2019 was an interesting year in the financial market. The market was dominated by themes on trade and general weakness in the economy. At the same time, stocks had the best year since 2012, with most indices rising by more than 20%. There were two reasons for this. First, corporate earnings in the United States continued to rise. Second, the Federal Reserve made three rate cuts in the year. This was an important thing because the Fed hiked rates four times in the previous year. The biggest question is whether stocks will continue rising this year. In this article, we will look at 10 American stocks to buy in 2020.
- 1 Tesla (TSLA) | Automotive
- 2 Chipotle Mexican Grill (CMG) | Restaurants
- 3 Zoom Video (ZM) | Technology
- 4 Uber (UBER) | Technology
- 5 Boeing (BA) | Industrial
- 6 Slack (WORK) | Technology
- 7 Microsoft (MSFT) | Technology
- 8 Target (TGT) | Retailer
- 9 Workday (WDAY) | Technology
- 10 Shopify (SHOP) | Technology
- 11 Summary of US Stocks to Buy in 2020
Tesla (TSLA) | Automotive
Tesla has been on a roll of late. The automotive and energy company run by Elon Musk has seen its stock soar by almost 50% in the past year. This is because the company has continued to ramp up production of Model 3. It has also successfully launched its factory in Shanghai. This year, the company will likely continue the upward momentum. There will be several catalysts. First, the company could continue its global domination battle by opening a factory in Germany. Second, it could continue to make profit. Third, it could spin-off its energy business. Finally, it will likely release the semi and the roadster. There is a possibility that the stock could soar to more than $600 this year. This makes it the best American stocks to buy in 2020.
Chipotle Mexican Grill (CMG) | Restaurants
Chipotle Mexican Grill was one of the best-performing stocks of 2019. In the past year, the stock soared by more than 70%. This has made big investors like Bill Ackman billions of dollars. There were three main growth drivers for the company in the past year. First, the company has moved on past its e-coli previous crisis. Second, it is attracting more foot traffic in its stores. Finally, the company has continued to ramp online delivery options. This year, the company will continue this journey. Unless of a major crisis, there is a likelihood that Chipotle will continue being one of the best American stocks to buy in 2020.
Zoom Video (ZM) | TechnologyZoom Video is a company that is changing the world of corporate video communications. The company has grown very fast in an industry that is dominated by the likes of Microsoft and LogMeIn. It held its IPO in 2019 and the stock soared. It then lost its momentum and declined as shown above. In 2020, the company could turn the page and become one of the best-performing. This is because more companies have started to use its services and its revenue growth will continue being above 50%. The company will likely retest its all-time high of $102. This means that Zoom is one of the best American stocks to buy in 2020.
Uber (UBER) | Technology
Before it became a public company, Uber was the biggest unicorn. It was valued at more than $120 billion. However, the company has struggled since its IPO in 2019. The stock has dropped, and the company is now valued at $57 billion. The company has continued to face a number of negative headlines.
In December, it released its incidents report that showed almost 6k sexual incidents. The company also faced a major problem in London and California. In London, it lost a licence to operate while in California, the legislature passed AB1 law. This law means that the company may be forced to recognize drivers as employees. It also reported a big loss.
There is a lot of negative sentiment about Uber. However, it is one of the stocks to buy in 2020 because the company is undervalued based on the scale of its business. The company could also do some shareholder-friendly things like spinning its Uber Eats business. As a result, the stock could trade above $50.
Boeing (BA) | Industrial
Boeing has been in trouble. In 2019, the company was one of the worst performers in the Dow Jones Industrial Average. Trouble started when an Ethiopian jet crashed in March. Since then, the company’s revenue has missed estimates regularly. Revenue growth was affected and in December, the company decided to halt all production of the 737 max jet altogether. The company has also faced a lot of negative headlines.
Amidst all this, why do we believe that Boeing is one of the stocks to buy in 2020? Several reasons. First, Boeing is the biggest industrial company in the United States. It is present in most of all sensitive states. The company could use its political engineering system to come back online soon. Second, we expect that the company will receive a recertification of 737-max this year. Third, the company could receive a boost in its military division. All this makes Boeing a contrarian buy in 2020.
Slack (WORK) | Technology
Slack has been a troubled company after its IPO in 2019. The company has fundamentally done everything right. For example, it has continued to grow its number of users. It has more than 13 million daily active users. The biggest challenge for the loss-making company is Microsoft. The company has been ramping up its free Microsoft Teams service that has now more than 20 million users. This number has been criticized though.
Slack’s stock has declined from an all-time high of $38 to a low of $20. It has nonetheless made some recovery, and as of this writing, the stock is trading at $23. Slack is one of the stocks to buy in 2020 because of the quality of its product and the loyalty of the number of users. Frankly, I have never met a person who uses Microsoft Teams. As such, there is a likelihood that Slack will retest its all-time high of $38. This makes it one of the best American stocks to buy in 2020.
Microsoft (MSFT) | Technology
Microsoft has become the biggest company in the world based on market capitalization. This is a surprising turn of events for a company that was left for dead a few years ago. Cloud has become the most important factor in the company’s growth story. As a good evidence for this, the company won a major defence department contract in 2019. This contract will see it continue to get more government contracts.
In 2020, Microsoft is a stock to watch mostly because of cloud. The company has created a complete suite of cloud computing products. The most important investment has been on hybrid cloud, which is one of the reasons why it has continued to grow. This will see it take some of the market share from Amazon, which was the pioneer in cloud computing.
Microsoft will have a major risk in 2020. Amazon has sued the Department of Defense and its decision to award Microsoft a cloud computing contract.
Target (TGT) | Retailer
The retail industry has been going through a mixed period. In the past few years, the growth of e-commerce has made more people do their purchases online. This has reduced the amount of traffic in malls and shopping centers. In 2019, investors realized that some retailers will continue to do well. One of these retailers is Target, which saw its stock price rise by more than 80% in 2019. The company has achieved this by creating an intersection between physical retail and e-commerce. The momentum is still in Target’s side and the stock will likely continue soaring.
Workday (WDAY) | Technology
Workday had a mixed year in 2019. The stock declined sharply when the company reported two consecutive weak quarters. This saw the stock drop from a high of $224 to a low of $152. In the past few weeks, Workday has gained momentum as investors place their bet on the future of the company. This has seen the stock soar to $180. This price is slightly below the 50% Fibonacci Retracement level. Momentum is on its side and the company may continue to rise in 2020. This is mostly because the company as a whole remains being healthy. As such, the company is one of the best American stocks to buy in 2020.
Shopify (SHOP) | Technology
Shopify has been one of the best performers in the past few years. The stock has risen by more than 1,400% since its IPO a few years ago. In 2019, cracks started to emerge in its story as investors started to worry about its growth. The stock has made some recovery as shown above. This year, the company will continue to grow based on momentum and the growth the company has had.
Summary of US Stocks to Buy in 2020
Some in the market are expecting a rough 2020. Indeed, Ray Dalio, who runs the biggest hedge fund in the world believes that stocks will decline sharply in the first quarter. We take the contrary opinion. Sure, there will be some risks but the general picture in the US is that stocks will continue to do well. This outperformance will mostly be in the technology sector. Therefore, we recommend that you have a diversified portfolio and also you invest in index funds to diversify your income.
Crispus is a finance professional with more than a decade experience in the industry. Over the years, Crispus has written in-depth articles on leading platforms like CCN, Marketwatch, and Seeking Alpha. He also runs a Forex education and managed account company called WestEndFx.