It certainly was an eventful year for the S&P/ASX 200 Index (ASX: XJO) in 2020.
After losing as much as a third of its value at the height of the pandemic, the benchmark index was on course to finish the year flat until a last minute selloff on 31 December. This ultimately led to the ASX 200 index recording a 1.4% decline for the year.
The COVID-19 pandemic dominated the headlines last year and had a major impact on the performance of Australian companies.
While some companies were impacted negatively, others benefited greatly from changing consumer behaviours, the working from home initiative, and other tailwinds.
Listed below are the five best performing ASX 200 shares in 2020. Here’s why they were on fire over the 12 months:
Afterpay Ltd (ASX: APT)
The Afterpay share price was the best performer on the ASX 200 in 2020 with a whopping 303% gain. However, that gain is only telling you half the story. At the peak of the crisis, the Afterpay share price had plunged to a two-year low of $8.01 after investors panicked that bad debts would spike and underlying sales would collapse. However, those fears were extremely wide of the mark and Afterpay recorded exceptionally strong growth in the ANZ and US markets without compromising its bad debts. This led to the Afterpay share price ending the year at $118.00, which is a staggering ~1400% higher than its March low.
Kogan.com Ltd (ASX: KGN)
The Kogan share price was the next best performer with a 150% gain. This ecommerce company was one of the biggest winners from the pandemic thanks to the dramatic shift to online shopping. With bricks and mortar stores forced to close during lockdowns, consumers flocked online for their shopping. Many for the first time. This resulted in Kogan reporting explosive customer, sales, and profit growth. According to a report by IBM, the pandemic has accelerated the shift away from physical stores to online stores by approximately five years.
Mineral Resources Limited (ASX: MIN)
The Mineral Resource share price was a strong performer and stormed 127% higher in 2020. The catalyst for this was the mining and mining services company’s exposure to two of the hottest commodities of 2020. A rebound in lithium prices due to electric vehicle optimism and a surging iron ore price got investors excited.
Fortescue Metals Group Limited (ASX: FMG)
The Fortescue share price wasn’t far behind with an impressive 119% gain in 2020. As one of the world’s leading iron ore producers, investors were fighting to get hold of its shares after the price of the steel making ingredient jumped to multi-year highs. This was driven by supply constraints in Brazil and robust demand in China as it invests heavily in infrastructure to boost its economic growth. The iron ore price ended the year at US$155.84 per tonne. This compares incredibly favourably to Fortescue’s C1 costs of US$12.74 per wet metric tonne.
Netwealth Group Ltd (ASX: NWL)
The Netwealth share price was on form in 2020 and recorded a 104% gain. The investment platform provider was a strong performer in FY 2020 despite the pandemic. For the 12 months ended 30 September, Netwealth delivered a 21.7% increase in underlying net profit after tax to $43.8 million. The catalyst for this was a 35% increase in funds under administration (FUA) over the 12 months to $31.5 billion. Pleasingly, this strong form has continued since then, with Netwealth ending the first quarter of FY 2021 with FUA of $34 billion.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Netwealth. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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