There's no question 2019 was a great year for stocks, with the S&P 500 roaring to new all-time highs. Global trade tensions have seemingly eased and U.S. economic numbers are stable after three interest-rate cuts.
The 11-year-old bull market is alive and well as investors flip over the calendar to 2020. Here are five stocks that could kick off 2020 with a bang by putting up some big numbers in January:
-- Intel Corp. (ticker: INTC)
-- Citigroup (C)
-- JD.com (JD)
-- Canopy Growth Corp. (CGC)
-- Walt Disney Co. (DIS)
For the past decade, investors have watched big tech stocks lead the market higher. Heading into 2020, there's no indication the tech sector is slowing down.
While tech leaders including Amazon.com ( AMZN), Alphabet ( GOOG, GOOGL), Facebook ( FB) and others continue to face risks associated with antitrust and data privacy regulation, Intel should be mostly clear of headline risk.
Intel is set to report fourth-quarter earnings on Jan. 23. While investors are always hoping for earnings and revenue beats, they will also have their ears open for any updates from management on Intel's 10 nanometer (nm) processors.
Intel finally began shipping 10 nanometer processors in bulk in the third quarter and the company said the first 10 nm desktop processors will be shipping in early 2020. A positive 10 nm update on the earnings call could ease fears about market share losses to Advanced Micro Devices ( AMD) that have weighed on the stock in recent years.
Intel shares are up 59% in the past five years, but they have significantly lagged competitors AMD and Nvidia Corp. ( NVDA), which are both up more than 1,000% in that time. If it puts its production problems in the past, INTC stock is a compelling value at just 12.7 times forward earnings. It also pays a 2.1% dividend, a rarity in the tech sector.
Some analysts believe a late-2019 market rotation from growth stocks to value stocks will continue in 2020, and Citigroup shares are currently trading below their book value.
The latest commentary from the Federal Reserve suggests interest rates have finally stabilized, and falling rates should no longer create net interest margin pressures for big banks in 2020.
While global banks with high exposure to Europe are pressured by lackluster loan growth in the region, Citi has much higher exposure to high-growth regions such as Latin America and Asia. After years of selling assets to shore up its business following the 2008 financial crisis, Citigroup is now streamlined, well-capitalized and back on offense.
Citigroup trades at an earnings multiple of under 10 and pays a 2.6% dividend. In addition, its aggressive share buyback program should continue to reduce share count and boost earnings per share.
Citigroup will report earnings on Jan. 14.
Chinese e-commerce giant JD.com managed to gain more than 73% in 2019 despite constant headlines about trade war tariffs and slowing economic growth in China.
Not only has the trade relationship between the U.S. and China seemingly improved since a preliminary phase one trade deal was announced in December, JD also proved to investors it can still outgrow U.S. e-commerce leader Amazon even as China's economy slows.
China's massive population gives JD tremendous long-term growth potential. The latest economic projections suggest China's GDP will grow at 5.8% in 2020 compared to about 1.8% projected U.S. growth. In addition, China has an emerging middle class of younger consumers and JD is targeting less developed regions of the country in an attempt to gain market share.
JD shares surged more than 11% in December as investors piled back into China stocks following the trade war progress. Investors can expect U.S. President Donald Trump to attempt to continue that momentum in 2020 rather than risk voters penalizing him for the trade war at the voting booth in November.
Canopy Growth Corp. (CGC)
Most investors had a great year in 2019, but not cannabis investors. Vaping health concerns, disappointing revenue growth in the Canadian market and persistent heavy losses let the air out of cannabis stocks that had been big winners in 2018.
Canopy Growth was no exception, finishing 2019 down more than 28%. However, Canopy remains one of the best-positioned cannabis stocks heading into what could be a big rebound year for marijuana.
While competitors like Aurora Cannabis ( ACB) are struggling to raise capital, Canopy has the financial backing of global alcohol giant Constellation Brands ( STZ), which holds roughly a 37% stake in Canopy.
In July, Canopy founder and CEO Bruce Linton left the company and former Canopy chief financial officer David Klein was named Linton's replacement. In the near-term, Canopy could be a potential buyout candidate for Constellation, according to Cantor Fitzgerald analyst Pablo Zuanic.
Not only is Canopy a Canadian cannabis market share leader, it recently announced a conditional buyout of U.S. Acreage Holdings (ACRGF) back in April. If the U.S. ultimately lifts the federal ban on marijuana, Acreage will give Canopy a significant first-mover advantage in the American market.
Walt Disney Co. (DIS)
Walt Disney launched its highly anticipated Disney Plus streaming service in early November. By nearly any measure, Disney Plus has exceeded expectations in the early stages.
Disney reported more than 10 million Disney Plus subscribers within 48 hours of its launch. Cowen & Company analysts estimate Disney Plus added 24 million total subscribers in the month of November.
Based on its own guidance, Disney hadn't even expected to hit the 20 million subscriber mark by the end of 2020.
At the same time, Disney clearly seems to be gaining share from market leader Netflix ( NFLX). Cowen analysts estimate Netflix will lose about 1 million additional subscribers to Disney Plus in the fourth quarter. A recent Bank of America survey of 1,000 Americans who subscribe to both streaming services say they plan to eventually cancel Netflix in favor of Disney Plus.
Disney Plus has given Disney a much-needed potential long-term revenue growth source, a rarity for investors in the traditional media space. Investors will get their next major update on Disney Plus in early February when the company reports fourth-quarter numbers.
In addition to Disney Plus, "Star Wars: The Rise of Skywalker" generated $374 million in global ticket sales in its opening weekend in December.
Disney reported its studios have generated more than $10 billion in global box office sales in 2019, demolishing its previous record of $7.6 billion in 2016.
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