20 Brilliant companies to invest in 2020 amidst COVID-19

Looking for the Best Company to invest in stock market for 2020 ?

best stocks to invest in right now

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:

Covid-19 impact on economy

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:

6-compelling-reasons-invest-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:

Selecting best company for stock investment

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-pick-stocks

How To Identify Best Stocks to Invest in Right Now?

4 Critical Tips To Identify Best Stocks to invest in 2020:

How To identify best stocks - Step 1 & 2
How To identify best stocks - Step 3 & 4

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.
Stock market step by step

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

Undervalued-Overvalued-Stocks

Factors To Consider Before Choosing To Invest in Stock

factors for stock investment in company

1. Financial Growth

A steady financial growth even if it is slow can be a safe option to invest in a company stock.

2. Stability

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.

What is P/E ratio

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.

10 best metrics to invest in stock market

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.CompanyValuationEstimated annual earning for next 3 years (%)Past 5 years performance (%)Share price (past 3 months)
1Facebook3.3 % undervalued compared to fair value19.632Volatile
2eBay2.2% undervalued compared to fair value5.3-10.4Volatile
3Newmont13.86 x P/E ratio4.666.6Stable
4Netflix102.78 x P/E ratio28.352.1Volatile
5Activision Blizzard38.95 x P/E ratio10.213.6Stable
6Shopify36.99 x price to book ratio67.1-39.2Volatile
7Pinterest7.39 x price to book ratio30.6-2182.9Volatile
8Square170.33 x P/E ratio87.656Volatile
9Trade Desk160.42 x P/E ratio35.262.2Volatile
10Canopy Growth>50% undervalued compared to fair value79.3-82.7Stable
11Etsy2.2% undervalued compared to fair value36.263.3Volatile
12Beyond Meat20.79 x price to book ratio52.721.8Volatile
13Snap16.63 x price to book ratio65.5-5Volatile
14Okta61.55 x price to book ratio0.5-26.5Volatile
15Medifast0.05 undervalued compared to fair value13.836.1Volatile
16Nexstar Media Group>50% undervalued compared to fair value17.433.3Volatile
17Abbvie32.2% undervalued compared to fair value12.211.4Stable
18NMI Holdings>50% undervalued compared to fair value19.160Volatile
19Healthpeak Properties43.8% undervalued compared to fair value-91.310.8Stable
20Alibaba group Holding30.69 x P/E ratio12.527.1Stable

Conclusion

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

Share Market Tips for beginners

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