3 Stocks To Bet On As The New Year Kicks Off
Investing.com | Jan 02, 2020 20:30
Across the board, 2019 was an exceptional year for U.S. stocks. Receding U.S.-China trade tensions, a dovish Federal Reserve and optimism that the economy would avoid slipping into recession propelled markets higher. The results: both the benchmark S&P 500 and the tech-heavy NASDAQ notched their largest annual percentage gains since 2013, while the Dow closed the year with its greatest yearly percentage increase since 2017.
While there are plenty of reasons to be cautious about the stock market in 2020, the following companies will likely continue providing shareholders with impressive returns in the year ahead.
Apple (NASDAQ:AAPL) shares soared in 2019 and are positioned to ascend further in 2020. The iPhone maker’s stock finished the year at an all-time peak of $293.65 on Tuesday, having surged 86% in 2019, well outpacing the benchmark S&P 500’s annual gain of roughly 29%. It was also the top-performing FAANG stock this year by a wide margin. The Cupertino, California-based tech giant has a market cap of $1.3 trillion, making it the most valuable company trading on the U.S. stock exchange.
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Apple’s 2019 rally was fueled by signs of better-than-expected demand for the flagship iPhone product. Additionally, Wall Street was encouraged by strong growth in Apple’s wearables segment—led by Apple Watch and AirPods—and subscription services, which includes Apple TV+ and Apple Arcade.
Looking ahead to 2020, the company is expected to get a boost from the introduction of new model iPhones that are compatible with high-speed 5G networks, which carriers are starting to roll out across the U.S. Some analysts believe this could be a key to unlocking as many as 200 million upgrades from consumers still using older iPhone models.
The iPhone maker is also poised to benefit from improving trade relations between the U.S. and China, as it generates 20% of its total sales from the Asian nation.
Taking all this into consideration, we expect Apple’s stock to continue its strong uptrend over the next 12 months.
- Microsoft (+54% in 2019)
- Amazon (+22% in 2019)
- Alphabet (+28% in 2019)
Shares of Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) look set for another strong year, as both companies should continue to benefit from rapid expansion in their cloud-computing offerings.
The robust revenue growth enjoyed by Google-parent Alphabet (NASDAQ:GOOG), (NASDAQ:GOOGL) in 2019 is likely to bode well for the search giant, which also has ambitions to move up the ladder in the booming cloud-computing space.
Paylocity (NASDAQ:PCTY), a leading provider of cloud-based payroll and human capital management (HCM) software solutions, saw its stock rally to astonishing levels in 2019. Shares from the firm, which began trading at $58.89 at the start of 2019, soared 100% on the year to settle at $120.82 on Tuesday, as strong demand for its cloud-based HCM software-as-a-service (SaaS) spurred gains. The Illinois-based human resource software provider has a market cap of around $6.5 billion.
Paylocity’s powerful rally looks set to continue into the new year, with investors encouraged by the growing adoption of the enterprise-cloud company’s human resource solutions among small and medium-sized organizations. Its services are used to process payroll, administer human resources and recruit talent.
In a sign of just how robust demand is for its SaaS offering, the software firm surprised on earnings for all four quarters of 2019, delivering revenue growth north of 20% in each period. Sales for the fiscal second quarter—tentatively scheduled for Feb. 6—are expected to come in between $129.5 million and $130.5 million, which would mark Y-o-Y revenue gains of 21.5%.
Despite enjoying triple-digit gains in 2019, we anticipate the positive trend in Paylocity’s stock to continue in 2020, considering the booming demand for the company’s HCM software services.
- Paycom (+116% in 2019)
- Trade Desk (+123% in 2019)
- Okta (+80% in 2019)
Similar to Paylocity, the outlook seems bright for fellow human resource software provider Paycom (NYSE:PAYC), which has enjoyed strong demand for its cloud-based human capital management software-as-a-service.
One of the big winners of 2019, Trade Desk (NASDAQ:TTD), looks poised for a strong 2020 thanks to the popularity of the self-service software platform, where customers can buy and manage data-driven digital advertising campaigns.
After seeing its stock surge in 2019, Okta (NASDAQ:OKTA), one of the fastest-growing cloud-based cybersecurity firms, should continue to perform well thanks to strong demand from large enterprises for its cloud-based identity and access management software.
Advanced Micro Devices (NASDAQ:AMD) was the S&P 500’s top performer in 2019, with shares rallying 146% as investors cheered the chip-maker’s ability to accrue market share at the expense of its bigger rivals. The stock closed at $45.86 on Tuesday—approaching the all-time high of $48.50 reached at the peak of the dot-com bubble in June 2000—after starting the year at $18.01. The Santa Clara, California-based company has a market cap of around $51.0 billion.
Despite seeing shares more than double last year, AMD remains one of the most promising names in the semiconductor sector going into 2020, as it continues to take market share away from Intel (NASDAQ:INTC) and NVIDIA (NASDAQ:NVDA) in the central processing units (CPU) and graphics processing units (GPU) space.
Highlighting the booming demand is for its chips, the company is expected to post its best quarterly revenue since 2005 when it next reports earnings on Jan. 29. Consensus calls for sales to increase 48% from the same period a year earlier to $2.1 billion.
As such, we continue to expect a significant upside from here and recommend accumulating shares of the CPU and GPU developer.
- NVIDIA (+76% in 2019)
- Lattice Semiconductor (+176% in 2019)
- KLA-Tencor (+99% in 2019)
NVIDIA (NASDAQ:NVDA) looks set to be amongst the big winners from the U.S.-China trade truce, as it is one of the tech companies with the largest percentage of their overall revenue coming from sales to China, at 56%.
Lattice Semiconductor (NASDAQ:LSCC) remains in prime position to continue enjoying growth in its 5G, artificial intelligence and server security businesses, making it a good bet going forward.
Despite last year’s staggering performance, the big rally in KLA-Tencor (NASDAQ:KLAC) stock could just be getting started due to its competitive position in several chip equipment are
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