The essence of this article is to show you how to ride the stock markets with the top 8 stocks that you should consider trading for 2020. The stocks chosen below cover the UK and US markets.
In selecting a good stock to buy for 2020 and beyond, a number of factors need to be considered.
- You need to pick a stock of a company that operates in a sector with high growth potential. That is why this article has featured stocks of some companies that are entering the lucrative and yet virgin medicinal cannabis market. However, not every investor may be sold on buying a “cannabis stock”: some consider this to be on the same scale as selling unlicensed cannabis itself. But the principle is the same: a stock which has a pioneer status in an industry with high growth potential can be considered to be a potentially good pick.
- Also consider stocks which have intrinsic value. A stock with strong fundamentals which has undergone significant price correction to make it undervalued could fit into your 2020 investment mould.
- Stocks of companies that are entering into fields of development of emerging technologies with high potential for widespread adoption and use-case application are good candidates. This is where you have companies that are deploying technologies based on the blockchain or on artificial intelligence (AI).
- Everyone needs to take care of their health at some point, and we also have millions of people who suffer from incurable ailments. For the latter group, a new set of therapies which target interventions at the level of the genes, provide hope. This is where you find some of the most promising biotechnology stocks that make up the list in this piece.
- Companies whose products will create significant disruptions in facets of human existence are also high growth potential stocks and should be considered when building your 2020 portfolio.
So what are the companies that satisfy one or more of the criteria set out above?
Editas Medicine Inc is one of the stocks you need to consider trading for 2020. One of the pioneer companies in the area of gene editing technology, the company’s stocks (EDIT) is listed on the Nasdaq exchange in the United States. Editas is pioneering the development of gene editing therapies to treat illnesses that have defied cures for generations, and some of their therapies have shown great promise in clinical trials.
Companies such as EDIT usually have to achieve certain milestones to command market attention. Some of these include securing research funding or having drugs in development being approved for clinical trials. Based on the results of the clinical trials, approval for clinical use and commercial production are usually the final steps. Editas Medicine Inc has had a number of successes along the way in terms of milestone achievement, leading to a great rise in the stock price of EDIT in 2018 where it hit an all-time high of $45.
EDIT has just entered into a strategic research partnership with Asklepios BioPharmaceutical (AskBio). The partnership is to allow EDIT and AskBio research into in vivo treatment of neurological diseases using genome editing therapies. AskBio is to brings its AAV and clinical-stage manufacturing technology to the project, which will be combined with the genome editing technologies of Editas Medicine Inc, to spearhead innovation of genome editing medicines that will be used to treat presently incurable neurological diseases. This is just an example of the kind of partnerships that EDIT is striking which will have future relevance in its financials.
Why is EDIT going to be a good investment in 2020 going forward?
A study of the chart for EDIT reveals that the company’s share price has retraced from its 2018 all-time highs and is presently sitting right on the 78.6% retracement price of $19.85. Therefore, prices have dropped to more affordable levels than they were a year ago. Potential for a bounce at this price is good, and this is one stock that has a lot of potential going into 2020.
CRSP is the stock symbol of CRISPR Therapeutics AG, yet another biotechnology company that is involved in the use of genome editing technology for treatment of genetic disorders. Just like EDIT, CRISPR Therapeutics (CRSP) has signed a number of strategic agreements, the latest of which is the exchange partnership agreement signed with KSQ Therapeutics, another biotechnology company. This agreement will enable CRSP and KSQ exchange each other’s intellectual property (IP) for editing certain novel gene targets in order get higher success rates in gene therapy development.
Presently, CRISPR Therapeutics AG has not declared profit, but this is because most of its money is going into its work. As at June 2019, CRSP only had about $428m in cash reserves, but the company was operating without any debt or financial liabilities. The company’s cash holdings have actually grown steadily since 2015, and the company ramped up its cash burn by 61% as it invested massively into its operations in 2018. However, its cash burn of 2018 totalled only 5.1% of its total market cap, which gives the company some space to borrow or dilute its present shareholdings by selling some of its outstanding shares in fund raising attempts if need be.
In terms of price action, CRSP still has potential for more downside in 2019. The price is off its 2018 highs of nearly $75 a share, and has undergone correction as have most of the companies in the genome editing space such as EDIT and VRTX. Unlike EDIT, there is still potential for price to drop to either $30 a share or as low as $22.85, if the support levels on the chart are anything to go by. These price levels would provide cheaper entrance points for traders who want to buy and hold this stock for 2020 and beyond.
Many people tend to squirm at the thought of investing in the so-called “cannabis stocks”. These are stocks of companies that are licensed to sell medical marijuana in regulated quantities. Many of these companies have been licensed in selected states of the USA as well as in Canada. However, it seems that there is soon going to be a breakthrough as far as penetration of the UK market is concerned.
Canopy Growth is listed on the New York Stock Exchange as CGC, and on the Toronto Stock Exchange as WEED. Canopy Growth’s Spectrum Therapeutics division has just been granted a license to store and distribute cannabis-based products in the UK by the Home Office and the UK Medicines and Healthcare Products Regulatory Agency (MHRA). The company would also be able to eliminate any reliance on 3rd party suppliers, as its license allows it to import medicinal cannabis-based products from its global networks directly.
The entrance of this company into the UK market is definitely going to be a boost in its business. Both CGC and WEED gained on their respective exchanges as soon as the announcement was made on Monday October 21, 2019. CGC recorded a 3% jump to take it above $20 a share. This is a company with some serious growth potential and you may need to pick up this stock for 2020 and beyond.
The company also plans to expand further into Europe, with Luxembourg being the next destination point. Already, Canopy Growth has a presence in 11 countries and its revenue base looks set to shoot up.
At present levels, the stock price of Canopy Growth makes it an undervalued stock. It has already undergone significant correction. Apart from the current price level which is already at a support zone, the only price area where it would be attractive to buy once more would be at the $10 mark. For a company whose stock was already close to $60, this could end up being a bargain for discerning investors.
Canopy growth has more than $2billion in cash reverses, nearly 7 times more than the cannabis stock company Aurora which has a presence in 25 countries. The UK market has only had exposure to legalized medicinal cannabis use for a year. There is a lot of growth potential and Canopy Growth is a good candidate for enlisting in a 2020 stock portfolio.
The market for identity management, which in many countries is expected to get more digitalized in the next three years, is where OKTA Inc (OKTA) operates. This market has high growth potential; it is expected to more than double in the 7 years that extend from 2018 to 2025, if the report by Zion Market Research is anything to go by.
For a market that is expected to grow to become a $23billion market in the next 6 years, OKTA has definitely positioned itself to capture a large chunk of this market. One of OKTA’s businesses is providing tools for user authentication and authorization, especially in globally connected workplaces where remote access by staff is the norm. The need to ensure that users who are not in the same physical location as the company’s operating centre are properly identified and authorized to have access to the organization’s tools is provided for by OKTA’s Identity Cloud Platform.
The company has also signed strategic partnerships which will help grow its business. OKTA’s enterprise security business is booming. Revenue growth for the 2019 fiscal year is projected to hit 56%. Sales are also projected to hit the $1bn mark in 3 years.
A look at the company’s stock price shows that the performance return from its April 2017 Initial Public Offer (IPO) and subsequent Nasdaq listing has hit 580%. After crossing the $140 mark in July 2019, the stock has undergone some correction and is now trading around $100. This is a stock that should be in your portfolio for 2020. However, the stock is actually quite pricey at the moment. It may be better to allow for more price correction before getting in.
Listed on the Nasdaq, NVIDIA has emerged as a leading company in the development of AI-based technologies, used in driverless cars and robotic solutions. They have also been very active as makers of the graphic cards used in gaming as well as in cryptocurrency mining.
With a market cap that tops $118 billion, NVIDIA is not a small player in the AI arena. NVIDIA underwent a major correction in 2018, which coincided with the plunge in the cryptocurrency market and the corresponding reduction in mining activities. However, the resurgence of the market has pumped a new lease of life into the company and its shares have started to pick up once more.
The company has adopted the GPU approach to development of AI technologies: this method is considered to be the industry standard at the moment. The company is also pushing its technology towards driver-less vehicles and unmanned drones. At $195, the price of NVDA is quite high. It may be better to allow for some price correction before entering the stock.
Vertex Pharma (VRTX) is perhaps the only biotech company involved in genome editing therapy development whose share price has stayed up consistently, even when its peers were suffering badly. Listed on the Nasdaq, VRTX is currently trading above $195 and is pushing new boundaries.
Vertex Pharmaceuticals is presently in the news for the reasons: it has just secured approval from the FDA for the release of its revolutionary drug known as Trikafta. Trikafta is the first ever triple combination drug therapy to be developed for the treatment of cystic fibrosis. The drug is expected to hit the pharmacies in a few weeks and will be available at a very chunky $311,000 price tag.
The drug is expected to hit sales of above $6billion by 2025, and will replace the single therapy drugs the company had earlier produced such as Kalydeco. Trikafta’s efficacy is said to trump that of the earlier treatments: market acceptance will mean big bucks for the company and healthy gains for investors in the company stock.
If the sales projections are anything to go by, the $190 that VRTX currently goes for on Nasdaq may be small change in a few years to come.
ASSOCIATED BRITISH FOODS (ABF)
How many times do you come across a business which has seen dividend growth in 21 years straight? If you have never had the opportunity to invest in one of such companies, Associated British Foods is one. Listed on the FTSE 100, this family-controlled business that was originally started by the Weston family has now become a leading UK conglomerate in the food and non-alcoholic beverage business.
Food business never goes out of fashion. There are now 8 billion of us on the planet who must eat every day. There is no getting around that. Chances are that you may have consumed a product from this company growing up, as they are the brains behind iconic brands such as Ovaltine and Kingsmill.
A period of slow growth caused a price correction in 2017, 2018 and much of 2019. However, it has just bounced very nicely off the 2013 previous low of $25.78. If you want to get this stock, this may be the best time for it.
DAIICHI SANKYO LIMITED
Daiichi Sankyo is the 2nd largest pharmaceutical company in Japan, and is a global firm with divisions across the world. This company is listed on the Tokyo Stock Exchange and also on the Over-the-Counter (OTC) market in the US. The company is a biotechnology company which has researched into and developed a beneficial treatment for breast cancer patients who have low levels of the HER2 protein. Scheduled for release in 2020, this treatment is expected to replace conventional chemotherapy and could net the company revenues of up to $12 billion in global sales, according to Bloomberg Intelligence analyst Caroline Stewart.
The drug is an Antibody Drug Conjugate known as DS-8501 and is the product of a partnership worth $6.9billion between British pharmaceutical company AstraZeneca and Daiichi Sankyo. The drug has shown promise in clinical trials and is said to selectively target and kill cancer cells without harming healthy ones: something that conventional chemotherapy treatments cannot do.
Currently trading at $62 per share (OTC equivalent), Daiichi Sankyo’s stock may not be this cheap for much longer. Due to the steep climb of its 2019 price movement, we may see some upside exhaustion and downward price move initially, which may make the stock cheaper to buy
This has been a presentation of the possible stocks that you should hold in your 2020 portfolio. These stocks were chosen primarily because of their potential to ride on the large growth potential of the industries they are found in. This list is by no means exhaustive and you should remember that past performance of a stock is not a guarantee of future performance.