A pandemic is arguably the ultimate black swan event. In a stroke, the Covid-19 crisis managed to be a game changer across nations and industries alike.
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But while a brief bear market took hold, a strong economic rebound also took hold as America reacted to the issue at hand. That resulted in a wave of companies that rose to the occasion or otherwise benefited from the changed economy. Improving employment figures, low interest rates and stimulus measures meant major indexes were able to quickly reverse course, bringing with them scores of stock winners.
“In 2020 we’ve moved from a bear market through March and April, to a new bull market since then,” CFRA Research Director Kenneth Leon told Investor’s Business Daily. “We’ve also seen different sectors outperform at different phases since the Covid pandemic hit.”
Best Stocks Of 2020 Benefit From Coronavirus
Oanda Senior Market Analyst Ed Moya told IBD how the popular trades evolved as the response to the Covid-19 pandemic developed.
“Technology stocks led the way for most of the year as stay-at-home stocks became the consensus trade,” he said. “The last quarter of the year was all about vaccine breakthroughs and saw the focus shift away from tech and back into beaten up industrials, energy and financials.”
But while the broader market may have gone through a few rotations during 2020, a majority of the best stocks come from a handful of areas.
A full quarter of the 100 best companies of 2020 — measured by stock performance — are biotechs.
While Moderna (MRNA) was the biggest winner, with a gain of more than 600%, there were a number of other standouts. Twist Bioscience (TWST), a San Francisco firm that manufactures synthetic DNA for the biotechnology industry, powered up just shy of 600%. German firm CureVac (CVAC), which is developing a Covid-19 vaccine, gained 560%.
In a pandemic year, some health care stocks also performed well. In addition to three stocks from the medical services industry, three came from medical research equipment and five from medical products.
Virtual outpatient health care treatment firm Ontrak (OTRK) was the best performing medical services name, with a gain of more than 300%, while Schrodinger (SDGR), which provides software for drug discovery, was the star name among the research equipment stocks with a gain of more than 350%.
Irvine, Calif.-based Inari Medical (NARI), which makes devices to treat venous diseases such as deep vein thrombosis, was the best performing stock in the medical products industry after swelling almost 300% in 2020.
Computing, Online Retailers Thrive
Computer software was another area that performed well, with more than 20 stocks featuring strong performance. Enterprise software was the biggest winner, but the likes of cybersecurity and design software also had stocks turning in good performance. Unsurprisingly, Zoom Video Communications (ZM), which has become the meeting platform of choice in Covid America, boasted impressive outperformance among enterprise stocks, posting a gain of almost 500%. However it has been undergoing a nasty correction of late, which means those who bought in near highs will have suffered nasty losses.
Among computer security stocks, Zscaler (ZS) was best-in-breed thanks to a gain of more than 300%. Appian (APPN), which provides a software development platform that allows organizations to develop applications, was the best performing software design stock after rising by almost 300%.
Stocks that focus on the internet, unsurprisingly amid broad lockdowns, also fared well. The internet content and internet retail groups account for about a dozen of the 100 best companies of 2020. Among the six retail stocks to make the cut, Fiverr International (FVRR) fared best and was the top stock of 2020 in the group. It beat the likes of Etsy (ETSY), which rose more than 300%, and online pet products retailer Chewy (CHWY), which soared around 250%.
Sea (SE), whose platforms include Garena, Shopee, and SeaMoney, was the best-performing internet content stock, with a gain of almost 400%. The Singapore-based firm operates in Southeast Asia, Taiwan and Latin America.
100 Best Companies Of 2020: Biggest Winners Follow CAN SLIM
A key consideration for any CAN SLIM investor is the N in the acronym, which stands partly for new products. Innovation is key for winning stocks, and the top three stocks have this in spades.
In terms of brute gains in 2020, Israel-based Fiverr stood out most. The company provides an online platform that connects businesses with freelancers.
Business is booming, which helped the stock increase in value by almost 850% since the start of the year. Its gains from its coronavirus crash lows are even better, with the stock rising by almost 1,000%.
Investors who jumped on board when the stock broke out of a consolidation in late April have been richly rewarded. The stock has risen more than 500% since passing its buy point of 35.23 on April 20. The stock has a Composite Rating of 96, and has posted profits for the past two quarters. Analysts expect 2020 will be the first year it turns a profit, with earnings growth of 173% seen in 2021.
Big Gains, Big Milestone For Tesla Stock
A feather it Fiverr’s cap is the fact it managed to beat Tesla (TSLA) into second place. The electric-vehicle company, led by eccentric CEO Elon Musk, turned in gains of almost 700% since the start of the year.
It now has a market cap north of $600 billion, making it easily worth more than automotive industry behemoths Ford (F), General Motors (GM) and Honda (HMC) combined.
Oanda’s Moya was very impressed by Tesla’s progress, which included passing a new milestone in December, when it was accepted into the S&P 500 index.
“Tesla is the first stock since Apple that has so many investors strongly believing in their leadership,” he said. “Tesla has masterfully dominated the EV space and has yet to see a true competitor rise.”
The company has been a tricky stock to trade in 2020. However, there have been good opportunities for those willing to give the stock time to work. Investors who pounced on its breakout from a cup-with-handle buy point of 174.06 in early June saw their gains soar around 270% by year’s end.
100 Best Companies Of 2020 Include Vaccine Maker Moderna
It should come as no surprise that Moderna is another of the year’s big winners. The company in December won FDA approval for its Covid-19 vaccine, which proved to be 94.5% effective at blocking the virus in clinical testing.
The U.S. has already ordered 200 million doses of Moderna’s coronavirus vaccine. Moya touted the performance of Moderna’s management in responding to the Covid-19 opportunity: “Moderna, a relatively small company when compared to Pfizer (PFE) or J&J (Johnson & Johnson (JNJ)), was so impressive in their ability to deliver their first vaccine,” he said.
The stock market has agreed, sending Moderna stock up more than 600% in 2020.
IPOs A Big Share Of 100 Best Companies Of 2020
In a strong year for IPOs, roughly one-fourth of the 100 best companies of 2020 went public during the year.
Home and renter insurer Lemonade (LMND) more than tripled in price from its IPO July 2. Inari Medical, which works on treatments for blood clots, broke out of a base a few days ago. It had already climbed about 350% from its initial offering at 19 a share. Xpeng (XPEV) also about tripled even after the electric-car maker gave back more than half the gain from its Nov. 4 breakout.
Most of the top 10 new issues were biotechs.