The annual ritual of recapping the year’s best-performing stocks is upon us.
The easiest way to come up with a list would be to take the 10 stocks with the best total return year to date through Dec. 16. Based on a minimum market capitalization of $5 billion, the top performer is Novavax (NASDAQ:NVAX), one of the leading Covid-19 vaccine contenders.
Last December, I actually wrote about “10 of the Best-Performing Conglomerate Stocks of 2019.” The top performer under my narrow criteria was Compass Diversified Holdings (NYSE:CODI), which had a total return of 83% through early December 2019. Unfortunately, the same can’t be said for CODI in 2020. It’s got a total return YTD of -12.7%. Maybe next year.
InvestorPlace’s Vince Martin wrote a piece in early January that recommended 10 stocks to sell that performed admirably in 2019. The top performer on Vince’s list in 2019 was Roku (NASDAQ:ROKU). It had a 2019 YTD return of 341%. YTD in 2020, it’s up a more moderate 139%.
Needless to say, there are many ways to handicap the winners in 2020.
Here are my picks for the best-performing stocks of this year:
I’ll go with 10 best-performing stocks from 10 sectors excluding energy, all of which trade on either the New York or Nasdaq stock exchanges, are up more than 20% on the year, and have a market cap of $5 billion or more.
YTD Total Return (through Dec. 18): 88%
Market Cap: $14.5 billion
Sector: Basic Materials
The specialty chemical company is having quite a year, thanks to the lithium prospects. The demand is expected to improve greatly in the next 12-24 months as more electric vehicles are produced. As the largest producer of lithium in the world, Albemarle is ideally positioned.
However, if one looks at its Q3 2020 highlights, net sales fell 15% over last year to $747 million while adjusted earnings fell 28.8% to $1.09 a share in the quarter, it’s hard to get excited about those prospects. The numbers for the first nine months of the year aren’t any better.
If one takes Covid-19 out of the 2020 equation, its numbers would have been much stronger in the past year, hence why its share price almost doubled this year.
YTD Total Return (through Dec. 18): 1,044%
Market Cap: $66 billion
Sector: Consumer Cyclical
Speaking of electric vehicles, Chinese EV manufacturer Nio has had an unbelievable year in the markets in order to land a spot in this list of best-performing stocks.
Part of its success has to do with the Tesla (NASDAQ:TSLA) effect. Elon Musk has risen to become the second-wealthiest person on the planet in 2020 and it wouldn’t have happened if EVs weren’t so hot a commodity.
The second part of its success is that it makes some very sharp-looking vehicles.
It’s currently got three EVs on the road: the ES6 and ES8, which are five-seater and seven-seater SUVs, along with the recently launched EC6 coupe SUV; a fourth vehicle, the EE7 sedan, will be launched early in the new year. Later in the year, there could be a fifth vehicle.
As I said in my most recent article, Nio is doing everything right now, including a top-notch job allocating capital.
I doubt it will gain more than 900% in 2021, but as long as it keeps reporting growth, its share price will move higher.
Futu Holdings (FUTU)
YTD Total Return (through Dec. 18): 309.8%
Market Cap: $5.6 billion
Sector: Financial Services
One of my favorite Chinese financials is Noah Holdings (NYSE:NOAH). It provides asset management to high net worth people in China. So, when I saw what type of performance Futu Holdings delivered in 2020, having never heard of it, I was curious about its business.
It turns out Futu is an online broker that operates digitally through its Futu NiuNiu platform. It went public on Nasdaq in March 2019 at $12 a share; As one of the best-performing stocks this year, it’s up more than 246% since its IPO.
In mid-November, Futu announced its third-quarter earnings. Across the board, the numbers were exceptional. Revenues grew by 272% to $122.1 million. Its adjusted net income rose 1,600% to $52.6 million on the bottom line, while the total number of paying clients increased 137% to 418,089.
For the first nine months of the year through the end of September, it had total revenues of $274.1 million, a gross margin of 78.6%, and net income of $102.3 million for a net margin of 37.3%.
If you don’t fear investing in Chinese stocks, FUTU is one to keep an eye on in 2021.
eXp World Holdings (EXPI)
YTD Total Return (through Dec. 18): 571.7%
Market Cap: $5 billion
Sector: Real Estate
This company is proof positive that there are still plenty of U.S.-listed stocks to choose from despite the number available dropped by more than half between 1997 and 2017.
I had never heard of eXp World Holdings until I saw its YTD performance in 2020. It’s fair to say that the pandemic has been good to the cloud-based real estate brokerage.
The company started eXp Realty in October 2009 with real estate agents in two states. By the end of fiscal 2019, it had more than 25,400 agents worldwide, including the U.S., Canada, UK, and Australia.
Originally started as a traditional real estate brokerage, it changed to a virtual business model after acquiring VirBELA LLC for $10.6 million in November 2018. VirBELA’s Frame software platform provides its eXp Realty’s real estate agents with a 3D immersive meeting space enabling agents to operate entirely remotely.
In the past 12 months ended Sept. 30, 2020, its revenues have increased by 71% year-over-year to $1.46 billion, while its net income’s grown 255% YOY to $24.2 million.
I’ll have to learn more about it, but from a first glance, it seems like eXp Realty’s business model has legs.
GSX Techedu (GSX)
YTD Total Return (through Dec. 18): 174.5%
Market Cap: $14.3 billion
Sector: Consumer Defensive
GSX Techedu is one of the many Chinese education companies that provide online after-school tutoring to K-12 students. The company went public in June 2019, selling 19.8 million shares at $10.50. It’s up 462% from its $10.50 IPO share price.
Although GSX stock has more than doubled in 2020, it could have performed even better had its Q3 earnings not been such a disappointment due to a significant increase in its marketing expenses during the quarter.
As a result, it lost 57 cents, 26 cents more than the analyst estimate. On the plus side, revenues were $289.5 million, slightly higher than the consensus estimate.
In the fourth quarter, it expects sales to increase between 122% and 126% over the same period as last year. In Q4 2019 it had revenues of 935 million yuan ($143.1 million). At the midpoint, the outlook would be for $320.3 million. Add that to $723.7 million in the first nine months of 2020, and you get full-year sales of $1.04 billion.
Based on its market cap, it’s trading at approximately 14 times sales.
YTD Total Return (through Dec. 18): 3,210%
Market Cap: $7.7 billion
It’s better late than never. That’s definitely true for one of the best-performing stocks of 2020, a Maryland-based vaccine developer.
Pfizer’s (NYSE:PFE) Covid-19 vaccine has already been given to people in several countries, and as I write this, Moderna’s (NASDAQ:MRNA) is about to undergo the Food & Drug Administration’s expert panel review to get emergency use authorization to become America’s second vaccine in play.
The smaller company continues to rack up orders for its vaccine candidate despite the fact it still has to complete Phase 3 clinical trials in the U.S., UK, and elsewhere. It’s no slam dunk.
However, the fact that the European Union has entered into negotiations for Novavax to supply up to 200 million doses — 100 million doses plus an option for an additional 100 million — ought to be good news for its shareholders.
And the best part is, it has a second billion-dollar vaccine, Nanoflu, that’s awaiting FDA approval.
Despite the massive gains so far in 2020, they could be just the tip of the iceberg.
New Fortress Energy (NFE)
YTD Total Return (through Dec. 18): 233%
Market Cap: $8.1 billion
In case you’re unfamiliar with New Fortress Energy, it operates a vertically-integrated natural gas company that develops and builds cleaner energy facilities. From the natural gas procurement and liquefaction, all the way to the development of natural gas-fired power plants in developing countries, it’s working to power more of the world.
The company’s current infrastructure includes liquified natural gas (LNG) storage facilities and regasification facilities in Jamaica. It’s currently developing additional terminals and power plants in Puerto Rico, Mexico, Ireland, Nicaragua, and Angola.
At the moment, it is working with nine customers in four regions of the world to deliver heat and power to its end-user customers. These customers will result in the supply of more than 50,000 gallons per day of LNG. It is also working on finding the cheapest zero-emissions hydrogen in the world.
New Fortress went public in January 2019, selling 20 million shares of its stock at $14. It’s up 241% since its IPO. Founder and CEO Wes Edens holds 87.6% of the stock. He is also co-CEO of Fortress Investment Group, owned by Softbank Group (OTCMKTS:SFTBY).
Fiverr International (FVRR)
YTD Total Return (through Dec. 18): 770%
Market Cap: $7.1 billion
Sector: Communication Services
I had never heard of Fiverr until my InvestorPlace colleague, Laura Hoy, wrote an article about the company and its digital marketplace platform that allows freelance services providers to connect with customers interested in securing their services.
As someone who makes a living on a freelance basis, I can appreciate the importance of its platform.
In August, InvestorPlace’s Josh Enomoto recommended FVRR among a group of 10 stocks to buy for your 10-year-old.
“Over time, I see Fiverr working out its kinks — such as exposure to too many low-quality jobs. In the meantime, I think a long-term speculative bet on FVRR stock is warranted given where our society is headed,” Josh wrote on Aug. 7.
Great call by my colleague. Its share price has virtually doubled in the four months since.
Plug Power (PLUG)
YTD Total Return (through Dec. 18): 867%
Market Cap: $11.8 billion
Plug Power’s claim to fame is that it provides fuel cell solutions to companies such as Walmart (NYSE:WMT) who use its products to power their warehouse forklifts.
On Dec. 16, Walmart stated that it currently has 9,500 vehicles in its 37 distribution centers powered by Plug Power’s GenDrive fuel cells, with more on the way.
That’s excellent news if you own its stock.
I recently wrote about Plug Power’s relationship with both Walmart and Amazon (NASDAQ:AMZN). The two companies are buying millions of dollars worth of its product and, in the process, could be getting a potentially large ownership stake in the offing.
“As I pointed out previously, both Walmart (NYSE:WMT) and Amazon (NASDAQ:AMZN) hold warrants in the company tied to the amount of revenue generated by each of them. Assuming the exercise of all warrants, together, they would own 22% of the company,” I wrote on Dec. 16.
While I like Plug Power in the long run, I think its share price has gotten ahead of itself. Congratulations if you bought at the beginning of the year. You’ve done very well with one of the best-performing stocks of 2020.
Enphase Energy (ENPH)
YTD Total Return (through Dec. 18): 525.7%
Market Cap: $20.6 billion
I don’t think anyone should be surprised that many of the names on this list of best-performing stocks don’t make money. It speaks to the nature of the beast right now. With interest rates at historic lows, money is chasing growth. Sometimes at ridiculous valuations.
Enphase happens to make products for the solar industry, including microinverters that convert direct current power from a single solar module into alternating current, which is the electricity you need for your home. The company has shipped more than 30 million microinverters representing approximately nine gigawatts of power.
Operating on four different continents, Enphase actually makes money.
For the first nine months of 2020, it had revenues of $509.6 million, up from $414.3 million a year earlier. It had operating profits of $107.3 million in Q1-Q3 2020, 84% higher than a year earlier.
As the demand for solar energy continues to heat up, I could see Enphase’s market cap doubling in no time.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.