With 2019 drawing to a close, investors should carefully plot out their stocks to buy for January. For one thing, the holiday season typically provides folks with extra time to digest the events of the outgoing year and to strategize for the upcoming one. Given the many market drivers that we saw over the trailing 12 months, at least a few will carry over into 2020.
Second, a phenomenon known as the “January Effect” may help bolster the case for compelling stocks to buy. This is a dynamic where the prior year’s laggards find substantial positive momentum. One explanation is that fund managers sell out of their winners and shift the capital gains to presumably undervalued plays for favorable tax coverage. With a little bit of luck, this approach can set up your portfolio for tremendous success later in 2020.
Third, if you previously haven’t strategized for stocks to buy for January, this year may be the best time to do it. That’s because 2020 is poised to become one the most eventful in recent memory. Obviously, the upcoming presidential election in November is a vital one for the country and our place in the world. And if we get a new president, it will surely reshape the present economy for better or for worse.
Furthermore, we have several exciting industrial and technological developments that will continue to grow. This isn’t just about speculating on 2020’s winners; instead, many investments have long-reaching implications.
With that, here are seven stocks to buy for January.
Stocks to Buy for January: AT&T (T)
Typically known as a boring investment more geared toward retirement portfolios, AT&T (NYSE:T) made a strong case for being one of the stocks to buy for January. On a year-to-date basis, T stock has jumped a remarkable 36%. At least, that’s remarkable for a giant lumbering telecom firm.
But recently, MoffettNathanson’s Craig Moffett took issue with T stock, labeling AT&T’s TV division as a “cancer.” That’s an awfully strong word, but I can appreciate the sentiment behind Moffett’s criticism. Typically, you shouldn’t trust value created by an expensive acquisition. Furthermore, the streaming revolution makes AT&T’s TimeWarner deal a worrying bet.
However, I argued that streaming, too, has its challenges. More importantly, AT&T is currently one of few companies that has the capacity to rollout 5G competently. This transformative technology will shape the course of society, as it has myriad applications beyond just telecom. Therefore, I’m still liking T stock despite its flaws.
Sociedad Quimica y Minera de Chile (SQM)
With so much emphasis on technology and the digitalization of everything, a mining firm like Sociedad Quimica y Minera de Chile (NYSE:SQM) may seem anachronistic. However, SQM stock could be one of the most important stocks to buy. And I’m not just talking about January but for many years to come.
According to the company’s website, SQM stock represents exposure to the world’s largest, low-cost producer of lithium. As you know, lithium is a core element that’s used in electric vehicles such as those made by Tesla (NASDAQ:TSLA) or Nio (NYSE:NIO).
Admittedly, I’m not a big fan of these two names. However, we’re seeing a dramatic push for green initiatives. Due to their clean footprint, EVs have generated considerable interest, especially among environmentalists. That alone could help lift SQM stock in the near to intermediate term.
Plus, SQM stock was battered badly in 2019. However, shares appear to have formed a bottom. Therefore, SQM entices as one of the stocks to buy for January.
Barrick Gold (GOLD)
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For several years following the precious metals’ rally in 2011, both the sector and related mining firms like Barrick Gold (NYSE:GOLD) have tantalized investors. Just a few years removed from the 2008 financial crisis, the economic and market recovery lacked credibility. Therefore, the case for gold made sense. However, the record-breaking performance of equities squashed that thesis, invariably hurting GOLD stock.
But the upcoming new year and new decade may help change the long-term trajectory of GOLD stock. For one thing, the economic recovery — though impressive — still has vulnerabilities. The biggest example is the U.S.-China trade war. What experts initially thought was a quick war of words escalated into a nearly two-year conflict. Because tensions still remain, the fear trade is potentially viable.
Furthermore, the U.S. government’s fiscal picture is a mess. At time of writing, our national debt is over $23 trillion. Also, economists predict that by 2020, the federal budget deficit will balloon to $1 trillion. Am I suggesting building a bunker to protect against a societal meltdown? Far from it! But the ugliness augurs well for gold and GOLD stock.
Lockheed Martin (LMT)
Source: Ken Wolter / Shutterstock.com
In what has got to be the most significantly bizarre geopolitical event ever, President Donald Trump met with North Korean dictator Kim Jong Un in 2018. This was the first time a sitting U.S. President met face-to-face with North Korea’s supreme leader. Despite this diplomatic “breakthrough,” I still supported the idea of buying Lockheed Martin (NYSE:LMT) and LMT stock.
Why? North Korea has never come across as a reliable international partner. Furthermore, the Asia-Pacific region is a hotbed of potential military and economic conflict. Not only do we have an assertive China in the region, Russia is also rearing its ugly head. Thus, LMT stock in many ways represents the muscle that our government flexes.
In addition, Trump’s much-hyped diplomatic victory isn’t panning out the way he originally hoped. In fact, military and intelligence officials are concerned that North Korea may launch more intercontinental ballistic missiles. It looks like we’re going to have another year of stare downs and fierce rhetoric. Therefore, put LMT stock on your list of stocks to buy for January (and beyond).
Cyberark Software (CYBR)
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If you’re looking for no-brainer stocks to buy for January, the cybersecurity industry offers multiple compelling names. Thanks to digitalization trends, virtually all of our devices are now connected to the internet. But because of this unprecedented connectivity, bad actors have sought to advantage this situation. That’s one of the main reasons why Cyberark Software (NASDAQ:CYBR) stock moved significantly higher in 2019.
However, I believe CYBR stock has more room to run in 2020 and beyond as the scope of cyberattacks become more prominent and painful. Experts in the field estimate that by next year, “the average cost of a data breach will exceed $150 million.” Globally, we could see cyberattacks cause fiscal damage that runs into the multiple trillions.
That’s not all. As I mentioned above with AT&T, the 5G rollout is among the most significant technological developments. But new tech also means new risks. Combined with the Internet of Things, hackers have ample opportunities for nefarious purposes. Thus, I really like CYBR stock and its ilk for their almost guaranteed relevancy.
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As a generics drug specialist, Mylan (NASDAQ:MYL) offers a critical bridge between patients and their therapies. That’s because brand name drugs are often exorbitantly expensive, especially for difficult-to-treat conditions or for rare diseases. Historically, MYL stock skyrocketed to incredible heights thanks to their effective but cheaper copycat products.
But now, legislative committees are eyeballing the generics industry, and not in a good way. Over the last few years, U.S. lawmakers probed Mylan, along with Teva Pharmaceuticals (NYSE:TEVA) and privately held Heritage Pharmaceuticals for price fixing. Subsequent investigations reveal a seemingly carefully controlled system of anticompetitive agreements and price gouging.
While the controversy has arguably impacted Teva Pharmaceuticals the most, MYL stock also took a beating. Optically, this looks like an assault against desperately dependent patients. Clearly, Mylan has a serious public relations battle to overcome.
Although MYL stock is not the most popular investment right now, it may turn out to be one of the more profitable. First, shares have never really recovered its implosion in May 2019. Second and cynically, we need Mylan and companies like it. Otherwise, patients will not stand a chance of getting relatively reasonably priced drugs and treatments.
Cronos Group (CRON)
There’s really no way around it: the legal cannabis sector was one of the ugliest and most disappointing market segments of 2019. Even well-backed names like Cronos Group (NASDAQ:CRON) couldn’t escape from the bloodshed. What was once a promising start for CRON stock quickly devolved into a nightmare. Understandably, most folks want to avoid marijuana-related companies like the plague.
However, if you can stomach the turbulence that will surely impact this market, Cronos may be one of the more interesting contrarian picks for stocks to buy for January. First, publicly traded cannabis companies have likely hit every branch of the ugly tree. As such, speculators may be more willing to gamble on CRON stock.
Second, the world is generally moving toward cannabis tolerance, if not outright acceptance. Legalization will be a huge issue in the upcoming 2020 election. Further, CNBC reported growing botanical momentum in Asia, which is traditionally a conservative region.
I get that investors shouldn’t dismiss the vulnerabilities in names like CRON stock. At the same time, the fundamental picture in legal marijuana is also incredibly robust.
As of this writing, Josh Enomoto is long T stock and gold bullion.
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