Great Stuff Picks: The “Simply the Best” Edition
By this point, everyone and their mother has offered up an opinion on the best stocks to own for 2020.
Everyone, that is, except Great Stuff…
Well, the wait is finally over. Today, I reveal the four stocks that you must own for 2020 and beyond. This was no small undertaking. No sir.
The companies we selected had to have strong financials and equally exceptional stock performance. And, above all, these companies simply had to be part of a critical market mega trend.
Today’s Great Stuff picks play a major role in at least one (if not more) of the six mega trends I laid out yesterday:
- The Internet of Things (IoT).
- Artificial intelligence (AI).
- Precision medicine (aka biotechnology).
- New energy technology.
Am I stealing a bit from Bold Profits here? Maybe. Or maybe I’ve just been in the stock market long enough to recognize a good investment when I see one. (I’ve been doing this for more than 15 years at this point. Give me some credit here … jeez.)
So, without any further ado, here are Great Stuff’s best of the best for 2020 and beyond:
No. 4: Applied Investing
The IoT is big. Really big. You just won’t believe how vastly, hugely, mind-bogglingly big the IoT is. Statista reports the IoT market will reach $1.6 trillion by 2025. And you may think it’s big now, but that’s just peanuts compared to where it’s going once 5G hits its stride.
But the IoT and 5G technologies don’t just fall out of the sky. Someone has to make the devices and the brains that drive those devices.
Who’s gonna do it? You? You, Lt. Weinberg?
Applied Materials Inc. (Nasdaq: AMAT) has a greater responsibility than you could possibly fathom. (Yes, I’m mixing pop culture references at this point … just go with it.) This company builds the machines that make semiconductors and integrated circuits for the IoT and 5G to run on.
Its customers are a veritable who’s who of the hottest smartphone, semiconductor and networking firms on the planet, including Apple Inc. (Nasdaq: AAPL), Nvidia Corp. (Nasdaq: NVDA) and Intel Corp. (Nasdaq: INTC) … just to name a few.
Mega trend established. But what about the money?
Applied Materials beat Wall Street’s estimates in each of the past four quarters. Most recently, the company lifted guidance for the first part of 2020, citing improving industrywide demand. That little trade deal between the U.S. and China certainly helps a lot.
As for AMAT’s price action, the shares are up 90% in 2019, and they’re poised to break out above a double-top from their 2018 all-time highs.
And the icing on the cake? Applied Materials’ current dividend yield sits at 1.37%. That’s better than Apple or Microsoft Corp. (Nasdaq: MSFT).
All of this together is more than enough to put Applied Materials on Great Stuff’s top picks for 2020 and beyond.
No. 3: This Brand Ain’t No Con
When we look back at 2019, we’ll see it as the year of disappointing initial public offerings (IPOs).
From Uber Technologies Inc. (NYSE: UBER) to Lyft Inc. (Nasdaq: LYFT) to Peloton Interactive Inc. (Nasdaq: PTON), nearly every overhyped IPO is now trading underwater. That is, except Beyond Meat Inc. (Nasdaq: BYND).
But even the meatless wonder is living on borrowed time. The IPO fad is over. The real work begins now. It’s time for Conagra Brands Inc. (NYSE: CAG).
Conagra is putting its full weight behind the meat-alternative movement. Given the company’s connections, distribution chain and sheer amount of money, Beyond Meat is in trouble.
Conagra moving into meat alternatives means lower prices at the supermarket for the same expensive products that Beyond Meat pushes. Conagra has more money and broader reach. It’ll dominate the supermarkets in the meat-alternative market.
What … you still think meatless meat is a fad? Don’t kid yourself. There are health reasons. There are environmental reasons. There are sustainability reasons. There are personal preference reasons.
You may not understand them. You may not agree with them. But there are so many varied reasons why this meatless genie isn’t going back in the bottle, even stodgy old Conagra is jumping into the game.
In fact, the company’s shift into fake meat helped lead it to its first revenue beat in two and a half years. Driven by its “on-trend innovation,” Conagra is expected to see revenue rise more than 12% next year — that’s far above the average for its competitors.
And, for those buy-and-hold investors out there (I know you’re still there despite media reports of your death), Conagra sports a tasty dividend yield of 2.52%.
Conagra is poised to become Beyond Meat’s worst nightmare. That alone is enough to make it a Great Stuff pick for 2020 and beyond.
No. 2: The Year of the Mouse
Admit it. You knew The Walt Disney Co. (NYSE: DIS) was going to be on this list, didn’t you?
How about the fact that Disney accounted for 33% of the total U.S. movie market in 2019? Or that seven of the eight biggest-grossing films of 2019 were all Disney? (The other film in that list was Spider-Man: Far From Home, which had some help from Disney’s Marvel Studios as well.)
And then there’s the fact that The Mandalorian was the hottest streaming TV show for the past two months.
Speaking of Disney+, the service is expected to have more than 20 million subscribers by the end of 2019. Combine those subs with Hulu (remember Hulu?), and Disney is a major force in the online streaming market. This is the competition that Netflix Inc. (Nasdaq: NFLX) bears warned you about.
Unfortunately for Netflix, Disney has deeper pockets and better content (i.e., intellectual property), such as Marvel, Star Wars and literally everything it has ever made in its 96 years of existence.
Cable TV is out. Streaming is the new hotness … the next big mega trend in content delivery and production. Nobody does either better than Disney right now.
2020 is the year of the mouse, making Walt Disney a Great Stuff pick for infinity and beyond. (OK, maybe not infinity, but I couldn’t resist.)
No. 1: Oh, Hello Roku!
So, who didn’t see this coming?
If there’s one company that I’ve written about more than Disney this past year, it’s Roku Inc. (Nasdaq: ROKU) … and for good reason.
We’ve long since established that streaming is the hottest mega trend in entertainment.
Every analyst worth their salt is scrambling to crown “the next Netflix.” But many of those same analysts forget that even Netflix wouldn’t be “the next Netflix” without Roku, the handy USB stick that I take from TV to TV to watch The Mandalorian in peace.
In fact, the video-streaming mega trend itself would’ve taken a lot longer to materialize without Roku as a catalyst. Practically every Roku ever made has a Netflix button on the remote. (I’m betting new ones will have a Disney+ button on them soon.)
The point is, Roku is the king of the streaming mega trend. Its low-cost devices enabled millions to stream directly to their TVs at a time when such a thing was left to the geeks of the world. Now, these streaming devices are everywhere. Roku’s software is even embedded into smart TVs to make the process even easier.
The key to Roku’s success is its agnosticism. The company doesn’t care whether you watch Netflix or Disney+, as long as you use a Roku to do so.
In an age where Apple, Amazon.com Inc. (Nasdaq: AMZN) and Google’s parent, Alphabet Inc. (Nasdaq: GOOGL), have frequent spats about which streaming services are available on their devices, Roku is accorded neutral territory.
But device sales are just the tip of the iceberg. Roku has its own streaming channel with a premium option. What’s more, the company makes bank by selling ads on its eponymous streaming channel, in the Roku device menu and in the screensaver.
This is where many analysts miss the boat on Roku. They see it merely as another streaming device, completely missing the ad revenue component — or grossly underrating it. Right now, ad companies spend big on cable TV advertising.
Where will that money go when cable finally kicks the bucket?
I’ll tell you where … it’s going to the streaming market. And right now, Roku has the best bang for an advertiser’s buck. There are roughly 32.3 million Roku device users in the U.S. And every one of those devices has all the streaming services anyone could want. In other words, ad revenue will explode for Roku in 2020.
I’ve said it before, and I’ll say it again: Roku is going to $200 next year. This is the company to invest in for the streaming mega trend, and it’s Great Stuff’s top selection for 2020 and beyond.
Great Stuff: Ring in the New Year, Great Stuff Style!
Say, do you have any snacks? Beer? Bourbon?
All that writing really wore me out.
No? I guess you’re saving up for tonight’s New Year’s Eve bash.
We here at Great Stuff want to thank you for reading and all your feedback over the months. I know I talk a big game, but it’s all for you, dear reader. You’re the reason Great Stuff exists.
Anyway … heading into 2020, Great Stuff promises to keep you informed on the hottest trends on Wall Street, providing you with key information to make you filthy rich (your results may vary) and sparking the best in dinner table conversation.
No, Uncle Jeb, you drank all the Natty Lite, and I’m not making a run to the store for more. If only you had a self-driving Tesla or something…
At this point, Great Stuff would like to remind you that the best investment of all (to even see 2020) is an Uber (or Lyft) home tonight. As always, don’t drink and drive. This has been your Great Stuff PSA for the new year. Thank you.
Finally, Great Stuff is the perfect New Year’s gift for that extra-special someone in your life … someone so special, in fact, that you waited until just now to think about what to get them for the new year.
Show that person just how much you care. Sign them up for Great Stuff today!
Until next time, good trading!
Great Stuff Managing Editor, Banyan Hill Publishing