3 Popular Stocks That Delivered Big Surprises In 2019
Investing.com | Dec 23, 2019 16:38
After the 2018 Christmas Eve collapse of U.S. equity markets, 2019 was a year that proved many forecasters wrong. The economy remained strong, markets soared and stocks continued their decade-long expansion.
This happened despite multiple warnings from analysts of impending recession after the yield curve inverted over the summer, producing one of the biggest signals that growth was about to turn negative.
Below, we put together a list of three popular stocks which showed strength despite a variety of odds their businesses faced in 2019. Their performances this year also show the willingness of investors to take risks in an environment when return on other asset classes remained low and the central bank stands ready to cut interest rates if the economy wavers.
Tesla's (NASDAQ:TSLA) stock finally broke its bearish spell in October after many missteps by its founder and CEO Elon Musk. The electric-car maker’s shares climbed to a record high on Friday, closing at $405.59. They’ve surged more than 55% since the company reported a surprise profit on Oct. 23.
The year-end news flow became supportive of this rally, even though during 2019 investors saw Musk’s botched attempt to take the company private, his fight with regulators and many broken promises. Musk, a man who has often been lauded as one of the country's most innovative CEOs, had become almost a self-destructive liability for Tesla.
The current spike in its shares began when the company delivered positive earnings for the third quarter, in which it earned $1.86 a share profit, exceeding the most optimistic projection by a wide margin and beating the consensus estimate for a $0.24 loss.
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The carmaker further boosted sentiment when it said it was ahead of schedule on a new factory in China and that its Model Y crossover will launch much earlier than previously reported. Tesla will likely end the year far above the 12-month consensus price target of $293 a share and with the majority of analysts still having a negative rating on the stock.
h2 2. General Electric/h2Embattled industrial giant General Electric (NYSE:GE) kept analysts divided as the company pursued a turnaround after a disastrous 2018 in which its stock price tumbled and demand for its products plunged.
After trading below $10 most of the year, the stock began a surprise rally in early October. Trading at $11.03 at Friday’s close, it shares have gained more than 50% in 2019, signaling that the new management’s restructuring plan is working.
The major boost this year came when GE reported its third-quarter earnings in November, which showed that its cash flow situation is improving and some of its industrial units have begun to show signs of life.
That performance is something the company’s new CEO, Larry Culp, has been promising since he took over more than a year ago. What made investors excited this time is the company’s improved forecast for its 2019 cash-flow — the second straight quarter GE was able to do that, helped by some a revival within some of its industrial businesses.
Despite these positive signals, analysts remain split on GE and its future still looks uncertain. J.P. Morgan, the biggest GE bear that accurately predicted its stock collapse three years ago, currently has a $5 price target on the equity. Its analysts said in a recent note they do not believe that GE’s “management has set a bottom” for the performance of its businesses, adding that “GE is missing guidance on core business EBIT that was set in March.”
Who would have thought that 2019 would turn out to be one of the best years for investors in Apple (NASDAQ:AAPL)? In the group of high-growth technology stocks that includes Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN) and Netflix (NASDAQ:NFLX), Apple gained the most, rising about 80% so far this year. The shares closed at $279.44 on Friday.
For the California-based maker of iPhone, 2019 was an extremely unsettling year as it faced slowing demand for its flagship product, while the macro environment turned hostile after the U.S. and China became embroiled in a long trade war.
With 20% of the company's sales coming from China, where it has also developed a huge network of suppliers, Apple faced a direct threat to its business from the prospect of rising tariffs and tit-for-tat retaliations.
Apple started the new year with its stock price down more than 30% from the record high it hit in August 2018. As 2019 progressed, however, it became clear that the consumer tech giant had plenty of ammunition to deal with the challenging situation the trade dispute created.
The company’s launch of iPhone 11 got a great reception, while its services business, which includes Apple Music, movie rentals and app downloads, continued to expand. In the later part of the year, Apple stock got strong support from analysts for its anticipated roll-out of fifth generation, or 5G, phones in 2020. Wall Street analysts expect the company to return to iPhone revenue growth in the fiscal year ending in September 2021.
Bottom Line
Tesla, GE and Apple are three examples of how stocks can surprise and even delight markets, with extraordinary innovation, or hard-won turnarounds or even, as with Apple (NASDAQ:AAPL), the sheer power of a big brand to mould even negative events to their own advantage. These three companies are ending 2019 on a high that seemed impossible at the start of the year and 2020 is now looking far more positive for each of them.
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