How Emerging & New Market Stocks Will Dominate in 2020

New Market Stocks Coming to Fruition

There are many ways to make money on the stock market, but one of the tried and true methods relies on new market stocks.

New market stocks are essentially companies operating in a sector that is new (or is set to receive a massive innovation so as to be new again in the eyes of customers).

These stocks are exciting to investors for obvious reasons. In some instances, you have companies that, within months or years, go from being non-existent to being worth billions of dollars.

Good examples include many of the tech companies of the past decades, such as Facebook, Inc. (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN). Both companies were able to parlay the momentum of an emergent industry into massive gains for early investors (and, to be fair, late investors as well).

What this means is that new market stocks are some of the best stocks an investor can consider—and the earlier the better.

Getting in before the big rush can mean the difference between hundreds, maybe even thousands, of percentage points of growth and being left dreaming of what could have been.

The stock market is currently replete with emergent industries that are gearing up for big runs in 2020 and beyond. Below are some of the strongest emergent industries that are set to see major growth in the coming years.

AI Stocks

Long the stuff of science fiction, artificial intelligence (AI) stocks are quickly becoming reality. We’re seeing many of the largest companies in the world take notice of this industry and make their own plays.

And while the giants conduct an arms race to see which multi-billion-dollar tech company can pioneer AI tech, many smaller companies will crop up along the way, making them ripe for acquisitions or potentially making their own breakthrough that could generate hundreds of trillions of dollars in value.

McKinsey & Company projects that AI and machine learning could help create up to $2.0 trillion in value in manufacturing and supply chain planning, as well as up to $2.6 trillion in marketing and sales. (Source: “Visualizing the uses and potential impact of AI and other analytics,” McKinsey & Company, last accessed February 25, 2020.)

LinkedIn’s “2020 Emerging Jobs Report” names “artificial intelligence specialist” as the job that saw the most growth in the past five years when comparing different jobs’ hiring growth rates every year, averaged out. (Source: “2020 Emerging Jobs Report,” LinkedIn, last accessed February 25, 2019.)

The LinkedIn report shows a 74% jump each year in AI specialist hirings, on average, since 2015.

“At this stage, most of the workforce doesn’t work in the emerging field of artificial intelligence, but that doesn’t mean it won’t impact everyone,” said Guy Berger, LinkedIn’s principal economist.

“Artificial intelligence will require the entire workforce to learn new skills, whether it’s to keep up to date with an existing role, or pursuing a new career as a result of automation.” (Source: Ibid.)

Which only serves to show just how strong the AI sector is going to be in coming years.

And it won’t stop there.

In December 2019, the House Financial Services Committee’s Task Force on Artificial Intelligence held a meeting with university academics and Wall Street financial services professionals to discuss the impact of AI in a number of areas, including trading, advising, market monitoring, and other activities in the financial services sector.

They are right to be thinking about AI: a report by Wells Fargo predicts that 200,000 banking jobs in the U.S. will be lost over the next decade. (Source: “Artificial Intelligence Is Superseding Well-Paying Wall Street Jobs,” Forbes, December 10, 2019.)

The fact of the matter is that multi-billion-dollar and trillion-dollar industries are going to be radically redefined by AI technology. And in that redefinition, we’re going to see a lot of companies make a lot of money. That windfall of profits is going to be great for investors.

The AI sector is set to be worth trillions of dollars. That’s because the applications of the technology are going to be near limitless. From coding, to analytics, to data mining and processing, to machine learning-based devices, to the Internet of Things (IoT), there are so many possible uses for AI tech.

As such, AI stocks are quite likely operating in what it is bound to be one of the largest and most potentially lucrative emergent sectors.

As stated above, there are many ways to skin this particular cat.

Investing in the larger companies that are funneling tons of money into research and development is a good way to see steady growth over time, with the potential for extremely rapid growth.

Going for smaller companies that are operating in this space, however, could also be hugely beneficial to investors. That’s because these companies are going to be gobbled up quick the second they get a lead in the tech race. And if those companies don’t allow themselves to be acquired, we could very well see some of the most impressive tech initial public offerings (IPOs) in the coming years.

5G Stocks

Another interesting tech sector that should have investors excited is 5G. The latest and greatest in high-speed Internet, 5G looks set to revolutionize Internet technology. Investors who make the right plays at the right time could become very, very rich.

Analysts are expecting to see 5G product launches sometime within the next quarter or so, meaning we could see a surge of profits hit multiple big-name companies. (Source: “AT&T Stock Gets a Downgrade as Analyst Braces for Imminent Wave of 5G Deals,” MarketWatch, January 30, 2020.)

During that surge, smaller 5G stocks will no doubt rise with the tide as many hot new products fly off the shelves into the waiting hands of consumers.

Many of the smaller 5G stocks could be some of the best plays on the tech stock market in 2020. After all, whenever we see a massive technical advancement like what we’re going to see with 5G, smaller stocks operating in the industry see massive gains.

Meanwhile, giants like AT&T Inc. (NYSE:T) are looking to expand 5G tech globally. AT&T recently announced that its 5G network is now live in 10 markets. (Source: “AT&T’s 5G network launches for consumers in 10 markets, but don’t buy a new 5G phone yet,” CNBC, December 13, 2019.)

The fact is that 5G stocks represent yet another trillion-dollar opportunity on top of AI stocks (not to mention that the two technologies could work in conjunction with one another in the near future).

Meat-Alternative Stocks

Another notable subsector of the tech industry trades circuit boards and computers for taste buds and farms. But don’t be fooled, this is just as much related to technology as AI and 5G .

I’m talking about meat-alternative stocks, which made their first entry on the public stock market by way of Beyond Meat Inc (NASDAQ:BYND).

That company began 2020 with a lot of questions surrounding it. The most poignant one was whether BYND stock could maintain its furious growth rate. The stock rose by about 300% going into 2020.

To many, its best days were behind it, but to many others—myself included —Beyond Meat stock was just getting started. And it turns out we were right.

Chart courtesy of StockCharts.com

Beyond Meat stock has gained an additional 50% year-to-date. And frankly, I don’t see it slowing down anytime soon. That’s because the market it operates in is so damn strong.

Consider that market research company The NPD Group, Inc wrote that 18% of Americans have been attempting to consume less meat. (Source: “Beyond Meat’s stock surges to all-time high,” CNBC, July 23, 2019.)

That trend will likely continue as people become ever more health- and environment-conscious. Couple that with the fact that the farming industry hasn’t exactly been celebrated for its—at times—vicious treatment of animals and you have the perfect storm of an opportunity

What we have then is a product, food, that is essential to consumers but is undergoing a radically innovative period—possibly the most radically innovative period since humans switched from hunter-gatherer societies to crop farming.

That combination, as you’d imagine, could pay off handsomely for investors.

The food industry is, as you’d expect, big business. The meat-alternative sector, if it reaches its potential, has the ability to be worth billions upon billions of dollars. The next decade could see the meat-alternative market top $140.0 billion. (Source: “Alternative meat to become $140 billion industry in a decade, Barclays predicts,” CNBC, May 23, 2019.)

While Beyond Meat Inc is a fine company, there will no doubt be many competitors cropping up in the near future, with meat alternatives likely going to balloon in popularity and value as time goes on.

Renewable Energy Stocks

One of the most impressive stories of 2020 so far has been the impressive run of Tesla Inc (NASDAQ:TSLA).

Similar to Beyond Meat stock, many believed that Tesla stock had already seen its best days speed by. And much like BYND stock, they were wrong. TSLA stock has roughly doubled since the beginning of 2020.

Chart courtesy of StockCharts.com

And while those gains are great for Tesla stock investors, it’s even better for those who want to make money by investing in renewable energy stocks.

You see, Tesla stock has served as a proof of concept. Which is to say that there is a huge appetite among both consumers and investors for renewable energy stocks.

For the third time in this piece, I’ll be invoking the “T” word. The renewable energy sector has the ability to be worth trillions of dollars in the coming years.

According to a UN report, investment in new renewable energy capacity (not including large hydro) from 2010 to 2019 was estimated at $2.6 trillion. (Source: “Global Trends in Renewable Energy Investment 2019,” United Nations Environment Programme, last accessed February 25, 2020.)

That’s more than three times the amount invested in the previous decade. It’s a significant sum to be poured into the industry, and that number is expected to grow as more and more countries make serious efforts to curb climate change.

A report by BloombergNEF, meanwhile, showed that investments in clean energy have been massive, totaling over $332.0 billion in 2018. (Source: “Clean Energy Investment Exceeded $300 Billion Once Again in 2018,” BloombergNEF, January 16, 2020.)

What this means is that the renewable energy market is rife with opportunity for exciting green tech startups to come in and begin raking in the money.

As the industry grows, I imagine that many companies will see strong growth as governments and private companies alike dump boatloads of money into green technology in the coming years.

Analyst Take

Three of the four industries mentioned above are set to be worth trillions of dollars, and the other is valued in the hundreds of billions. In other words, this is a great time to be in the tech stock market.

What’s more, many of these companies have been generating entirely new markets that are going to drum up huge amounts of cash. From AI to 5G, to meat alternatives, to green tech, these sectors will likely expand exponentially in the coming years.

And during that expansion, we can expect a lot of money to be made. During that time, investors who get into these new market stocks will likely see their portfolios grow.

2020 may be one of the best years ever for investors to take advantage of exciting opportunities in the tech industry. After all, almost everything we use on a daily basis—from cars, to the Internet, to food—is set to be radically redesigned in the coming years.

We’ve already seen that these industries have the capability to produce massive gains for investors. Going forward, I anticipate we’re going to see many more success stories.