Where Will You Find the Best Stocks in 2020?

By Dale Gillham | Published 03 December 2019

In this week’s US Stock Market Report, Dale discusses where you will find the best stocks to buy in 2020, as well the Black Friday sales and the impact on the retail sector.

Black Friday has now come and gone and, so far, shoppers have spent a massive $4.2 billion online, which is a 14.5 percent increase from last year and a record high according to data released by Adobe Analytics. As of writing, we don’t have the final figures, however, it is indicating that online sales for black Friday are on track to hit $7.4 billion this year.

According to Adobe Analytics, nearly half of the revenue on Thanksgiving Day came from smartphones, which is a 24.4 percent increase on last year. While e-commerce giants saw a 244 percent increase in sales, smaller retailers saw a 61 percent jump.

In an interesting twist, some stores were quiet on Friday given that around 40 percent of shoppers opted to make a purchase online and pick it up in the store or curb side, according to Adobe. If we combine this with the fact that 24 percent of sales came from smartphones, you would think that millennials were shopping online, while those over 35 were more than likely visiting the bricks and mortar stores.

Retailers are expected to generate around 60 percent of their yearly revenue between Black Friday and the end of the year. And with the busiest shopping days before Christmas yet to come, it will be interesting to see the final figures and how this flows into the stock price of retailers.

It is now the last month of 2019, so what has happened in the market this year?

Since 1 January 2019, the S&P 500 has risen 25.3 percent while the Dow Jones Index is up 20.25 percent as of writing. November was an excellent month with the Dow up 3.72 percent and the S&P 500 up 3.4 percent. If the market keeps rising, then I believe the Dow Jones will hit 29,000 points while the S&P 500 will hit 3,300 points in December.

The best sectors in 2019 to date have been Technology, up 41.78 percent, Industrials up 27.03 percent, and Financials up 26.03 percent. While the worst sectors have been Energy up just 1.86 percent, Healthcare up just 14.73 percent and Materials up 18.43 percent. Given this, I believe Energy and Healthcare are the sectors to watch for opportunities in 2020.

Looking at the Technology sector and, more specifically, the FAANG stocks, we have seen strong returns from Apple up 69.42 percent, Facebook up 53.82 percent and Alphabet up 26.01 percent. While Amazon was up 19.90 percent and Netflix was up 17.56 percent, these returns were below what the Dow and S&P 500 returned in a sign that increased competition may be affecting these companies.

In regards to Amazon, both Target and TK Max have done very well online, while other large brick and mortar stores have raised their standards online and are fighting back with the majority doing much better in 2019 and taking market share back from Amazon. While Netflix has faced increased completion from Disney plus and Apple plus, I dare say 2020 will be an interesting space to watch, as consumers are likely to be the winner.

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