With 2019 in the rearview mirror, investors are looking ahead for investments that can deliver strong returns in 2020 even as the broader market continues to reach new highs. Recession fears have abated somewhat as trade tensions between the U.S. and China appear to be easing, while the 2020 presidential election also has some market-moving implications.

Here are three top stocks to buy and hold through 2020: Spotify (SPOT -2.02%), Okta (OKTA -0.50%), and Disney (DIS 0.01%).

Interior shot of Spotify headquarters showing neon logo hanging on a wall

Image source: Spotify.

Spotify: Two opportunities for margin expansion

Last year marked a major strategic shift for the Swedish music-streaming leader, as it spent $400 million to acquire three companies in an aggressive effort to expand beyond music and into podcasts. Spotify wants to offer more than just music and sees opportunity in the broader market for audio content.

Podcasts represent a path to higher margins, as that form of content doesn't carry the same type of royalty burden as the core music business. Podcast listeners are also converting to paid subscriptions at higher rates, further helping profitability. Spotify is betting that original podcast content can simultaneously drive user engagement while enjoying higher cost efficiency, much like Netflix's wild success in original video content.

"So streaming was to Netflix as podcasting is to Spotify," former Spotify CFO (and former Netflix CFO) Barry McCarthy said in October. "And there was a time when we increased investment in streaming in Netflix at the expense of the [profit and loss] and before we began to talk with investors about the goodness that would come as a result of the increased spending and the growth in the [total addressable market]." McCarthy retired on Wednesday.

There is also margin expansion potential in Spotify's "two-sided marketplace" strategy, which has only recently begun to roll out. The company believes it can connect fans and artists directly, offering analytics and targeting tools to artists. McCarthy said that Spotify will share more details around the gross margin impacts when it reports fourth-quarter results in February.

Spotify has generated underwhelming returns for investors ever since going public via a direct listing last year, largely due to investor concerns about profitability, because the company's biggest costs are variable in nature. That makes it hard to scale and enjoy operating leverage, but 2020 could be the inflection point in terms of profitability if Spotify can execute on its ambitious strategies throughout the year.

Break room at Okta headquarters

Image source: Okta.

Okta: The leader in IAM

Even though enterprise identity access management (IAM) provider Okta crushed the market last year, there could be more outperformance in store for 2020. The company consistently earns accolades as a leader in the IAM sector, executing well against much larger rivals like Microsoft, Oracle, and IBM. Okta's platform has the broadest and deepest set of third-party app integrations (over 6,500) in the industry, a massive advantage in the world of enterprise software.

Okta had been posting stellar results and boosting its full-year guidance throughout 2019, with all of its core operating metrics heading in the right direction. Billings, remaining performance obligations (RPO), and large customers are all soaring. Dollar-based net revenue retention is also comfortably above 100%, evidence that Okta is successfully upselling customers on more offerings.

The software-as-a-service (SaaS) company is still in the early innings of expanding internationally, and management is confident that global demand is strong. International markets are still just 15% of the business, and increasing revenue abroad is one of Okta's most promising growth opportunities.

Disney+ interface display on a TV

Image source: Disney.

Disney: Investing heavily in direct-to-consumer

Entertainment behemoth Disney had a solid run in 2019, outpacing the S&P 500 by a few percentage points. That was mostly attributable to a steady flow of good news around Disney+, the company's flagship video-streaming service that launched in November. Shares are currently trading within a stone's throw of all-time highs.

Disney is growing its direct-to-consumer and international (DTCI) business like never before, cultivating direct billing relationships with subscribers who historically subscribed through cable operators. The company had 3.5 million ESPN+ subscribers and 28.5 million Hulu subscribers at the end of last quarter and plans to start sharing Disney+ subscriber data when it reports earnings.

CEO Bob Iger, who plans to step down in 2021, has already billed Disney+ as the most important product of his tenure. Disney is already signaling to investors that 2020 will be a year of investment as it develops its portfolio of original Disney+ content. As a result, the DTCI segment is expected to post considerable operating losses, but Disney is playing the long game: Management expects Disney+ to garner 60 million to 90 million subscribers by 2024.

Cord-cutting has taken its toll on Disney in recent years, but the focus on DTCI is mitigating those concerns -- and investor sentiment is dramatically improving as a result.