The Year’s Best-Performing Stocks

Shopify (TSX:SHOP)(NYSE:SHOP) is once again among the best-performing stocks of the year. Can they outperform again in 2020?

| More on:

We are exiting the decade on a strong note, and with the longest bull streak in history intact. It has been quite an impressive run for the markets. As of writing, the S&P/TSX Composite Index is up 18.1% year to date and is on pace for its best year since the financial crisis.

As is customary at this time of the year, we look back at the year that was. What better way than to look at the best-performing stocks of 2019? Of note, the selections below were limited to those with a market cap of $100 million or greater. Will these stars outperform again in 2020? Let’s take a look.

The best-performing small cap

Real Matters (TSX:REAL) has crushed the competition in 2019. With returns of 291%, it is not only the best-performing small cap, it is also the best-performing stock on the TSX. The company’s market cap has almost tripled from approximately $350 million to $1.098 billion today. Talk about an impressive run.

Is Real set up for a repeat performance next year? It is improbable, as the company isn’t exactly cheap. It is trading at 33 times forward earnings and at seven times book value. Likewise, it is trading at a significant premium (21.2%) to analysts’ one-year estimate of $10.66 per share. That isn’t to say the company isn’t done growing, it is just doubtful it will triple again next year. Analysts expect 56% average annual earnings growth over the next five years, which is still among the best growth rates on the TSX Index.

The best-performing large cap

Not surprisingly, the best-performing large cap is also a tech company — Shopify (TSX:SHOP)(NYSE:SHOP). No stranger to the top performer list, Shopify has been an unstoppable behemoth. Since it went public, Shopify’s market cap has grown by 2,263% and it is currently worth $56.7 billion. This ranks it among the 10 biggest companies on the TSX Index, surpassing such notable names such as BCE and Canadian Imperial Bank of Commerce.

In 2019, Shopify posted yet another double, as its share price is up 160% as it closes out the year. Is another double on tap next year? Although I am a big fan (and shareholder) of the company, the odds of a double are unlikely. It is trading near record highs in relation to its forward P/E, P/B, and P/S ratios, yet the growth rates are expected to remain stable.

Make no mistake; Shopify is still a company poised to deliver hefty returns, as it is expected to grow earnings by an average of 62.50% over the next five years. Good luck trying to find a large cap with those kind of growth rates. Instead of a double, a more reasonable expectation is for the company to grow in line with earnings.

The best-performing Dividend Aristocrat

As a dividend-growth investor, I like to pay particular attention to the list of Dividend Aristocrats. Which has been the best-performing dividend-growth company? That distinction belongs to Equitable Group (TSX:EQB). This alternative lender is up 87.67% in 2019, rewarding investors with both capital appreciation and dividend growth.

The company has raised dividends in every quarter this year. No other Aristocrat can lay claim to this type of dividend growth. In total, it raised the quarterly dividends by 25%, well above the average dividend-growth rate.

The best part? It is well positioned to continue its run of outperformance. At a forward P/E of only 8.28 and a P/E-to-growth ratio of 0.38, it remains cheap. It also puts into perspective just how undervalued the company was to start the year. Equitable Bank has plenty of runway to grow, as analysts expect the company to grow earnings by an average of 25% annually over the next five years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Mat Litalien owns shares of Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.

More on Tech Stocks

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »

Data center servers IT workers
Tech Stocks

Better Buy: Shopify Stock or Constellation Software?

Let's dive into whether Shopify (TSX:SHOP) or Constellation Software (TSX:CSU) are the better options for growth investors in this current…

Read more »

nvidia headquarters with nvidia sign in front
Tech Stocks

Nvidia Just Delivered a Beat-and-Raise Quarter. There’s 1 Red Flag Investors Shouldn’t Ignore.

The chipmaker continued to benefit from robust demand for artificial intelligence (AI). But can it last?

Read more »

GettyImages-1473086836
Tech Stocks

Why Super Micro Computer Stock Is Soaring Today

The volatile stock is getting a boost from Nvidia.

Read more »

Snowflake logo in snowflake office on wall_snowflake-1
Tech Stocks

Here’s Why Snowflake Stock Skyrocketed Today

Shares of the data company are up 32% for the day.

Read more »

man touching magnifying glass button on floating search bar internet google search engine
Tech Stocks

Why Alphabet Stock Was Sliding Today

The parent company of Google is facing heat from U.S. regulators.

Read more »

chart reflected in eyeglass lenses
Tech Stocks

Top Canadian AI Stocks to Watch in 2025

Celestica (TSX:CLS) stock and another Canadian AI stock are worth watching closely this holiday season.

Read more »