Stocks to Buy

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Markets are hitting new highs in 2020. We see volatility on its way – but nothing that should deter you from buying stocks.

Our favorite stock picks right now are companies that will thrive this year no matter what trade wars, election battles, and recession fears get thrown at the market.

They all beat the market in 2019, and we expect another outperforming year.

Pick up shares now and put these stocks on your shopping list for any market pullback.

And make sure to sign up for Money Morning to get all our stock recommendations sent right to you, for free.

Best Stocks to Buy in 2020, No. 7: Alibaba Group Holding Ltd.

Every stock has downswings, even the biggest winners. A winning stock is one whose upswings are large enough to make you forget about the downswings.

Take Alibaba Group Holding Ltd. (NYSE: BABA), for example. At first glance, BABA shares have gone up and down with the rest of the market.

But looks can be deceiving. While the Chinese tech superstar has endured several valleys in 2019, it has outperformed the S&P 500 by 45%, delivering 33% gains on the year as of early November.

This stock is built for long-term growth, which it showed last November with yet another huge "Singles' Day." That's the anti-Valentine's Day tradition that Alibaba has turned into the world's biggest annual shopping day. Last November, Alibaba's $30.8 billion in sales for the day beat the previous year's number by 22%. And it absolutely dwarfed the $7.9 billion in Cyber Monday online sales for all U.S. retailers combined.

There's still plenty of room for growth, which is why it's No. 7 on our list of best stocks to buy. According to Money Morning Executive Editor Bill Patalon, Alibaba is a "single-stock wealth machine" – one you can buy and plan on holding for decades to come.

Singles’ Day 2019 was the first since visionary founder Jack Ma left the company. There was a lot of nail-biting on Wall Street when Ma’s retirement was announced last year. But in fact, the care with which Ma's succession has been handled only demonstrates what an exceptionally well-run company Alibaba is.

CEO Daniel Zhang, who took over as executive chair in September 2019, was the creator of the Singles' Day sales event. Since he became CEO in 2015, Alibaba became the first Asian company to pass $400 billion in market value and has emerged as one of the top 10 most valuable public companies in the world.

Even with Ma's departure, there's no reason to think to the company will slow down. And between Alibaba's lean business model – it acts as a digital retail shelf rather than a warehouse – and rapid growth in Asia, this is the online retail giant with the most room to grow in the next few decades.

To give you an idea of the long-term growth you can expect, Bill Patalon says every share of Alibaba you buy – trading at about $180 in early November – will be worth $2.1 million in four decades.

That's why Bill says Alibaba is "one of the single greatest wealth opportunities of our lifetime – meaning it's a stock you have to own."

And that's just the first pick on our list of the top stocks to buy for 2020…

Best Stocks to Buy in 2020, No. 6: Wix.com Ltd.

With more than half the world's population now online, according to Statista, it's hard to believe the World Wide Web is only 30 years old as of 2019.

Web presence has become indispensable for any business of any size. And thanks to our next pick, small businesses don't have to shell out top dollar to get a beautiful, functional website.

Wix.com Ltd. (NASDAQ: WIX) was founded in 2006 to make the website-building process easier. Wix's cloud-based service comes with a wide variety of customizable templates with drag-and-drop functionality. So smaller organizations can learn the ropes on their own and set up and maintain their site with a minimal investment of time.

The real reason Wix is such a great investment is its e-commerce functionality. According to Statista, e-commerce sales in the United States will reach $735.4 billion by 2023, up 64% from $446.8 billion in 2017.

Wix gives sellers access to this booming market for $23 a month.

Wix's low-cost, high-quality model has earned it a huge – and growing – following. In 2019, just 13 years into its existence, Wix passed the 150 million-user mark. And that user base is growing at a 18% annual pace.

Users who pay for premium services now total 4.3 million and are growing at a 17% annual pace.

That kind of performance has driven share price growth of more than 530% over the last five years. But don’t expect the stock to slow down now. Wix's services are only going to become more essential in the coming years. Cybersecurity Ventures projects that Internet users will grow to 6 billion by 2022, a nearly 50% jump from 2018.

The web isn't getting simpler, either. Individuals and organizations of all types are going to need dynamic, multi-functional websites that can be easily viewed not only on desktop and laptop computers but on tablets and smartphones.

For those hundreds of millions of potential clients, Wix is going to be the obvious choice.

Money Morning Defense and Tech Specialist Michael Robinson says that makes Wix "one of those stocks that can turbocharge your portfolio for years to come."

Now, let's get to the top five stocks to buy for 2020…

Best Stocks to Buy in 2020, No. 5: The Bancorp Inc.

Contrary to what you might have heard elsewhere, FinTech is not going to spell the demise of traditional banking anytime soon.

Just the opposite, actually. While “pure play” FinTech companies like PayPal Holdings Inc. (NASDAQ: PYPL) and Square Inc. (NYSE: SQ) have made a big splash in recent years, the real winners of the FinTech revolution have been traditional banks that incorporate tech into their services.

There’s simply no replacement for the FDIC insurance that comes with bank accounts up to $250,000. Your Venmo account doesn’t have that, and that’s not going to change anytime soon.

Banks are subject to regulatory scrutiny that PayPal and other FinTech companies aren’t going to match. With that built-in competitive advantage, banks that adopt new technology to make their customers’ lives easier have a lot of upside potential.

That’s where The Bancorp Inc. (NASDAQ: TBBK) comes in. It’s been an industry leader in combining traditional bank credentials with new technology.

As its website states, “You may not have heard a lot about us. And that’s by design.”

You see, instead of focusing on branch-based banking, the company specializes in providing financial backing to private-label, non-bank companies.

Just like when you buy Aldi brand frozen pizza, which is actually made by Richelieu Foods, there are more than 100 different brands of financial products powered by The Bancorp.

Thanks to The Bancorp, mobile-banking services like Chime and Varo are actually able to provide that ever-so-important FDIC insurance to account holders.

The Bancorp is also behind PayPal’s prepaid Mastercard, which offers direct deposit and transfers from your PayPal account, and is also easily managed via a mobile app.

With services like these, The Bancorp has carved a niche for itself by encouraging innovation in the FinTech industry and providing the financial security that is sorely missing from many new financial products.

That’s going to keep it ahead of its competitors for years to come. Money Morning Special Situation Strategist Tim Melvin says he expects double-digit earnings growth to continue for the foreseeable future.

Investors that get in on The Bancorp now, Tim says, should see the price move “dramatically higher over the next several years."

Here’s the next pick on the best stocks to buy list…

Best Stocks to Buy in 2020, No. 4: Waste Management Inc.

While some investors are busy speculating on the next mobile app or wearable device, this pick keeps delivering steady gains by providing essential services that are constantly in demand.

After all, you're not going to stop throwing out your trash any time soon. And neither is anybody else.

For Waste Management Inc. (NYSE: WM), your trash is its treasure.

With more than 20 million customers, WM is the largest provider of waste management and residential recycling services in North America.

According to CSIMarket, Waste Management holds the largest market share in the United States for every major segment of environmental services – and a 37% share overall. That's compared with a 22% share for its top competitor.

But the moneymaking opportunities don't stop when the trash is picked up. WM is also a leader in converting trash to LNG fuel. In turn, that fuel can go into its truck fleet or even into natural pipelines or local electric grids.

In other words, Waste Management is not just a trash company. It's also an energy company.

It's solving one of humanity's more pressing problems – how to deal with a growing population using the same amount of space – by turning it into a new resource for communities and more profits for shareholders.

WM's dividend has increased in 16 consecutive years and currently yields a solid 1.8%. But that stable income generation hasn't kept WM from being a growth stock. The stock has risen 120% over the last five years, compared to 50% for the S&P 500.

Those gains worked out well for subscribers to Keith Fitz-Gerald's High Velocity Profits service.

In November 2017, Keith recommended a Jan. 19 call option on WM. He recognized that it was a great stock, and an option trade allowed subscribers to put up a relatively small amount of money and enjoy big, fast gains if it did well.

That's exactly what happened. By the time the options expired, about two and a half months after the initial recommendation, they had gained 275% in value.

Don't worry. There's plenty more fuel to propel this stock upward in the coming months and years. And if you want to go for truly fast profits, a call option may be the way to go.

But if you'd rather have a stock you can hold onto forever – or as long as people keep producing trash – Waste Management is exactly that.

Best of all, we still have three more picks on our best stocks to buy list…

Best Stocks to Buy in 2020, No. 3: Intuit Inc.

Nothing is certain but death and taxes. So naturally, the top provider of tax preparation software is one of the most dependable investments you can make.

But Intuit Inc. (NASDAQ: INTU) is much more than its wildly popular TurboTax software. Its QuickBooks software has long been a favorite of small businesses. And in 2014, it launched QuickBooks Self-Employed, tapping into an enormous and growing market.

As of October, the United States was riding a record 108-month job growth streak. What's more striking, though, is that the freelance workforce – now accounting for $1.4 trillion annually – is growing three times faster than the overall labor force.

At this rate, according to a 2017 study by Upwork and Freelancers Union, freelancers will be a majority of the U.S. workforce by 2027.

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Some of those new freelancers are making the switch out of pure entrepreneurial spirit, and some are simply adapting to economic realities. Either way, this trend puts Intuit, which already has 5.8 million small businesses and freelancers as customers, in an ideal position to serve this growing segment of the population.

"QuickBooks Self-Employed" is available at a subscription price of just $7 per month. It allows users to track every aspect of their finances, including mileage for work purposes, and to keep personal and business transactions separate along the way. And it can all be done seamlessly between the user's computer, tablet, and smartphone.

Upgrading to the $12-per-month package gives them TurboTax too, which is fully integrated into QuickBooks to make the user's yearly tax return a cinch. It will even calculate estimated taxes automatically over the course of the year.

Intuit's EPS grew by 17% in the 2019 fiscal year, and according to FactSet, it's expected to increase by double-digit percentages in each of the next two years.

As the workforce changes over the next decade and more, Intuit is going to be one of a small number of companies prepared to reap the rewards. That makes it one of the best stocks you can buy now.

"This is one of those dependable tech leaders that you can count on for the long haul," writes Michael Robinson, "to keep you squarely on the road to wealth."

Best Stocks to Buy in 2020, No. 2: Nvidia Corp.

The autonomous vehicle market is expected to be worth $54.2 billion in 2019, according to Allied Market Research. By 2026, it will be more than 10 times that.

So it's no surprise that we'd have a play on self-driving cars on our list. But you might not know it's a company that was once primarily known for making graphics cards for video games.

Nvidia Corp. (NASDAQ: NVDA) has been transforming itself in recent years. Now it's a leader in all kinds of game-changing technologies, from cryptocurrency mining to virtual reality to artificial intelligence.

But perhaps most exciting is its Nvidia Drive AGX, a self-driving platform being installed in many auto models currently on their way to sales lots around the world.

That includes Volkswagen AG (OTCMKTS: VLKAF), which has put self-driving capabilities for all its cars in Nvidia's hands. And Drive AGX-equipped cars will be coming soon from Audi AG (OTCMKTS: AUDVF), Volvo AB (OTCMKTS: VLVLY), and Tesla Inc. (NASDAQ: TSLA).

Nvidia self-driving is not just for cars either. Trucks made by PACCAR Inc. (NASDAQ: PCAR) are sporting Drive AGX, and so are fleet vehicles deployed by Deutsche Post AG (OTCMKTS: DPSGY).

A partnership with Daimler AG (OTCMKTS: DDAIF), which makes Mercedes-Benz autos, shows off even more of what Nvidia can do. The voice-activated Mercedes-Benz User Experience (MBUX) learns a driver's preferences over time and can make smart suggestions about music, directions, and various other settings in the car. It converses in plain language and features a beautiful 3D touchscreen display.

It's no surprise then that Nvidia's fortunes are skyrocketing. Sales have more than doubled since 2016, and profits soared approximately 575% in that time.

Nvidia added another growth catalyst in August 2019, when it signed on to help overhaul the graphics for Minecraft, one of the world’s most popular video games with more than 90 million monthly users.

But as Michael Robinson says, Nvidia "hasn't even hit its stride yet." In October 2018, he predicted shares would rise 65% in 2019. As of early November, they’re up 55% on the year. And as self-driving technology takes over the automotive world, Michael says, "the sky is truly the limit."

Keep reading for the No. 1 pick on our best stocks to buy for 2020 list, along with a bonus stock with incredible profit potential…

Best Stocks to Buy in 2020, No. 1: Apple Inc.

For years, Wall Street analysts have been wringing their hands over every little bit of bad news for Apple Inc. (NASDAQ: AAPL). Whether it's an earnings miss or a production slowdown or the specter of hitting "Peak iPhone," there's always a reason for investors to jump ship.

And in late 2018, it seemed like they were finally right.

AAPL shares slipped 26% in October and November. That was due to a number of factors, including unimpressive iPhone sales, tariffs threatened by President Trump, and the general downturn in the market.

But none of these are real long-term threats for Apple. The stock climbed another 35% in the first 10 months of 2019 and remains a great buy.

Apple customers have already demonstrated that they're willing to pay higher prices for new iPhones, keeping sales dollars up even if the gadgets don't fly off the shelves at record-breaking speed.

More importantly, as Keith Fitz-Gerald points out, Apple is not a device company anymore.

That is, it's not unit sales of Apple devices that are driving the company's growth. It's the services Apple delivers to the devices people already own.

Sales of those services, including Apple Music, iCloud, and the App Store, hit $12.5 billion in the last quarter of FY2019. That puts them on pace for $50 billion for the first time – in line with the most optimistic projections from a year ago.

Apple’s $3.03 EPS for the quarter marked the third consecutive earnings beats. According to FactSet, the company heads into 2020 with a projected increase in EPS of 24% over the next two years.

AAPL’s share price has hit Michael Robinson’s projection from 2018 of $250. But Money Morning's resident Apple expert, David Zeiler, puts it at $300 per share during the same period.

Because of Apple's long-term performance and reliability, Bill Patalon considers it one of his "Accumulate" stocks. That means it's a stock you can keep buying more of year after year and keep gaining wealth from it.

But regardless of whether you buy it in installments or in one chunk, you should look forward to Apple's performance in 2020.

Now, let's get to our "bonus" stock – or stocks – to buy in 2020. This is for those willing to take on a little more risk, but with huge potential rewards…

Best Stocks to Buy in 2020, "the Bonus": Investing in Cannabis

This list wouldn't be complete without a look at the state of legal cannabis investing.

Any time we’re talking about a young industry like legal cannabis, there’s going to be some volatility. But the long-term trajectory is extremely positive.

If you bought shares of Canopy Growth Corp. in November 2017, for example, you would have seen a lot of ups and downs over the last two years. But your shares today would be worth 58% more than when you bought them. That’s three times better than the S&P 500.

Arcview Market Research projects that the global legal cannabis market will more than double from $12.2 billion in 2018 to $31.3 billion in 2022. By that time, the industry could employ nearly a half-million Americans full time.

So the million-dollar question is this: Where is the next cannabis success story going to come from?

In addition to Canopy, we've got another great candidate for you: Aurora Cannabis Inc. (NYSE: ACB).

Thanks to some key acquisitions, Aurora overtook Canopy as the world’s largest cannabis producer. As of summer 2019, Aurora was producing 700,000 kilos of cannabis per year, compared to somewhere between 500,000 and 550,000 for Canopy.

Aurora also has established a presence in 24 of the 40 countries that have legalized cannabis, giving it plenty of markets to consume its record-setting production for years to come.

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But hang on. Let's not count Canopy out either. Just because it's already had a great run, don't assume that it doesn’t have an even bigger growth phase ahead.

In fact, Canopy has its own deal with a beverage giant. Constellation Brands Inc. (NYSE: STZ) – the producer of Negro Modelo, Corona, and Svedka Vodka, among other brands – holds a nearly 40% stake in Canopy. So this is another potentially huge beneficiary of cannabis beverage legalization.

So we have two weed stocks: Aurora and Canopy. Which one should you buy?

Both of them, if you can.

When building your cannabis portfolio, you'll want a few stable pick-and-shovel plays to start. That might include Microsoft Corp. (NASDAQ: MSFT), Scotts Miracle-Gro Co. (NYSE: SMG), or GW Pharmaceuticals Plc. (NASDAQ: GWPH), which all have their hand in the cannabis market.

From there, you want a healthy mix of pure-play weed companies, so you're not putting all your eggs in one basket. Aurora and Canopy are a great pair to get you started. They’ve both had their upswings and downswings. But the potential long-term rewards are worth a few bumps in the road.

Remember, this whole industry is set to nearly triple in the next four years. And that's just the average. If one of these pulls away from the pack, you'll be looking at a truly handsome payday.

Now that we've covered the full list, here are our answers to some of the most popular stock questions we hear from readers…

Are Stocks a Good Investment?

Yes, stocks are a good addition to any investment portfolio. Over time, stocks can be the most successful way to build wealth.

Stocks typically offer higher returns than other investment vehicles, like real estate and bonds. We identify the factors that make stocks a good long-term wealth builder and give investors those picks regularly.

Trading stocks by trying to time the market for short-term gains is much riskier. It can be done successfully – and profitably – but if it's done without proper research and analysis, it often results in big losses.

How Do You Pick the Best Stocks?

One key step to pick the best stocks to buy is to examine a company's earnings reports over time to analyze the firm's financial health. The most important metrics to measure are earnings per share (EPS) and price/earnings (P/E) ratio.

EPS is the portion of a firm's profit distributed to each share of stock. It's the most basic and important number for measuring a company's profitability and helps to calculate valuation metrics like the P/E ratio.

The P/E ratio shows how much investors can invest in a stock to recoup one dollar of earnings. In other words, it shows how much people will pay for every dollar a company earns. The ratio is calculated by dividing the most recent share price by the most recent EPS.

What Are Other Good Stocks to Buy in 2020?

The stocks we mentioned here are a great place to get started. But if you're looking to expand your portfolio, keep up with Money Morning throughout the year.

We'll be offering expert recommendations periodically, and every few weeks, we publish a list of the best stocks to buy now based on the most up-to-date information available.

And if you're looking for more ways to profit, we've got you covered…

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