Innovation. In one word, that's what defines the best stocks of 2019.
XThroughout the year's list, there is an undercurrent of groundbreaking products and services that shape the way we live, much like this list has characterized most years past.
Of the 100 best stocks of 2019 through Dec. 27, more than 30 are biotechs. The prowess of the industry is especially evident at the top of the list, where eight of the top 10 and 14 of the top 20 are biotechs.
The biotech industry was out of favor for much of 2019 as proposals for "Medicare for All" pressured health care stocks, says Kelly Bogdanova, vice president and portfolio analyst at RBC Wealth Management. But the tide turned in the sector's favor in the final few months of the year. Progressive candidates who championed health care reform lost momentum, and the hefty price tag for Medicare for All made it less likely to come to fruition, she adds.
Looking to 2020, the political winds remain a key factor, Bogdanova says. Four times since the Clinton administration, health care reform proposals weighed on the sector, and by now investors are becoming more pragmatic about the risks. "I think there's a general understanding that the government in Washington tends to move slowly, and like a supertanker. Regardless of which party controls the levers of power, significant changes . . . don't necessarily materialize quickly and without a fight," she said.
Leadership Of Best Stocks 2019
But in an industry with a lot of hit-and-miss stories, those with breakthroughs vaulted to the top.
Arrowhead Pharmaceuticals (ARWR) took the prize as the single best stock of 2019. The biotech soared 423%, although its most productive run started May 21. On that day, Arrowhead broke out of a flat base with a 20.70 buy point. Volume surged to several times the stock's average on the breakout and on several days that followed as institutions raced to own the rising star.
A couple of weeks earlier, Arrowhead had posted a profit of 21 cents a share vs. a year-ago loss of 18 cents. Revenue soared to $42.7 million from just $700,000 a year earlier. What was causing the huge increases? Arrowhead is working with Johnson & Johnson (JNJ) on a promising treatment for hepatitis.
J&J licensed a drug from Arrowhead in 2018, testing the drug as a hepatitis B treatment. The drug, called JNJ-3989, belongs to a class that interferes with ribonucleic acid, or RNA. The goal is to silence problematic genes that can cause the disease.
Throughout the Top 100 stocks of 2019 list you find similar stories of medical progress. Medicines Co. (MDCO) — up more than 300% this year — in November reported positive trials for a new cholesterol drug. Also using a method called RNA interference, the drug attacks a genetic disorder that prevents the body from removing bad LDL cholesterol from the blood.
But investing in biotech requires skillful stock-picking. The industry group has more than 560 companies, and for every success story, there are many others failing trials or still far from getting products to market. Hundreds of biotechs are speculative plays with no profits, which makes it hard to invest with traditional growth methods such as CAN SLIM. IBD's investment method seeks companies with superior profit and sales growth, among other factors.
Still, biotechs often figure prominently every year in the Top 100 stocks. In 2017, 31 biotechs dominated the top 100 and in 2018 about a dozen made the list.
Other Top Stocks
Other highlights from the year's best stocks:
- Roku (ROKU) climbed 355% as the company successfully competed against giants such as Amazon.com (AMZN), Alphabet (GOOGL) and Apple (AAPL) in video streaming devices. A Needham analyst on Dec. 3 said Roku is in 40% of U.S. connected-TV homes, making it a key gatekeeper for internet TV services. Roku is just getting started on its international expansion, the analyst said.
- Cloud software accounted for many of 2019's best stocks. Seven cloud stocks — including Coupa Software (COUP), Paycom (PAYC) and Avalara (AVLR) — more than doubled in price during the year
- Semiconductors suffered through weak spells. Any time the U.S.-China trade war flared up, chip stocks sold off because they are vulnerable to tariffs. By December, however, the trade war was cooling off, which helped about a half-dozen stocks make the top 100. Breakouts Aug. 1 and Oct. 31 contributed to Cirrus Logic's (CRUS) winning year. And Advanced Micro Devices (AMD) met success with new microchips.
- How did an insurance company stock explode more than 200%? Palomar Holdings (PLMR), which went public in April, uses analytics to concentrate on underserved markets for earthquake, wind and flood insurance. In Q3, the number of the California-based firm's earthquake policies surged 67.5% after the Ridgecrest, Calif., earthquake in July.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
YOU MIGHT ALSO LIKE:
Five Top 100 Stocks Of 2019 Are Just Below Buy Points
Market Outlook: Clear Skies To Start 2020, But This Cloud Looms
Get Free IBD Newsletters: Market Prep | Tech Report | How To Invest
IBD Live: Learn And Analyze Growth Stocks With The Pros
MarketSmith's Tools Can Help The Individual Investor
The post Best Stocks 2019: Innovation, As Usual, Wins The Day — Or Even The Year appeared first on Investor's Business Daily.
http://feedproxy.google.com/~r/BusinessRss/~3/uaEMdvn-oZc/
No comments:
Post a Comment