I struggled to find 5 top picks for 2020, I was only able to come up with 2:
- DR Horton (DHI). I think this homebuilder, currently at about $53, will reach $86 by year end. With low rates and a booming economy this is my top pick. EPS growth over the last 5 years was about 24% and return on equity is about 17%, current P/E is only 12, so I think this stock is undervalued.
- LCI Industries (LCII). This auto component supplier, currently at about $108, is undervalued and could reach about $164 by year end. It also sports a dividend yield of about 2.4% as a bonus. EPS growth over the last 5 years was about 23% and return on equity is 18%. The P/E is a bit high at about 20, but expected EPS growth is 20% so I still think that this stock is undervalued.
For a speculative pick, I still like ROKU, as it is not tied to single streaming supplier – it supports Disney+, Hulu, Netflix, just about every streamer out there. And they have their own ad-supported Roku Channel. As I said on traditional value metrics I would not pick them but I bought a small amount of shares back in 2018 at about $47, and the stock is now about $148! I still think that this stock has room to grow.