A surging stock market gave investors plenty of ways to make money in 2019. Yet it's a new year, and the question now is: What's next?
If you're looking for ways to make 2020 as profitable as -- or even more lucrative than -- 2019, here are some key areas you'll want to focus on.
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Cannabis
2019 was most unkind to cannabis investors. Many marijuana stocks plunged in value as regulatory delays, financing challenges, and a still-thriving black market all slowed the industry's expansion.
But with many cannabis stocks now trading at far lower prices, some of the best marijuana businesses now represent compelling profit opportunities.
The majority of cannabis investors have focused on the companies that produce marijuana, such as industry titan Aurora Cannabis (ACB -6.81%). Although Aurora has intriguing growth potential due to its industry-leading production capacity and strong international presence, the Canadian cannabis producer has struggled to generate the cash it needs to fund its expansion. Its once high-flying stock has fallen sharply in recent months, as investors have grown more concerned about Aurora's financial health. So while its stock certainly has significant upside potential, it's also a high-risk investment.
A far safer way to profit from the cannabis boom can be found in marijuana-focused real estate investment trust (REIT) Innovative Industrial Properties (IIPR -0.82%). Rather than produce cannabis itself, IIP acquires facilities that can be used to grow and process medical marijuana. It then leases these properties to only the most financially sound state-licensed producers in the U.S.
These low-risk leases are highly profitable for IIP, generating annual returns of 10%-16% for periods of as much as 20 years. As a REIT, IIP passes nearly all of these profits on to investors via its rapidly growing dividend, which currently yields a sizable 4.9%. For these reasons, Innovative Industrial Properties delivered gains of more than 70% in 2019 -- and it's poised to continue to reward shareholders in 2020 and beyond.
Gold
Gold is another investment that could help you protect and grow your wealth in 2020.
Long viewed as a defensive store of wealth, gold maintains this valuable purpose today. But gold can help you do more than just preserve your wealth. The precious metal tends to perform well during periods of geopolitical turmoil, particularly when the potential for military conflict is high. It's during these times that gold can not only outperform other asset classes that decline in value, but also see its own price rise significantly.
With tensions between the U.S. and Iran once again causing investors to factor the risk of war into their outlook for the economy and their own portfolios, many are seeking refuge in gold.
The precious metal, in turn, has seen its price trade near multi-year highs in recent weeks. Moreover, the potential for escalating military conflict in the Middle East could see investors bid up the price of gold to new highs in 2020.
Investors seeking to profit from a potential surge in gold prices should take a look at iShares Gold Trust (IAU 0.57%). The exchange-traded fund holds gold bars in secure vaults, thereby giving its owners a means to benefit from a rise in gold bullion prices without the need to store and secure the gold themselves.
Although SPDR Gold Trust (GLD 0.60%) is more popular, with net assets of nearly $44 billion compared to less than $18 billion for iShares Gold Trust, IAU is the better bargain, with an annual expense ratio of only 0.25% versus 0.40% for GLD. So if you're looking for a way to invest in gold, iShares Gold Trust is your best profit opportunity.
E-commerce
While gold is a great defensive investment, e-commerce is fertile ground for growth investors. Global retail e-commerce sales will grow to more than $6.5 trillion by 2022, up from approximately $3.5 trillion in 2019, according to Statista.
Within this huge and fast-growing market, Amazon (AMZN -1.65%) reigns supreme in the U.S. and many other areas of the world. Its massive online retail operations and army of third-party sellers offer an unmatched selection of goods at attractive prices delivered in as little as a few hours. It's a powerful value proposition that should continue to fuel Amazon's growth -- and its shareholders' profits -- well into the next decade.
Shopify's (SHOP -2.37%) stock is another excellent way to profit from the growth of e-commerce. Shopify provides the tools that online merchants need to operate and scale their businesses. More than one million merchants use Shopify's platform. Together, they sold $14.8 billion of merchandise in the third quarter alone. In turn, Shopify generated more than $390 in revenue during the quarter, representing a 45% year over year increase. With demand for its services booming, Shopify is likely to continue to rewards its investors in the years ahead.
Lastly, don't overlook Visa (V 0.05%) and Mastercard (MA -0.08%). The digital payment titans are two additional ways for you to profit from the worldwide growth of e-commerce. As more retail sales transactions are completed online, Visa and Mastercard enjoy more demand for their debit and credit card payment processing services. Although their processing fees are small on an individual basis, the well over 100 billion transactions these payment giants facilitated helped Visa and Mastercard produce $11.5 billion and $6.9 billion in net income, respectively, over the past year. With e-commerce set to fuel their growth, Mastercard and Visa are set to deliver even more profits -- and more gains to their investors -- in 2020.
