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3 Top Stocks To Watch This Year

By Rick Munarriz – Sep 22, 2020 at 11:25AM

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Some of 2020's hottest stocks still have some sizzle as we head into the fourth quarter.

This has been a surprisingly strong year for investors, especially if you managed to warm up to some of this year's top growth stocks. Shares of Peloton Interactive (PTON -14.44%), Zoom Video Communications (ZM -1.87%), and DocuSign (DOCU -0.20%) have made early believers a lot of money this year, but the party could just be getting started.

Peloton, Zoom, and DocuSign have all more than doubled this year. Let's go over why they continue to be the top stocks to watch in 2020.

2020 in golden block letters against a backdrop of dollar bills as wallpaper.

Image source: Getty Images.

Peloton

When it comes to fitness, most of us have had little choice but to sweat it out at home. Peloton was doing just fine before the new normal, selling its premium-priced stationary bikes and treadmills, but the COVID-19 crisis has made Peloton the safest way to stay in shape if you have the means to afford the four-figure initial investment in equipment and then the $39-a-month connected fitness subscription. 

Revenue soared 172% in its latest quarter, nearly matching the stock's year-to-date surge. Peloton also silenced naysayers by posting its first quarterly profit. There are now 1.09 million subscribers on Peloton's flagship connected fitness platform, and the home fitness speedster sees that base nearly doubling a year from now. 

A lot of fitness gear winds up collecting cobwebs a few weeks later, but Peloton's interactive platform is proving ridiculously engaging. The average connected fitness subscriber clocked in with a record 24.7 monthly workouts in Peloton's latest quarter. With new products and a clever pricing strategy about to widen its potential market, it's hard to get off the Peloton bike right now. 

Zoom

We'll remember 2020 as the year of Zoom. Classrooms, corporate meetings, and family reunions have all gone virtual, and Zoom has skyrocketed 615% this year through Monday's close. In probably one of the biggest mic-drop earnings reports of the year, Zoom's fiscal second-quarter report at the end of August was a thing of beauty.

Revenue catapulted 355% higher for the quarter. The number of customers with more than 10 employees has exploded by 458% over the past year. Its guidance has been a rocket as the year plays out. 

There will always be the boobirds arguing that this party ends the moment that we've licked the pandemic, but do you really think that's going to happen? Companies know you can get work done remotely now. Virtual schooling may not be as effective as the real thing, but it will certainly be more acceptable. Do you think you'll even call your parents or nieces again when you can Zoom them to feel more connected? Zoom took the videoconferencing genie out of the bottle, and the genie's not going back in without a fight. 

DocuSign

Wet signatures are so 2019, and DocuSign has established itself as the lead horse in the booming electronic signatures market. If you're kicking yourself for missing out on one of this year's obvious winners, you may have a second chance here. The stock has corrected sharply in September, sliding nearly 30% since poking its head just above $290 earlier this month. 

The stock peaked the day before DocuSign posted financial results for its fiscal second quarter, but the numbers were solid. Revenue rose 45% for the three months ending in July, accelerating from the 39% pace it posted in both the fiscal first quarter and for all of fiscal 2020. Billings were up an even more impressive 61%. DocuSign also boosted its full-year guidance. 

The pandemic has naturally sped up the migration away from physical signatures, but there's little chance of the trend reversing itself at the other end of this tunnel. As DocuSign pointed out in its fiscal second-quarter earnings call, once a customer shifts to electronic signatures, they rarely go back.  

Rick Munarriz owns shares of Peloton Interactive and Zoom Video Communications. The Motley Fool owns shares of and recommends DocuSign, Peloton Interactive, and Zoom Video Communications. The Motley Fool has a disclosure policy.

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Stocks Mentioned

DocuSign Stock Quote
DocuSign
DOCU
$55.20 (-0.20%) $0.11
Zoom Video Communications Stock Quote
Zoom Video Communications
ZM
$74.47 (-1.87%) $-1.42
Peloton Interactive, Inc. Stock Quote
Peloton Interactive, Inc.
PTON
$7.05 (-14.44%) $-1.19

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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