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Investing in Your 20s: 3 Stocks to Watch

By Keith Noonan – Sep 9, 2020 at 9:30AM

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Keep an eye on these industry-shaping, market-moving companies.

The sooner you start your investing journey, the better. That doesn't mean investors in their 20s should be buying stocks indiscriminately, but the benefits of starting young are potentially life-changing. 

Take a look at this chart tracking the level of the S&P 500 index over the last 50 years. 

^SPX Chart

^SPX data by YCharts

The big takeaway from the chart above is that buy-to-hold investors enjoyed strong performance if they bought into the market at any point over the last half-century, but the sooner you began investing, the better. If you were 20 years old in 1980, starting to invest that year would have made you far wealthier than if you saved your money in a bank account and then started buying stocks when you were 40.

Whether you're already buying stocks or just starting to survey the market, keeping track of influential companies will help you stay up to date on influential trends and potentially lucrative trades. Within that mold, Walt Disney (DIS 1.60%), Activision Blizzard (ATVI 5.62%), and Shopify (SHOP -0.43%) are companies that are shaping their industries and the market at large. Here's why these three stocks deserve spots at the top of your watch list. 

A pocket watch on top of cash.

Image source: Getty Images.

1. Walt Disney: At the center of trends shaping the entertainment market

If you would have told people last year that a virus would dramatically reduce traffic at Disney's parks, bring its movie studio business grinding to a halt, and result in delays and cancellations for large sporting events that are crucial to the entertainment giant's ABC and ESPN networks, few would have believed you. If you also told them that Disney stock would be down just 2% over the last 12 months, your prediction would have sounded even more outlandish.

The big story at Disney right now, and the core factor in its resilience, is the company's big success in streaming. The House of Mouse closed its acquisition of Twenty-First Century Fox properties last year and completed deals with Comcast and AT&T, giving it full ownership over the Hulu streaming platform. It then launched its own subscription over-the-top (OTT) video service in November, Disney+. Strong performance for these two platforms has helped the company notch more than 60.5 million streaming subscribers for Disney+ and 35.5 million Hulu subscribers. Disney's ESPN+ service also has more than 8.5 million subscribers.

Disney owns more valuable entertainment franchises than any other company on the planet, and its market-moving size alone makes it worth watching. It's also a company that finds itself at the intersection of some interesting trends -- booming demand for streaming-based entertainment, and big headwinds for entertainment industries that rely on in-person attendance or production. Studying Disney's business will not only give you insights into a top entertainment company, it will also keep you up to date on a variety of trends that are shaping the market.

2. Activision Blizzard: A top player in the video game market

Activision Blizzard is the U.S.'s largest video game publisher by revenue. The company is responsible for popular franchises including Call of Duty, World of Warcraft, and Candy Crush Saga, and it's been a leading player in the growth of interactive entertainment.

The company's share price has soared roughly 56% over the last year, thanks to strong performance for key titles and surging engagement amid shelter-in-place and social distancing measures stemming from the coronavirus. However, Activision Blizzard's performance over the last few years highlights the potentially volatile nature of the business and broader video game industry.

ATVI Chart

ATVI data by YCharts

Engagement for some of the company's key franchises started to wane in the second half of 2018, and the weaker growth outlook prompted investors to exit the stock. Since then, the company has continued to reliably generate hit titles, with strong sales for the Call of Duty franchise in particular boosting performance. The stock now trades off roughly 7.5% from the high of $86.84 per share that it hit roughly two years ago.

The video game industry has a promising long-term growth outlook as more people around the globe take up the hobby, and Activision Blizzard's leading role in shaping the growth of interactive entertainment makes it a top player to watch. 

3. Shopify: Huge runway for expansion in e-commerce

Shopify is this year's hottest e-commerce stock. The company's share price is up roughly 150% year to date even after a recent spat of market volatility, and its long-term performance is even more impressive. The e-commerce software service company's share price has skyrocketed more than 3,550% over the last five years, and the Ottawa-based company now has a market capitalization of roughly $120 billion and stands as Canada's most valuable company. 

Shopify provides website creation tools and a wide range of support services that make it easy for businesses to quickly launch and scale online retail operations. Talk about having the right product at the right time. Last quarter saw Shopify grow gross sales volume conducted across its platform climb 115% year over year, new stores created jump 71%, and sales increase 97%. 

The coronavirus triggering temporary shutdowns for brick-and-mortar retail operations and dramatic shifts in consumer behaviors have driven huge growth for e-commerce this year, and the overall online retail space still has a huge runway for expansion. Shopify is well-positioned to continue powering that growth.

Keith Noonan owns shares of Activision Blizzard and Walt Disney. The Motley Fool owns shares of and recommends Activision Blizzard, Shopify, and Walt Disney. The Motley Fool recommends Comcast and recommends the following options: long January 2021 $60 calls on Walt Disney, long January 2022 $75 calls on Activision Blizzard, short January 2022 $75 puts on Activision Blizzard, and short October 2020 $125 calls on Walt Disney. The Motley Fool has a disclosure policy.

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