Now that Shao has returned, with his lengthy list of accomplishments in tow, many investors might see his return as confirmation of a new day. Plus, a new auditor and chief executive will be able to make new decisions and help Luckin forge ahead.
Perhaps the biggest reason why Ramer remains bullish on Ramer is its Chinese headquarters. Even after messing up on an international stage, Luckin still seems to have the support of the Chinese government. Sure, it had to pay a small fine. But largely, business as usual continues, meaning that it is in the best interest of the Chinese government to help Luckin thrive. Why? The narrative of fostering a rival Starbucks is just too good to pass by.
Luckin Coffee may not be one of the best stocks in 2020, but Ramer believes its time is yet to come. Read more about LKNCY here.
Energy Transfer (ET)
Investor: Charles Sizemore
Year-to-Date Change: -57%
Just like with Luckin, there’s no denying that Charles Sizemore is playing the contrarian.
Energy Transfer has had a rough year, and its future is far from certain. At the start of 2020, Sizemore was betting that the leading names in the oil and gas space would be able to stage a comeback. Unfortunately, no one predicted the pandemic, or its massive impacts on demand for crude.
When the whole world came to a halt, manufacturing activity, demand and crude oil prices all came way down. Even Energy Transfer, a midstream infrastructure provider, is feeling the pain. And there are two more headwinds on the horizon.
First is the rise of environmental, social and governance (ESG) investing. As the environment becomes more of a priority, many institutional and individual investors will move away from the oil space.
Second is the upcoming election. In just a few weeks, former Vice President Joe Biden could wind up in the White House. What would that mean for Energy Transfer?
This is where Sizemore makes an interesting case.
Earlier this year, the company received a court order to shut down its controversial Dakota Access pipeline. Although it has temporarily appealed the order, a Democratic victory wouldn’t leave ET with much federal support. But that may not be a bad thing.
If, instead of focusing on growth through rapid pipeline expansion, Energy Transfer could clean up and steady things out, it would be a great buy. Heck, it has a massive and reliable distribution to lure you in too.
Sizemore has one call. Buy the dip in Energy Transfer. Read more about ET here.
Best Stocks for 2020: Hercules Capital (HTGC)
Investor: Neil George
Year-to-Date Change: -16%
The case for Hercules Capital hasn’t really changed. In fact, InvestorPlace analyst Neil George wrote at the end of the third quarter that HTGC stock was an investment in “alchemy.” That’s high praise for any company.
One of the biggest draws is its corporate structure — HTGC is a business development company. As George has outlined throughout the year, this structure allows Hercules some of the benefits of a traditional financial institution. However, it also spares HTGC the majority of regulations and oversight. Essentially, Hercules Capital represents the best of both worlds.
Things remain steady. Hercules continues to drive forward its portfolio of companies, investing in them and guiding them along. Importantly, amid the pandemic, many of its businesses are quite relevant. For instance, it has supported work-from-home stars Pinterest (NYSE:PINS) and Box (NYSE:BOX). Hercules also counts at-home gaming firm FanDuel among its portfolio darlings.
Because not much has changed over the last three quarters, you should see Hercules Capital as a long-term winner. The company will continue to reward you with ample and rising dividends, and it has a solid balance sheet backing it up. As more and more startups pop up in Silicon Valley representing the latest and greatest in tech, Hercules will be right there to steer them along.
That does sound rather magical. Read more about HTGC here.
Investors: John Jagerson and Wade Hansen
Year-to-Date Change: -14%
According to InvestorPlace analysts John Jagerson and Wade Hansen, Disney faces a “magical” blend of risks and rewards. Unfortunately, that blend has DIS stock in the red year to date.
The novel coronavirus has not been kind to Disney or its entertainment peers. As the duo reflected on last quarter, Disney had to shut down its theme parks, dock its cruises and halt major movie releases.
The third quarter introduced a few other headwinds. Although the release of Mulan straight to streaming services was a profitable move, it called into question company relationships with the Chinese government. Disney is also facing blowback for its treatment of minority actors like John Boyega — and its recent decision to lay off 28,000 employees.
But there is still some magic shining for Jagerson and Hansen. They said:
“In fact, the situation for DIS is serious enough that we might have considered suggesting that investors take their money off the table or reallocate it to some other position if it weren’t for the technicals. These indicators are painting a much more optimistic picture.”
As we approach the end of the year, analysts believe that technicals on DIS stock paint an optimistic picture. Beyond that, they believe the company should be able to continue growing its streaming revenue through direct-to-streaming releases and stabilize its larger businesses like theme parks and cruises.
Disney may not have been one of the best stocks in 2020, but it sure does have staying power. Read more about DIS here.
Best Stocks for 2020: Aimmune Therapeutics (AIMT)
Investor: Matt McCall
Year-to-Date Change: 3%
It is time for investors to say goodbye to Aimmune Therapeutics — or at least AIMT stock.
That is because, as InvestorPlace analyst Matt McCall writes, AIMT stock will no longer be trading as its own entity. In a major move, Nestle (OTCMKTS:NSRGY) acquired the rest of the company in an all-stock deal valued at $2.6 billion. For investors, this is a huge sign that Aimmune Therapeutics is onto something critical in the healthcare world.
At the start of the year, Aimmune Therapeutics looked hot because of its potential to cure peanut allergies. Then, it actually received U.S. Food and Drug Administration approval for Palforzia, its groundbreaking treatment. In a typical year, that should have shoot AIMT stock to the moon. However, the novel coronavirus delayed drug rollouts and kept patients from starting on intensive, in-person treatments.
Now though, Aimmune Therapeutics is becoming part of the Nestle family where its Palforzia can continue to make a difference in the lives of those with peanut allergies. Importantly, it is the first such treatment to receive approval from the FDA. Talk about a market opportunity!
Importantly, McCall also thinks that the “Decade of Biotech” is just ramping up.
As you look to pick the best stocks for 2021, keep his advice in mind. We are just seeing what is possible in healthcare — whether that be novel gene therapies, treatments for food allergies or remote healthcare.
Investor: Eric Fry
Year-to-Date Change: 20%
Freeport-McMoRan may be the perfect picks-and-shovels play to ride the boom in electric vehicles that is underway right now.
When InvestorPlace analyst Eric Fry first chose Freeport to be his contest pick, FCX shares were climbing up from selloff lows. He believed rebounding demand would help the company, as would megatrends like electric cars. And boy, was that a well-timed prediction.
In the recent quarter, investors developed a new mania for electric vehicles. The third quarter brought seemingly dozens of new publicly traded companies to the space, and talk of new battery technology drove the industry even higher. Importantly, Freeport-McMoRan is a big figure in the copper world, and copper is one of the key battery metals.
That means as more and more consumers start opting for Tesla (NASDAQ:TSLA) vehicles, demand for products from Freeport will continue to soar. Fry loves this trend. In fact, he believes FCX stock will hit $60 in the next few years.
Get ready to rev your engines and keep a close eye on this red-hot copper miner. Read more about FCX here.
Best Stocks for 2020: Roku (ROKU)
Investor: Left Brain Investment Research
Year-to-Date Change: 41%
The stars are really aligning for connected TV firm Roku.
Unlike many other names on this list, the pandemic helped Roku. More and more consumers are staying at home with nothing better to do than watch TV. Especially during the first peak of the coronavirus, consumers were turning to new streaming services and devices in record numbers. As one of the market leaders in connected TV platforms, Roku seriously benefitted.
Looking to the future, Left Brain Investment Research thinks this trend will keep accelerating. Consumers will continue the cord-cutting movement, opting instead for more flexible and personal streaming options. When they do adopt solutions from the likes of Disney and Netflix (NASDAQ:NFLX), Roku TVs will be the best bet for an all-in-one streaming environment.
The upcoming holiday season also presents a nice catalyst. Businesses are just starting to turn en masse to the world of connected TV advertising. Right now, spending on such ads represents roughly 1% of the broader market for TV advertising. That presents major growth potential, and once again, Roku has the leadership position to benefit.
Thanks to new ad inventory programs like OneView and its shopper data program with Kroger (NYSE:KR), Roku is proving that connected TV is a market advertisers want to be in. With brick-and-mortar retail largely still struggling, it is important to find new ways to reach consumers for this holiday season. That is why the team at Left Brain sees another massive growth wave coming to Roku through the end of the fourth quarter.
The past few months have proven a few things. Without a doubt, the relevance of streaming and connected TV is one of them. That means ROKU stock should continue to be one of the best stocks to buy for years to come.
Investor: Readers’ Choice
Year-to-Date Change: 58%
InvestorPlace.com readers are a savvy group. They picked Apple at the start of the year confident that its mix of services, software and hardware would continue to thrive. They were even hopeful about new iPhones — confident that models this year would finally be 5G-enabled. This was the quarter that proved our readers right.
Apple wasn’t immune to broader market woes in September, nor was it spared from the tech sector selloff that it took it down along with peers Facebook (NASDAQ:FB) and Amazon (NASDAQ:AMZN). However, Apple remains a favorite on Wall Street thanks to its reliable business model and its potential for future innovation. The company demonstrated just that in the third quarter.
First, Apple made waves in the services world. At a September shareholder event, the company unveiled a three-tier system of subscription bundles designed to make its services ecosystem a little harder to escape. Now, consumers can bundle up their subscriptions to thinks like Apple Music, Apple News, Apple TV+ and Apple Arcade. This gives Apple a leg up against competitors in any individual service, such as Spotify (NYSE:SPOT) with music streaming. Importantly, this announcement also came alongside the rollout of a fitness subscription, designed to take on the likes of Peloton (NASDAQ:PTON) in the at-home fitness world.
Then the company really delivered at the start of October, unveiling its four iPhone 12 models. Just as our readers predicted, these models all came with 5G thanks to a network partnership with Verizon (NYSE:VZ). A handful of other perks, like a low-cost iPhone 12 Mini and a new smart home speaker, made the hardware event a roaring success.
Looking to the future, Apple is just starting to ride the 5G wave. As it grows its dominance in the 5G smartphone world, it will continue to be one of the best stocks. Read more about AAPL here.
Best Stocks for 2020: PennyMac Financial Services (PFSI)
Investor: Louis Navellier
Year-to-Date Change: 71%
InvestorPlace analyst Louis Navellier may not have picked a household name this year, but he sure picked a strong contender. At the end of the third quarter, PennyMac Financial Services was up more than 70% for the year to date.
There are two big reasons behind this success.
The first is the current housing market. At the start of the pandemic, it became clear that the United States needed a series of definitive measures. The Federal Reserve swooped in, slashing rates to near-zero levels. Importantly, there is no indication that those rates will change any time soon.
More and more Americans continue to move, spurred on by months staying at home. With interest rates on their side, PennyMac should be seeing a lot of action. Remember, it is one of the top mortgage lenders and servicers within the U.S.
The other big catalyst comes from the fact that PFSI is a relatively election-proof stock. Navellier thinks that the housing market, supported by the above catalysts, will largely hold up. Plus, if Republicans win, he thinks we will still see a second stimulus package. If Democrats win, that package will be even larger. These huge cash infusions will keep the country afloat and keep businesses operating.
That is good news for PennyMac Financial Services. Read more about PFSI here.
Investor: Jason Moser
Year-to-Date Change: 222%
Have you caved and bought a new piece of furniture online yet? If so, you are one of many reasons behind the massive success The Motley Fool’s Jason Moser has seen so far in the Best Stocks for 2020 contest.
That shouldn’t be entirely surprising. Thanks to the novel coronavirus, everything e-commerce is working overtime. We have seen consumers embrace buying insurance policies, cars and even houses fully online. Why wouldn’t they buy furniture and home decorations?
But there is likely another level to this success. As more Americans find themselves working and learning from home, they face pressure to improve their living situations. New furniture can make any work-from-home setup a bit more appealing.
Wayfair has seriously delivered on this catalyst. As Moser wrote at the end of the third quarter, the company posted amazing earnings. It had top-line growth of 84% over the prior year. It recorded 26 million active customers, up more than 45% from the previous year. And it this is likely not the end of the story for Wayfair.
In fact, Moser believes that Wayfair will keep the ball rolling. Already up more than 200% year to date, it is a major winner in our Best Stocks for 2020 contest. Read more about W here.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.