It sounds and seems impossible, but we’re within sight of the end of 2019, and the beginning of 2020. The new year is only fifteen weeks away, which isn’t too soon to start thinking about restructuring stock portfolios.
The economy is still in reasonably good shape, which bodes well for stocks. It would be naive to believe the coming year, however, is going to look like a year that’s about to wind down. As market conditions change and the economic growth cycle matures, different areas thrive, while others struggle.
Geography can matter too.
With that as the backdrop, here’s a rundown of ten stocks to watch as 2019 comes to a close and 2020 gears up. Now may not be the ideal time to step into them, but now’s when they should be added to watchlists for due diligence purposes. Notice that not all of them are high-profile names, but they’re each positioned nicely for growth … more so than most of their peers.
It’s not a name that needs much in the way of an introduction. Alphabet is, of course, the parent to search engine giant Google, though the company is so much more than a search engine. Email, cloud-based platforms galore and the world’s most popular mobile device operating system all funnel people into the Google ecosystem.
Yes, that sheer size has become something of a liability. The world is distrustful of one company knowing so much about each and every person who connects to the web to use a Google-provided service. Even without a clear end-goal, state and federal regulators seem to be on a mission to declaw the company’s reach.
It just doesn’t matter. Even a better-contained Google will still serve billions of regular users, each of which ultimately represents revenue.
It’s a misnomer to say Amazon (AMZN) has put every single small brick-and-mortar retailer on its heels. Ulta Beauty, which sells skincare and hair care products as well as perfume and cosmetics via more than a thousand stores in the U.S. is doing just fine.
Granted, that wasn’t the case a week ago, when the stock was standing in the shadow of its own 30%+ selloff that materialized in a matter of days. Quarterly revenue as well as earnings fell short of expectations, and that news was made worse to contracted full-year guidance.
As Luke Lango noted at the time though, “any and all slowdowns in the U.S. personal care industry over the past two decades have been small and short-lived. During that stretch, personal care sales have risen at a fairly steady 4% compounded annual growth rate, and there have never been back-to-back years of declines.”
It’s another name that doesn’t need any description — add Walmart to your list of stocks to watch for the coming year.
There was a time not too long ago when the world’s biggest retailer didn’t necessarily deserve such acknowledgement. Its web presence was a joke (given its size), inventory management was poor and the organization almost demonstrated a kind of contempt for its customers.
The company has managed to make a near-180-degree turnaround from those dark days though. Last quarter’s same-store sales improved 2.8%, while e-commerce grew an incredible 37% year-over-year. Both extended long streaks of comparable quarterly growth.
The additional reason WMT stock ranks among the best stocks to watch for 2020: Even if we should slip into a recession, the nature of Walmart’s business keeps it pretty well shielded.
American Tower isn’t exactly a household name, although it’s likely someone that lives in your household who consistently relies on the company’s service. American Tower owns a network of 171,000 cell phone towers all over the world, leasing access to them to wireless telecom service providers like Verizon Communications (VZ) and T-Mobile (TMUS).
Clearly the need for this infrastructure is never going to go away. In fact, we’re entering a period where demand for mobile device connectivity towers could explode.
The advent of 5G connections is that driving force. With it, wireless internet speeds are rivaling more traditional coaxial and DSL (phone line broadband) speeds, opening the door to a whole new data-centric paradigm. American Tower believes the amount of data transmitted via mobile devices will quadruple by 2023, and is preparing now to help wireless service providers meet the need.
Copart is another name that may not be terribly familiar to most investors, but is one of the top stocks to watch as we move into what will likely turn out to be the latter stages of an economic growth cycle.
Copart, in simplest terms, is an automobile salvage yard. It sells wrecked vehicles — some more wrecked than others — to repair shops that need a lot of parts for a particular model of vehicle, or it sells these damaged vehicles to individuals looking for a fixer-upper project.
It’s a resilient business, with the company able to drive reasonably steady sales and earnings growth regardless of the auto market environment. Neither the 2008 lull nor the move into the 2015 frenzy that became known as “peak auto” appears to have made much of an impact on the company’s slow march forward.
In other words, CPRT stock is a nice all-weather play.
Paypal Holdings (PYPL) may have become the dominant name in the business first, but Square is coming on strong now. In June, Instinet analysts Dan Dolev and Conan Leon believe, Square’s so-called Cash App was downloaded more than PayPal’s comparable app.
It’s only anecdotal evidence that suggests Paypal’s best days are behind it while Square’s best days are ahead. Nevertheless, it’s a powerful, telling data nugget that points to a bigger trend.
Raw numbers tell the rest of the story. As the idea of a cashless society continues to gain acceptance, analysts are looking for Square to grow its top line by 43% this year, driving a 64% increase in per-share profits. Next year’s 34% revenue growth is forecasted to improve net income to the tune of 44%. That’s apt to happen regardless of the condition of the economy at the time.
Speaking of companies that shouldn’t be impacted by economic turbulence, add EXACT Sciences to your list of stocks to watch for 2020.
You may know the company better than you think you know it, if the name doesn’t ring a bell. EXACT Sciences is the developer of the at-home colorectal cancer screening test called Cologuard, which was well-touted through the use of television advertising after its 2014 approval. That’s not all the company does, but it’s certainly the current claim to fame.
That being said, the organization’s pipeline and diagnostic know-how is about to expand in a big way. In July, EXACT Sciences announced its intent to acquire Genomic Health (GHDX), which will dovetail nicely into the DNA-based diagnostics work the company was already doing.
As the old adage goes, there’s nothing certain in life but death and taxes. The statement isn’t entirely accurate though. In addition to death and taxes, as long as humans walk the face of the earth, they’ll be producing garbage and paying someone to haul it away for them.
Enter Waste Management … a long-established landfill and garbage truck operator that has also embraced the more modern concept of turning trash into treasure. That is to say, Waste Management has gotten serious about converting landfill gas into energy, annually collecting enough methane to produce 4.5 million megawatt-hours worth of electricity.
Perhaps more important, the company has the “steady-Eddie” results to make it a solid buy for an unclear future. Through the top line ebbs and flows, it always recovers bigger and better than ever.
There was a time in the increasingly distant past when Microsoft wasn’t fully prepared for the modern era of computing. Cloud-based everything is the new norm, and the advent of mobile/wireless connectivity has opened the door to a whole new kind of cybersecurity need. Indeed, the internet is now the centerpiece of how most businesses operate.
CEO Satya Nadella had his finger on the pulse of the future when he took the helm in 2014, ramping up the company’s presence in the all-important cloud market. Its Azure platform has become a wildly popular means for companies to manage their cloud, with revenue improving 64% last quarter, while business people and enterprise-level users love the fact that they can access their productivity programs like Word and Excel online, in any web browser.
The shift has been a win for Microsoft as well though. All of these new cloud-based offerings? They drive recurring, subscription-based revenue, allowing the company to know what the short-term and long-term top line will look like.
Church & Dwight
Finally, add Church & Dwight to your list of stocks to watch for 2020.
It’s in the same vein as Procter & Gamble (PG) and Unilever (UL), although not nearly as big as either of those more familiar players. That’s not necessarily a problem though. Indeed, it seems as if the massive size that once allowed the likes of P&G to be a powerhouse has since become something of a liability.
To that end, Church & Dwight’s brand names like Arm & Hammer, Oxi-Clean, Orajel, Nair and others are small enough to let them be the alternative to the most recognizable products in each major consumer goods category … big brand names consumers are increasingly shunning, even if just on principle.
The company’s got the proof that being smaller works. In only one quarter since 2006 has Church & Dwight failed to grow its top line on a year-over-year basis. The pros are calling for revenue growth of more than 5% this year and next year as well.
As of this writing, James Brumley held a long position in Alphabet.