Most investors made out nicely in 2019, and now it's time to see if the market can kick off 2020 on the right foot. I scoured the list of more than 700 stocks that were big winners last year -- up at least 50% in 2019 -- to come up with three names that I think will continue to deliver market-thumping returns in the month ahead.
Zynga (ZNGA), Target (TGT -4.02%), and The Trade Desk (TTD 0.83%) are three hot growth stocks that I think still have enough in the tank to keep moving higher this month. Let's go over why the mobile gaming, discount-retailing, and advertising leaders have bullish momentum on their sides.
There's a lot of love for the mobile gaming stock that's at the tail end of Wall Street's alphabetical roll call. At least three analysts -- seasoned money pros at Cowen, Baird, and Stephens -- have tapped Zynga as one of their favorite stocks for 2020 in recent weeks, and it's easy to see why.
Longtime investors may think of Zynga as the casual-gaming pioneer behind FarmVille and Mafia Wars during the early days of social gaming, but it's evolved from simply letting you pick out crops to plant and gangster hits to play out. Some of its biggest releases these days include Empire & Puzzles and Merge Dragons!, and even some of its older franchises, including Words With Friends and Zynga Poker, are proving surprising sustainability in a typically fickle world for smartphone app jockeys.
Zynga's revenue rose 48% in its latest quarter, with bookings soaring 59% for the period, making this the strongest top-line growth out of the reborn market darling since late 2011. Investors have been burned by Zynga before. Financials have been lumpy in the past, and growth has actually declined in three of the past seven years. However, it has never been as diversified as it is right now, and that should help it with volatility as it rides the success of some of the market's hottest gaming apps.
Discount department stores may not seem like a hotbed for growth, but Target's been on fire after stringing together a few better-than-expected financial reports. The "cheap chic" retailer is on a roll. Comps rose 4.5% in its latest quarter, a combination of a 2.8% uptick for in-store sales and a 1.7% lift from digital sales.
Retailers, in general, are making big bets on digital-sales channels, which are often at the expense of the bottom line -- but that's not Target. The discounter has come through with better-than-expected earnings in each of the past four quarters, and the percentage of the beat is accelerating. In other words, Wall Street isn't getting any closer in sizing up Target's positive momentum.
The Trade Desk
Programmatic advertising -- where data-driven algorithms dictate how marketing budgets are allocated -- is booming these days. The Trade Desk is a niche leader, and once marketers embrace the platform, it's hard to let go. Customer retention rate has checked in above 95% for 24 straight quarters, or six years.
Advertising may seem like a sleepy industry, but revenue rose 38% in The Trade Desk's latest report. It also seems to be boosting its full-year guidance with every passing quarter. Growth may be decelerating, but it's hard to bet against a sticky platform that keeps beating Wall Street profit targets by a double-digit percentage margin.