It's been an incredibly wild year on Wall Street. Yet when investors cross the finish line for 2020 in less than two weeks, they'll potentially be looking at double-digit gains.
Although the benchmark S&P 500 lost over a third of its value during the first quarter, the widely followed index is on track to deliver full-year returns above its historical norms. Not too shabby for a year when society was upended by the coronavirus disease 2019 (COVID-19).
But double-digit returns are peanuts compared to what a handful of stocks have delivered for shareholders in 2020. If you'd invested $100,000 into each of these three companies at the closing bell on Dec. 31, 2019, you'd have well over $1 million today.
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Novavax: $3.13 million (+3,034%)
The top-performing stock this year is clinical-stage drug developer Novavax (NVAX -3.74%), which has seen its share price catapult by more than 3,000%. Believe it or not, that's more than 30% below the 2020 closing high it set in August.
As you may have guessed, the buzz surrounding Novavax has to do with the development of a coronavirus vaccine. Novavax's candidate is NVX-CoV2373, which was engineered from the genetic sequence of SARS-CoV-2, the virus that causes COVID-19. In early stage studies, Novavax reported that 100% of trial participants developed neutralizing antibodies after the second dose, with no severe adverse events.
Novavax will likely get its chance to make a splash in overseas markets first. The company anticipates reporting phase 3 data on NVX-CoV2373 in the U.K. early in the first quarter of 2021. Phase 2b data from South Africa may also be available early on in Q1 2021. Meanwhile, its pivotal late-stage study in the U.S. has been delayed, but is expected to kick off in the coming weeks.
If the Novavax candidate is successful in preventing COVID-19 infections and/or severe cases, such as we've seen from Pfizer/BioNTech and Moderna, there may still be ample upside in the company's stock. After all, the global COVID-19 vaccine market will be measured in the tens of billions of dollars, yet only a handful of drug developers will initially have a shot at grabbing these dollars.
2021 will be a pivotal year for the market's top-performing stock.
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Blink Charging: $1.47 million (+1,365%)
Electric-vehicle (EV) charging equipment and services provider Blink Charging (BLNK -7.66%) also bolted higher this year. After beginning the year below $2 a share, Blink closed this past week at north of $27 a share. A $100,000 investment in Blink would be worth almost $1.5 million.
The excitement surrounding Blink has to do with its tie-ins to EV infrastructure. Electric vehicles represent the unquestioned future of the automotive industry. According to a November 2018 estimate from the Edison Electric Institute (EEI), the number of EVs on U.S. roadways is expected to grow from 1 million in late 2018 to 18.7 million by 2030. EEI further projected that about 9.6 million charge ports will be required to maintain this fleet of EVs by 2030. That's where Blink comes in.
This year, Blink has made a number of moves to cement its footprint as an EV charging and servicing leader. This includes acquiring BlueLA Carsharing in mid-September. BlueLA is the city of Los Angeles' contractor for its EV carsharing services program, which totals 200 charging stations and 100 EVs. In the third quarter alone, Blink Charging also sold, deployed, or acquired 668 charging states across 25 states.
However -- and this is a pretty big however -- Blink Charging is still a nascent company. Although revenue is up 84% through the first nine months of 2020, total sales have only totaled $3.8 million. To become the premier charging solutions company, it's going to have to spend aggressively, which will probably lock it into operating losses for years to come.
The NIO ES8 premium EV SUV. Image source: NIO.
NIO: $1.04 million (+944%)
In case I haven't driven the point home by now with bad puns, EV auto stocks have been sizzling-hot in 2020. Had investors chosen to invest $100,000 into China-based NIO (NIO -5.35%) at the beginning of the year, they'd have a little over $1 million as of this past weekend.
The buy thesis for NIO is similar to the one for Blink. The main difference is that NIO manufactures premium EVs. Also, it focuses on the largest market for EV consumption in the world: China. In October, the Society of Automotive Engineers of China predicted that new energy vehicle sales in China would jump from 5% of overall sales in 2020 to 20% in 2025. By 2035, half of China's new car sales are expected to be EVs or hybrids.
NIO has certainly seen demand for its premium SUVs pick up this year. In the six-month period between April 1 and Sept. 30, the company delivered a tad over 22,500 EVs, which is more than it delivered in the entirety of 2019. It also recently launched its EC6 premium EV crossover.
To drum up EV interest and brand loyalty, NIO also introduced a battery-as-a-service (BaaS) program in August. This program will reduce the initial cost of its vehicles in exchange for enrolling buyers into its BaaS program, which will cover battery replacements and future upgrades. It's a smart way for the company to trade off some upfront vehicle margin in favor of much higher and more predictable subscription service margins over the long run.
Still, NIO is valued at a frothy $57 billion market cap. While the company is now swimming in cash, and its capacity has bumped upward, its production and income statement don't even come close to meriting a $57 billion valuation. It could be a while before investors' emotions and NIO's operating results are on the same page.
