2020 is nearly in the rearview mirror. Of course, this has been an incredible year for many stocks; both the pandemic and the race for a Covid-19 vaccine resulted in some companies having breakout success, while others got left in the dump. But now is the time to look forward and to avoid drama. That means choosing safe stocks to buy for the new year.
Some of the companies on this list did very well in 2020. However, they were already on a growth trajectory and the pandemic just accelerated that growth. Others are tried-and-true companies that you can count on to deliver performance. They don’t take risks, but have a proven track record of making investors happy.
So, if you’re wondering where to put your investment dollars as one of the most tumultuous years in memory wraps up, here are seven safe picks. Each has earned an “A” rating in Portfolio Grader, so you know they are primed for low-risk, long-term growth.
- Advanced Micro Devices, Inc (NASDAQ:AMD)
- Amazon.com, Inc (NASDAQ:AMZN)
- Chewy Inc (NYSE:CHWY)
- Docusign Inc (NASDAQ:DOCU)
- PayPal Holdings Inc (NASDAQ:PYPL)
- Shopify Inc (NYSE:SHOP)
- Sony Corp (NYSE:SNE)
Advanced Micro Devices (AMD)
As of today, AMD stock has posted impressive gains of 99.7% year-to-date (YTD). However, this hasn’t been a fluke, or a case of being at the right place at the right time with the pandemic. In fact, Advanced Micro Devices was the top performing stock on the S&P 500 in 2019, by a wide margin.
After being in the dumps for a decade, the chipmaker has been aggressively winning market share in PC processors and graphics cards. AMD has also been making inroads in the lucrative data center market with its EPYC processors. Plus, a blockbuster, $35 billion acquisition announced at the end of October is set to further accelerate AMD’s inroads in the enterprise and server markets.
But that’s not all — adding to the AMD stock story, some of the hottest devices for the holiday season are powered by custom AMD chips. Those include the new PlayStation 5 and Xbox Series X/S, which have been sold out continually this holiday season. With next generation video game consoles being snapped up as quickly as they can be made, look for Advanced Micro Devices to enjoy a boost from all of that silicon. The demand for the new consoles will continue for years.
Finally, based on the past five years, AMD stock is up about 3,000%. Given everything the company is working on and its momentum, investments don’t get much more secure — this name is one of the best safe stocks to buy for the new year.
Next on my list of safe stocks to buy for the new year is Amazon, an e-commerce Goliath with an incredibly profitable side-business as the world’s leading cloud computing provider. Few companies had the pandemic ticking all boxes the way that Amazon did. Online shopping was through the roof. Video streaming also got a big boost this year and Amazon Prime Video was able to meet demand. Meanwhile, other streaming video services and online activity spiked, which meant more demand for Amazon’s AWS cloud computing.
Put all those factors together and it’s understandable why AMZN stock is up about 77% so far in 2020. Plus, another big pop could come when the company reports fourth quarter earnings next February. That report will include what are already record-setting holiday sales.
Growth tends to come in stages for this stock, but if you’re in it for the long haul, you can count on AMZN stock to provide solid returns. Over the past five years, shares in Amazon have increased in value by over 388%.
Online pet supply retailer Chewy has seen its shares jump in value by 229% so far in 2020. For one, Chewy stock has benefited from pet owners avoiding brick-and-mortar stores for food, treats and toys over the course of the pandemic. The company also benefited from a year when people adopted dogs in record numbers. In its latest quarter, the pet supplier reported net sales up 45% year-over-year (YOY) with improving margins and narrowing losses. What’s more, investors have been so impressed by those numbers that they’ve pushed CHWY stock up over 20% since Dec. 8.
However, the thing about Chewy is that it doesn’t have a long history as a publicly traded company. So, how can I be sure that it’s worthy of a spot on this list of safe stocks to buy for the new year?
Well, there are two reasons. Firstly, once people create an account and shop online at a site, they tend to keep doing so. As such, pet owners may not buy everything at Chewy going forward, but the company has far more customers than it did at the start of the year. And the second factor? Pet owners have a reputation for continuing to spend on their pets, even if they have to cut down on other expenses. During the last recession, one segment that emerged relatively unscathed from cutbacks was spending on pets.
So, more pets than ever — plus the convenience of online shopping and a recession-proof market — makes CHWY stock well worth considering, regardless of its limited track record.
DocuSign is a perfect example of a company that had already been making headway with a service only to see the pandemic rapidly ramp up demand.
In DocuSign’s case, the service is e-signatures. This has been an emerging market that replaces handwritten signatures with legally binding electronic versions. So, naturally you can see why the market for e-signatures would explode during a pandemic, when many people are working from home and not in the office. That’s why DOCU stock is up nearly 211% so far in 2020.
But this is a case of the pandemic accelerating a trend that was set to take off anyway. Now that e-signatures are legal and in use, can you see anyone going back to the hassle of sending documents by courier? I don’t.
The market for e-signatures was projected to be worth $2.8 billion in 2020, with growth to $14.1 billion in 2026. DocuSign currently has an estimated 70% share of that market. As such, its dominance — plus the projected growth of the market — makes DOCU one of the best safe stocks to buy for the new year.
Next on my list of safe stocks to buy for the new year is PayPal, another company that offers electronic services and saw adoption skyrocket during the pandemic. In PayPal’s case, its services are online payments. PYPL stock has increased 113% since the start of the year.
Before the novel coronavirus hit, PayPal’s mainstream adoption was already underway, but the pandemic gave it a huge boost. With online shopping increasing and people reluctant to handle cash, those who had been holding off on using PayPal suddenly found it was a good idea to create an account. This can be seen in the company’s latest quarterly earnings. For example, total payment volume over its platform was up 38% YOY, while 15.2 million new user accounts were added. Additionally, Venmo users transferred or paid $44 billion over the quarter — a 61% increase (Page 10).
PayPal and Venmo users were already pushing PYPL stock into serious growth territory over the past five years, with the stock up 542%. So, the big increase in its user base this year is only going to keep the growth going.
Shopify is Canada’s most valuable company and one that benefitted from a pandemic double-whammy.
As I’ve already discussed — amid a lockdown, store closures and the need to socially distance — consumers turned to online shopping a lot this year. Naturally, SHOP stock benefited from that trend.
At the same time, the closure of stores forced independent retailers to scramble online in order to save their businesses. Shopify was the ideal solution for many of them. Unlike Amazon, the platform allows retailers to retain their identity. Plus, sites are easy to create using Shopify’s tools, its monthly rates are affordable and both its payment and shipping support are integrated. Finally, the platform offers tools to manage inventory between physical storefronts and online ones.
The results of that confluence of online shopping and small stores getting online has been spectacular. SHOP stock is up 196% so far this year. Additionally, during the Black Friday and Cyber Monday sales weekend, Shopify reported sales volume from its network of over $5.1 billion. That’s a 76% increase YOY.
When the pandemic fears subside, I expect that the online shopping trend will continue for many people due to convenience. I also expect that those new Shopify merchants will stay online and take advantage of their new sales reach. Lastly, I believe SHOP stock will continue delivering gains, making it a surefire pick for this list of safe stocks to buy for the new year.
Last on my list of safe stocks to buy for the new year is probably the most traditional company on here. It’s also certainly the oldest.
Like many companies, Sony has faced challenges in 2020. For example, the closure of cinemas worldwide hit its movie studio business hard this year. Plus, with the imminent arrival of its next-gen gaming console, sales of the PlayStation 4 slowed to a crawl. However, despite the hits, SNE stock is still up nearly 47% YTD. More importantly, Sony shares have posted growth of 306% over the past five years.
That’s not from selling TVs. Instead, Sony’s videogame business has been a major driver of the company’s growth. The previous generation PlayStation sold over 113 million units. In addition, Sony has become a prestige game development studio. Games like “God of War” — which has sold 12 million copies since 2018 — are bringing in more revenue and giving the company a competitive edge.
Now this November, Sony has released the PlayStation 5. Despite a starting price of $499 (or $399 for the Digital Edition), the PS5 sells out within minutes whenever supply shows up. So, look for Sony stock to stay on a growth trajectory and for the company’s new console to be the engine that drives that growth for years to come.
On the date of publication, Louis Navellier had a long position in AMD, AMZN, CHWY, DOCU, PYPL and SHOP. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.