Chronicle Journal: Finance

The 5 Best Performing S&P 500 Stocks in 2020

The S&P 500 witnessed a major pullback in March 2020 due to heightened concerns surrounding the COVID-19 pandemic. But the index nonetheless managed to post healthy gains by the year’s close. Prominent members of the index, Tesla (TSLA), NVIDIA (NVDA), PayPal (PYPL), Carrier (CARR), and Etsy (ETSY) led the index’s charge by delivering triple-digit gains. Let’s look closer at why.

The S&P 500 closed pandemic-ridden 2020 with a 16.1% gain. In fact, the index hit a record high of $3760.2 on December 31, 2020. This performance is impressive since the global economy is still in recession.

While the coronavirus pandemic severely impacted the businesses of most companies last year, it also acted as a growth catalyst for many. Companies that helped businesses and people to continue functioning and delivering products and services during the public health crisis have thrived and their stocks have seen major gains. Also, the exceptional performance of Tesla, Inc. (TSLA) and Etsy, Inc. (ETSY) last year guided them to inclusion in the index.

Along with these two stocks, NVIDIA Corporation (NVDA), PayPal Holdings, Inc. (PYPL), Carrier Global Corporation (CARR) delivered stellar performances in 2020. These companies gained quickly based on the utility of their offerings amid the pandemic. Thus, it is  likely, we think, that these companies will post further gains going into 2021 and beyond.

Tesla, Inc. (TSLA)

This EV giant needs no introduction. The company is also involved in making powertrain components and stationary energy storage systems. TSLA has operations in the United States, China, Norway, and internationally. TSLA’s stock has gained 696.4% in 2020.

TSLA recently constructed a production facility in China and intends to make build new facilities in Austin, Texas and Brandenburg, Germany. The company is also poised to begin operations in India, which has the potential to be  a major market for the carmaker.

For the third quarter, the company saw an increase in total revenue of 39% year-over-year. The company’s net income increased 131% during the same period.

TSLA is expected to see revenue growth of 59.8% for the quarter ended March 31, 2021 and 47.1% in 2021. The company’s EPS is estimated to grow 67% in 2021 and at a rate of 396.5% per annum over the next five years.

How does TSLA stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

A for Overall POWR Rating

The stock is also ranked #1 of 35 stocks in the Auto & Vehicle Manufacturers industry.

NVIDIA Corporation (NVDA)

NVDA is a processing chip manufacturer that operates primarily in the gaming, enterprise, high-performance computing, and automotive segments. The company is also involved in developing artificial intelligence computing solutions. NVDA’s stock rose 121.2% in 2020.

NVDA recently entered a collaboration with Amazon Web Services to provide 21 NVDA NGC software resources on the AWS platform. The company is also collaborating with intelligent robotaxi manufacturer Zoox to power its vehicles. Zoox recently unveiled the first robotaxi meant for everyday urban use.

For the quarter ended October 31, 2020, the company saw an increase in revenue of 57% compared to the same period last year. NVDA’s  data center revenue grew 162% during the same period.

NVDA’s revenue is estimated to increase 50% for the quarter ended April 30, 2021 and 51% in 2021. The company’s EPS is expected to rise 67.9% in 2021 and 22% per year over the next five years.

NVDA’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with a “B” for Trade Grade, Buy & Hold Grade, and Industry Rank. It is ranked #46 of 88 stocks in the Semiconductor & Wireless Chip industry.

PayPal Holdings, Inc. (PYPL)

PYPL operates an online payments platform that enables users to transfer funds. The company has worldwide operations. PYPL’s stock price increased 115.3% in 2020.

PYPL recently launched QR-code enabled touch-free payment solutions for the iZettle point of sale app in the U.K. The company’s XOOM service now allows secure mobile transfers to mobile wallets in 12 African countries.

For the third quarter, the company saw a 25% increase in revenue  versus  the same period last year. The company also saw an increase of 38% in the Total Payments Volume (TPV) on its platform during that period.

PYPL’s revenue is expected to grow 21.3% for the quarter ended March 31, 2021 and 18.6% in 2021. The company’s EPS growth is expected to be 18.9% in 2021 and 23% per annum over the next five years.

It is no surprise that PYPL has a “Strong Buy” in our POWR Ratings systems with a grade of “A” in Trade Grade, Buy & Hold Grade, and Industry Rank. In the 47-stock Consumer Financial Services industry, PYPL is ranked #3.

Carrier Global Corporation (CARR)

CARR develops, manufactures, and markets heating and cooling solutions. The company sells air conditioners, refrigerators, ventilators, and automation technology. CARR’s stock gained 195.8% in 2020.

The company recently launched a new smart sensor installed in its Infinity System offering. This new sensor allows users to control the temperature in different zones in their homes. The company has also announced the availability of a new waterside economizer for its Carrier AquaForce 30XV Variable-Speed Air-Cooled Screw Chiller.

For the third quarter, the company saw an increase in revenue of 4% compared to the same period last year. The demand for the company’s residential HVAC offerings increased 46% during that  period.

CARR’s revenue growth is expected to be 3.6% for the quarter ended March 31, 2021 and 5.5% for 2021. The company’s EPS growth is expected to be 11.8% in 2021.

In our POWR Ratings system, CARR has been accorded an “A” for Industry Rank.

Etsy, Inc. (ETSY)

ETSY operates an online marketplace for the sale of handmade and vintage items, art, and supplies. The company’s marketplace also deals in clothing, paper goods, music, accessories, and more. ETSY’s stock was up 296.2% in 2020.

ETSY recently teamed up with Roller Rabbit for an exclusive and limited-edition collection of hand-crafted bowls, screen printed napkins, ceramic plates, and more. The company has also rolled out flexible payment options through its payments partner Klarna.

For the quarter ended September 30, 2020, the company reported revenue growth of 128.1% compared to the same period last year. The company’s net income increased 520% during the period.

ETSY is estimated to see a revenue growth of 13.5% for the quarter ended January 31, 2021 and 4.1% in 2021. The company is expected to see an EPS growth of 52.7% in 2022 and 17% per annum over the next five years.

It is no surprise that ETSY has a “Buy” in our POWR Ratings system with a grade of “A” in Trade Grade and Industry Rank. In the 61-stock Internet industry, ETSY is ranked #20.

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TSLA shares were trading at $723.98 per share on Monday afternoon, up $18.31 (+2.59%). Year-to-date, TSLA has gained 2.59%, versus a -2.01% rise in the benchmark S&P 500 index during the same period.



About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks.

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