Now that the year is drawing to a close, we look ahead to 3 companies that we think are going to have a very exciting time in 2020.
Dec. 28, 2019
Companies and investors alike prefer to plan ahead well in advance, and the end of the year is always a good time to reflect on the past and look forward to the year ahead. Here are the three companies we are following in 2020.
Lululemon
Lululemon (NASDAQ: LULU) has surpassed all expectations in 2019. For each quarterly report, there was decent growth, with the latest earnings report for Q3 being more of the same.
The clothing company had revenues of $916 million in Q3, representing a year-on-year increase of 23%. A large driver of this revenue result was its e-commerce sales rising by 30%, opening new stores and its existing stores having an 11% growth in sales.
Serious momentum has been made by Lululemon in 2019. As of now, there are not really any indications that the company’s strong results will be slowing down any time soon. Its gross profit margin is continually rising, increasing to 55% of total sales in this latest quarter. This is despite recent warnings from management that profits may fall due to increasing tariff costs and subsequent higher freight costs. None of these concerns materialized.
In April 2019, Lululemon released its ‘Power of Three’ strategic plan that aims to further accelerate the company’s growth.
The aim going into 2020 and beyond is to double its digital and men’s revenues. It also wants to quadruple its global revenues. The endpoint for these targets is 2023, but after its performance in 2019, it looks like these targets could be achieved even quicker.
Lululemon’s share price has reflected its results over the past year. At the current price of around $220, there does not seem to be too much value to be had, but it will still certainly be a stock to closely follow into 2020.
Apple
There are probably hundreds of articles written every day about what Apple Inc. (NASDAQ: AAPL) shares are going to do. However, one thing that does not seem to be debatable is that Apple will be getting into the 5G space in a major way.
According to a forecast report, the company will be releasing four different iPhones that will be 5G enabled. The likely release date is the latter half of 2020.
This 5G technology is set to be a significant upgrade to the speed of internet connections, leading to further innovation in smartphones.
There were concerns that the U.S. trade war with China would have a significant impact on Apple’s bottom line. It has managed to use its significant sway in both countries to minimize any sort of impact additional tariffs may have on its core business, thanks in part to the new phase one trade deal which meant that Apple was able to avoid tariffs that were supposed to be in place on Dec 15.
Analysts are forecasting that Apple’s earnings will rise by 10% in 2020. This growth is expected to be maintained over the next few years as the hype around 5G mobile phones takes hold.
While market share in China has been down a bit over the past year or two, the company is gaining momentum in the likes of India, with revenue growth of 3% for the quarter ended in June.
Airbnb
Airbnb has been a massive disruptor in the accommodation space in recent years. It has over 150 million users across 100,000 different cities and the company announced in September 2019 that it plans to go public in 2020.
There have been false starts for Airbnb going public in the past, which is mostly because the company does not really need the funding. Since it was founded in 2008, Airbnb has raised $4.4 billion through venture capitalists.
As it is still a private company, only snippets of financial info get released. It did say that in Q2 of 2019 that earnings for the company were $1 billion. However, it did not indicate if it was profitable or not.
While other major disruptor type companies like Lyft Inc. (NASDAQ: LYFT) and Uber Technologies Inc. (NYSE: UBER) have not gotten much love since going public, things seem to be a bit different with Airbnb.
Once the company can showcase that it is profitable or that there is a clear path to profitability, there will likely be a lot of support by the time the IPO rolls around. There was no indication given as to whether or not there will be a traditional IPO or if it will go for a direct listing like Slack Technologies Inc. (NYSE: WORK).
The failed WeWork IPO also provided key lessons for Airbnb CEO Brian Chesky. He says that he learned two things from WeWork’s failures – the importance of reputation and of being profitable.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Apple and Lululemon. Read our full disclosure policy here.