It might be hard to believe, but in just seven weeks we’ll be saying our goodbyes to 2019. Although investors have endured a couple of short-lived rough patches, it’s been an exceptionally strong year for the stock market. The broad-based S&P 500 is up 23%, the iconic Dow Jones Industrial Average has gained 18%, and the tech-heavy Nasdaq Composite has returned almost 27%.
How good are these returns? Well, let’s just say that…
the S&P 500, inclusive of dividends and when adjusted for inflation, has historically returned 7% annually, with the Dow closer to 5.7% a year, on average, over its 123-year history.
And it’s not just these indexes that stand out. Of companies with a market cap of $300 million or larger, 124 have gained at least 100% year to date, through Nov. 5. Just because the calendar is about to change over to a new year doesn’t mean this optimism can’t carry over.
If you’re looking for a number of intriguing investment ideas for next year, consider these 20 stocks as possible candidates to double your money in 2020.
1. Innovative Industrial Properties
Yes, cannabis real estate investment trusts (REIT) are a real thing, and they can be quite lucrative! Innovative Industrial Properties (NYSE:IIPR), the best-known marijuana REIT on Wall Street, is already profitable and growing at a lightning-quick pace. After beginning 2019 with 11 medical marijuana-growing and processing properties in its portfolio, it now owns 38 properties in 13 states that span 2.8 million square feet of rentable space.
The beauty of Innovative industrial Properties’ business model is that it creates highly predictable cash flow. The company’s weighted-average remaining lease term is 15.6 years, and its average current yield on its $403.3 million in invested capital is a cool 13.8%. At this rate, it’ll net a complete payback on its invested capital in just over five years.
As long as marijuana remains illicit at the federal level in the U.S., access to capital will be dicey for cannabis cultivators. That makes Innovative Industrial’s acquisition-and-lease model a veritable green rush gold mine for 2020.
2. Pinterest
If you missed out on the Facebook IPO and have been kicking yourself for the past seven years, don’t fret. Social media photo-sharing site Pinterest (NYSE:PINS), which allows users to create their own virtual boards based on their interests, could be your second chance to profit.
Like most brand-name social media sites, Pinterest has seen exceptionally strong user growth. Monthly active user (MAU) count rose to 322 million by the end of September, up 71 million from the prior-year period. What’s most notable about this growth is that it’s mostly coming from international markets (38% MAU growth vs. 8% in the U.S.). Even though ad-based revenue is minimal in foreign markets, it nevertheless demonstrates that Pinterest has global appeal.
The company is also making serious strides to monetize these users by boosting average revenue per user (ARPU) globally. In recent quarters, Pinterest has simplified its ad system for smaller businesses, focused its efforts on boosting ARPU in overseas markets, and pushed for video, which has a much higher repost rate than static images. These efforts appear to be paying early dividends, with international ARPU more the doubling to $0.13 from $0.06 over the past year.
With Pinterest forecast to push into recurring profitability next year, a doubling of its stock is certainly not out of the question.
3. Intercept Pharmaceuticals
Never overlook a first-mover advantage — especially when it pertains to a $35 billion indication!
Nonalcoholic steatohepatitis (NASH) is a liver disease that affects between 2% and 5% of all U.S. adults, has no cure or Food and Drug Administration (FDA)-approved treatments, and is expected to be the leading cause of liver transplants by the midpoint of the next decade. And according to Wall Street, it’s a $35 billion untapped disease.
In late September, Intercept Pharmaceuticals (NASDAQ:ICPT) submitted a new drug application for Ocaliva, a treatment for NASH. While the high dose of Ocaliva did lead to an unsettling number of pruritus (itching)-based dropouts in late-stage studies, it also produced a statistically significant reduction in liver fibrosis levels, relative to baseline and the placebo, without a worsening in NASH at the 18-month mark. Even if Intercept’s Ocaliva only secures a small subset of the NASH market, it has the potential, if approved by the FDA, to quickly earn blockbuster status of $1 billion or more in annual sales. Suffice it to say that 2020 could be a banner year for this midcap biotech stock.
4. Redfin
With interest rates and mortgage rates on the rise throughout much of 2018, it looked as if the fun had come to an end for a hot housing market. But following a trio of Federal Reserve rate cuts and a big drop in Treasury yields, the housing industry is hotter than it’s been in more than a year. That, along with low mortgage rates, could be the perfect recipe for online real estate brokerage company Redfin (NASDAQ:RDFN) to double in 2020.
Unlike some of the companies you’ll see on this list, profitability isn’t a near-term priority for Redfin. Rather, scaling its tech-driven platform and taking real estate service market share are its primary goals. One way Redfin is doing this is by undercutting traditional real estate agents with its salaried agents. With a listing fee of just 1%, Redfin cuts out costs that generally irritate buyers and sellers.
More so, Redfin is looking to infiltrate the high-margin servicing business to make the buying and selling experience less of a hassle. It’s expanding nationally and consolidating tasks, such as title, appraisal, and home inspection, into a single package that consumers can designate the company to handle, thereby removing a key buying or selling objection. Perhaps it’s no surprise that this real estate disruptor grew sales by 39% in the second quarter and saw its market share rise 11 basis points to 0.94% of U.S. existing home sales from Q1 2019.
5. Meet Group
The online dating industry is worth, by some accounts, $3 billion in annual revenue, and Meet Group (NASDAQ:MEET), which specializes in livestreaming and social media interaction (including online dating), is a company that growth and value investors should be swiping right on.
Whereas most of the tech world focuses on bigger names with broader brand recognition, Meet Group’s mobile portfolio of apps, which includes MeetMe, Lovoo, Skout, Tagged, and Growl, has done an admirable job of growing the business. More specifically, the company’s laser focus on bolstering its video business is really paying dividends. During the second quarter, daily active video users increased to 892,000, representing 21% of total users where Live is available on their app. This is important given that video revenue per daily active user grew to $0.26 in Q2 2019 from $0.15 in the prior-year quarter.
Furthermore, Meet Group’s big spending on security enhancements is now in the rearview mirror, according to a third-quarter preliminary update. This mobile livestreaming site is growing at a double-digit rate, has a focus on high-margin video, and sports a forward price-to-earnings ratio of eight (yes, eight!). This multiple, and stock, could both easily double and still have room to run…
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