After a stellar 2019, investors look ahead to 2020 for stock picks.
Analysts are skeptical that the stock market's gains, which are at more than 20% in 2019, will remain in the double-digit percentage range next year. They expect volatility to return in the midst of a U.S. presidential election.
Some investors wait for stocks to get cheaper before they step in and scoop up buying opportunities. Companies poised to outperform, they say, will be ones that can continue to grow their earnings even if the economy slows.
From iPhone maker Apple to beverage giant Coca-Cola to e-commerce titan Amazon, USA TODAY offers 20 stock picks for 2020 based on research reports and interviews with Wall Street stock analysts.
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Strong anticipated demand for Apple’s 5G iPhone next fall is projected to boost the company in 2020, according to Piper Jaffray analyst Michael Olson. In December, Olson reiterated his "overweight" rating on the stock and raised his 12-month price target to $305 from $290, citing robust iPhone demand and better-than-expected performance in wearables such as the Apple Watch, AirPods and AirPods Pro. Apple shares finished Thursday at $289.91.
Analysts at Bank of America named Microsoft one of the firm’s top software picks for 2020, driven by growth in the software giant’s cloud-computing unit that offers data storage. Analysts at the bank bumped up their price target on the stock to $200 from $162. Shares closed Thursday at $158.67. The stock outperformed the broader market in 2019, rising more than 50% while the S&P 500 rose nearly 30%.
Amazon’s stock is expected to benefit from strong growth in its cloud-computing and advertising businesses. Investors have been concerned about a hit to profits from the costs of one-day shipping and investments in Amazon Web Services, but those worries are largely priced into the stock, according to UBS analyst Eric Sheridan. He gave the stock a "buy" rating with a $2,100 price target over the next 12 months. Amazon's stock closed Thursday at $1,868.77.
Looking for a stock that pays steady dividends? Coca-Cola can satisfy investors’ thirst with its stable earnings growth and ability to ride out volatility, analysts say. Sean King, analyst at UBS, gave the beverage giant a "buy" rating with a $63 price target. Shares finished at $55.02 Thursday.
Disney is among one of the top stock picks in media, largely driven by the success of its entrance into the streaming world with Disney Plus. In November, Bernie McTernan, an analyst at Rosenblatt Securities, reiterated a "buy" rating on the stock amid strong subscriber growth and increased his price target to $175 from $170, up from Thursday's close of $145.70.
Wall Street expects Nike’s solid digital sales growth to continue as the company transitions from a wholesale retailer to a digital direct-to-consumer model. In a note to investors, Morgan Stanley analyst Kimberly Greenberger reiterated the firm’s "overweight" rating on the athletic-apparel company and raised its price target to $118 from $108. Shares of Nike finished Thursday at $100.71.
T-Mobile’s stock is projected to rise over the next year despite what happens with its pending merger with Sprint, experts say. Jonathan Atkin, an analyst at RBC Capital Markets, maintained an "outperform" rating on the telecom giant and lifted its price target to $94 from $87, citing subscriber momentum. That's up from Thursday's closing price of $77.40.
Google parent Alphabet was among the worst-performing this year among its larger tech peers, but Wall Street keeps a close eye on the stock. The company was fined $1.7 billion this year for restricting rivals' ads in Europe, though some of its antitrust issues are beginning to wane. Jason Bazinet, an analyst at Citigroup, reiterated the firm’s "buy" recommendation and boosted its 12-month price target to $1,500 from $1,450. The stock ended Thursday at $1,362.47.
Goldman Sachs (GS)
Investment banks and financial services companies such as Goldman Sachs are poised to benefit from the Federal Reserve keeping interest rates low next year because of the firm's lack of interest rate and credit risk, says Keith Horowitz, analyst at Citigroup. The bank upgraded shares of Goldman Sachs to "buy" from "neutral" and boosted its price target to $255 from $220. Thursday, shares closed at $231.21.
Micron Technology (MU)
The slumping memory chip industry could be turning a corner. Analysts expect demand for memory chips used in PCs, servers and USB drives to accelerate in 2020 as trade tensions thaw. Wedbush analyst Matt Bryson upgraded Micron to "outperform" from "neutral" and lifted his price target to $65 from $44, up from the stock's closing price of $55.11 Thursday.
Shares of McDonald’s underperformed the broader market in 2019, but its CEO shake-up, along with its innovative menu options and expansion of delivery capabilities, could drive revenue growth. Christopher Carril, an equity research analyst at RBC Capital Markets, initiated coverage on the stock in December with an "outperform" rating and target price of $218. The stock finished Thursday at $197.06.
PayPal is in the midst of winding down its financial ties to former parent company eBay, which some investors fear will be an earnings obstacle. Analysts say PayPal is in a strong position to drive account growth after forming partnerships with four high-growth platforms: Facebook, Uber, Paymentus and Mercado Libre. Mark Palmer, analyst at BTIG, reiterated a "buy" rating on PayPal with a price target of $130, up from Thursday's closing price of $109.75.
Diamondback Energy (FANG)
The production outlook for Diamondback Energy looks promising. The driller, which has a strong balance sheet and reinvests in growth, is based in Permian Basin in West Texas, the heart of the U.S. shale boom. The company is expected to grow oil volumes by double digits next year. Raymond James analyst John Freeman maintained a "strong buy" rating on the stock with a $110 price target. Shares ended Thursday at $91.31.
Visa heads into 2020 on an upbeat note, driven by robust credit card spending during the busy holiday shopping season. Higher spending on credit and debit cards is forecast to drive profit and revenue growth in the coming quarters. Morgan Stanley analyst James Faucette raised his price target for Visa to $220 from $207, up from Thursday's closing price of $189.16.
United Health (UNH)
Analysts at Goldman Sachs are bullish on United Health, the parent of the nation's largest health insurer, because of the company’s projected earnings growth. Analysts at the firm gave United Health a "buy" rating, with a $330 price target. Shares trade around $295.
Netflix, which missed its subscriber-growth targets for two straight quarters, faces more competition next year. Rival streaming services jumping into the fray include Disney Plus and Apple TV Plus, along with traditional media companies such as NBCUniversal’s Peacock and WarnerMedia’s HBO Max. Still, Wall Street’s forecasts for the subscriber growth of Netflix are too low, according to Heath Terry, analyst at Goldman Sachs. He maintained his "buy" rating on the stock with a $400 price target. Shares finished Thursday at $332.63.
Tesla’s fourth-quarter profitability is on an upward trajectory, thanks to strong demand for its Model 3 sedan, experts say. Dan Ives, analyst at Wedbush, raised the automaker’s 12-month price target to $370 from $270. That's down from its closing price of $430.94 Thursday. If Tesla is able to sustain its level of profitability and demand in Europe and China, it could open the door to a new chapter of growth for the company, he said.
Some analysts are bullish on Salesforce because of the cloud software company’s long-term growth prospects. The company seeks to grow in areas beyond cloud applications such as data visualization tools with its $15 billion acquisition of Tableau. This month, JPMorgan analyst Mark Murphy reaffirmed his "overweight" rating for the stock with a $200 price target, up from its closing price of $164.51 Thursday.
American Electric Power (AEP)
Investors eye American Electric Power because of the utility company's growing profits. The company benefits from investments in renewable generation. The company added wind facilities to its generation fleet, which is projected to contribute to earnings growth, analysts say. ScotiaBank changed the rating for the stock to "sector outperform" from "sector perform" and lifted its price target to $102 from $93. The stock ended at $93.88 Thursday.
Analysts grow more bullish on Uber, now that its embattled co-founder and former Chief Executive Travis Kalanick is leaving the company’s board. Analysts at Wedbush gave the stock an "outperform" rating with a $45 price target, adding that Kalanick’s exit will put management on a forward path. Shares closed at $30.67 Thursday.
This article originally appeared on USA TODAY: Stock market: 20 stocks to buy in 2020 including Apple, Amazon and Microsoft