20 Brilliant companies to invest in 2020 amidst COVID-19
Looking for the Best Company to invest in stock market for 2020 ?
We have created the list of Top 20 companies to invest in 2020 to gain huge profits.
The recent corona virus pandemic has taken a toll on the global stock market in the past few months and it doesn’t look like it’s going to end anytime soon.
Companies have shut down, many people have lost their jobs and the rest are living in the fear of losing their jobs.
The stock market however, continues to thrive. Even though investing in share market during the pandemic seems like a risky job, it is the right move to gain long-term profits.
“Be fearful when others are greedy, and be greedy when others are fearful” – Warren Buffet.
How coronavirus crisis has created tremendous opportunity to Invest in Companies?
To elaborate, let us take you a little back in time.
Let’s look at how crisis has impacted World GDP in history:
Source – Bombay Stock Exchange Data
Did you observe the pattern after crisis?
If you carefully see the graph, after each crisis, the world GDP has risen substantially and has only made the GDP growth stronger and better.
The stock market in 2020 may seem turbulent right now, but in the long run it has the capacity to give great returns on investments.
It is the best time to invest in profitable companies with a strong foundation. These companies are the ones which will survive and recover. It will take some time, but you will have to be patient.
“He that can have patience, can have what he wills”. – Benjamin Franklin
Why you need to invest in company shares right now?
6 Reasons To Invest in Stocks:
Whenever there is a recession, the stock prices are lowest.
This opens up a window of opportunity to gain more profits. People are not spending on movies, restaurants, bars and malls due to the lock down.
If you have that little extra cash, invest it in these undervalued stocks of good companies with strong fundamentals. When the market recovers, which it eventually will, these companies will give good profits. (Don’t forget to Check out below the List of 20 Best Companies to Invest in 2020)
Why you need to identify the best company to invest in stock market?
If you want to make a wise investment, you must put your money in the right company.
Right company doesn’t mean companies with only high profits.
Blindly, investing in best companies with high profits or sales and expecting good returns on your investment is not how this works.
Here are 10 Rules you should follow to select good stocks to invest for gaining high value:
You must identify the stocks worth investing in or else you will end up losing your hard earned money.
Warren Buffet once quoted “The stock market is a device to transfer money from the impatient to the patient” and we definitely want to be on the receiving side of this transfer!
It’s not easy, however, those who have understood and learnt power of investment in right companies have become millionaires.
Here are easy steps to pick stocks and invest money for beginners:
How To Identify Best Stocks to Invest in Right Now?
4 Critical Tips To Identify Best Stocks to invest in 2020:
Identify stocks which represent good business and are available at undervalued prices.
You can use the elimination method to identify best stocks:
- Eliminate the weaker stocks.
- Among the stronger ones, eliminate the overvalued stocks
- The remaining stocks would be the stronger undervalued ones.
Now you might wonder how to identify which are undervalued or overvalued stocks?
- Only stocks with a positive free cash flow are considered strong
- High free cash flow will lead to high intrinsic value
- Market price > intrinsic value = overvalued stock
- Market price < intrinsic value = undervalued stock
Demonstration of Undervalued and Overvalued Stocks
Factors To Consider Before Choosing To Invest in Stock
1. Financial Growth
A steady financial growth even if it is slow can be a safe option to invest in a company stock.
Every company goes through ups and downs. But the overall stability is something to consider
3. Price to earnings(P/E) ratio
A higher price to earnings ratio indicates higher growth of the company in the future.
4. Company Management
Make sure you do a background check on the management for competency, honesty and ability to bounce back in case of set backs.
5. Business Model
The business model of a company where you want to invest must be robust, in alignment with company goals and self re-enforcing.
20 Most Profitable Company To Invest In 2020
Now that we have understood the basics let’s look into some of the profitable companies that you can invest (according to expert analysis) in the present Covid-19 situation.
|Sl No.||Company||Valuation||Estimated annual earning for next 3 years (%)||Past 5 years performance (%)||Share price (past 3 months)|
|1||3.3 % undervalued compared to fair value||19.6||32||Volatile|
|2||eBay||2.2% undervalued compared to fair value||5.3||-10.4||Volatile|
|3||Newmont||13.86 x P/E ratio||4.6||66.6||Stable|
|4||Netflix||102.78 x P/E ratio||28.3||52.1||Volatile|
|5||Activision Blizzard||38.95 x P/E ratio||10.2||13.6||Stable|
|6||Shopify||36.99 x price to book ratio||67.1||-39.2||Volatile|
|7||7.39 x price to book ratio||30.6||-2182.9||Volatile|
|8||Square||170.33 x P/E ratio||87.6||56||Volatile|
|9||Trade Desk||160.42 x P/E ratio||35.2||62.2||Volatile|
|10||Canopy Growth||>50% undervalued compared to fair value||79.3||-82.7||Stable|
|11||Etsy||2.2% undervalued compared to fair value||36.2||63.3||Volatile|
|12||Beyond Meat||20.79 x price to book ratio||52.7||21.8||Volatile|
|13||Snap||16.63 x price to book ratio||65.5||-5||Volatile|
|14||Okta||61.55 x price to book ratio||0.5||-26.5||Volatile|
|15||Medifast||0.05 undervalued compared to fair value||13.8||36.1||Volatile|
|16||Nexstar Media Group||>50% undervalued compared to fair value||17.4||33.3||Volatile|
|17||Abbvie||32.2% undervalued compared to fair value||12.2||11.4||Stable|
|18||NMI Holdings||>50% undervalued compared to fair value||19.1||60||Volatile|
|19||Healthpeak Properties||43.8% undervalued compared to fair value||-91.3||10.8||Stable|
|20||Alibaba group Holding||30.69 x P/E ratio||12.5||27.1||Stable|
Don’t let fear get the best of your judgement at this crucial time. Yes, this crisis seems like a never ending dark tunnel, but buying a dip now will no doubt, give you immense return on investments in the long term. All you have to do is a complete background research and the right calculations to identify profitable companies like Facebook or Netflix (now I might be biased here for these two, but hey, the numbers above don’t lie) which are believed to have a profitable future growth. Better to use this opportunity now than to regret later.
“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass”. – Jack Bogle
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