There are multiple factors and cycles that could potentially fuel continued global growth in 2020.
Here are 3 stocks that are well poised to take advantage of future economic growth in 2020 and beyond.
CSL Limited (ASX: CSL)
There’s no denying that 2019 has been a blockbuster year for CSL, with the CSL share price surging more than 52% for the year. Earlier this year CSL’s FY19 results reported revenue growth of 11% and a 7% growth in profit for the financial year.
CSL is well poised to deliver further share price and volume growth in 2020 with the blood plasma market expected to remain tight for the next 3 years. The company is still investing heavily in building plasma collection centres in order to expand market share.
Recently, equity analysts from Macquarie retained an outperform rating on CSL with a $300 price target. Analysts cited that the company is well poised to capitalise on future growth with its Idelvion technology and plasma collection network.
James Hardie Industries (ASX: JHX)
James Hardie has also performed strongly in 2019, with the company’s share price bolting more than 88% for the year. The company’s growth has been fuelled by multiple micro and macro factors including lower interest rates which have fuelled housing activity.
Earlier this year the company reported results for FY19, which saw a 57% increase in net operating profit. Revenue also increased by 22% for the financial year with James Hardie forecasting stronger growth in FY20. A potentially weaker US dollar and sustained low interest rates has the company well-poised to deliver on growth in the short term.
BWX Ltd (ASX: BWX)
The BWX share price opened the year at around $1.50 and is currently trading 180% higher at $4.26. Although the current share price is far from its $8.00 all-time high, the bounce reflects changing sentiment around the company’s future growth prospects.
The owner of Australia’s number one selling skincare brand Sukin, BWX has turned its fortunes around by reducing inventories and focusing on exposure to foreign markets. The new strategy was reflected in the company’s improved performance for the second half of FY19. Backing a potential drive in earnings, BWX management forecasted guidance of 25% revenue growth and up to 35% earnings before interest, tax, depreciation and amortisation growth in FY20.
Should you buy?
Although there are plenty of cases for optimism in the current market environment, it should be noted that there are substantial risks as well. Central bank intervention and monetary actions must be converted into further growth in order to sustain market momentum.
Therefore, I think the most prudent strategy for investors is to keep these companies on a watchlist and scrutinise their business models before making an investment decision.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended BWX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.