It is no small feat for a stock to double in a year. After all, the average annual gain of S&P 500 is only about 10%. Beating that comeback by ten is an impressive achievement. But doubling in two consecutive years goes beyond impressive.
There probably aren’t many stocks that will achieve this feat in 2020 and 2021. However, there are three growth stocks which has doubled (and many more) this year and I think I have a very good chance of doing it again in the new year.
Etsy‘s (NASDAQ: ETSY) stocks have climbed more than 320% since the start of the year. You can thank COVID-19 for this remarkable increase. The pandemic has fueled an increase in online shopping, which has boosted sales of the e-commerce platform for handicrafts.
Some might fear that Etsy will struggle to replicate its success in 2021. I’m not. My take is that the pandemic has opened up a much larger customer base for Etsy. I think these customers will continue to look to the ecommerce site for unique gifts that are not available in most stores.
Equally important, Etsy makes it easy for sellers to do business on its platform. The business registration process is straightforward. Its commissions are low. Etsy’s policies are expected to attract more craft merchants, which in turn will likely attract even more customers to its site.
What about the competition, especially from the e-commerce giant Amazon? I agree with my Motley Fool colleague Jason Hall that Etsy is fundamentally Amazon-proof. Despite its excellent performance this year, Etsy’s market cap is still below $ 25 billion. I think there is still a long way to go for Etsy to double again.
Quickly (NYSE: FSLY) has given itself a very appropriate name (even if “quickly” is not a real adverb). The tech stock has quintupled in 2020 so far. As was the case with Etsy, the pandemic served as a big catalyst for Fastly. The increase in e-commerce traffic has pushed businesses to turn to Fastly’s advanced computing platform and Content Delivery Networks (CDNs), both of which increase the speed of end-users of the Internet.
Of course, there have been some wild swings along the way. After rising more than 540% year-to-date in mid-October, shares of Fastly plunged 50% amid uncertainty over whether its biggest client, TikTok, would be able to to continue to serve the US market.
My hunch is that the new Biden administration won’t try to punish Chinese companies like Trump did in the White House. This should alleviate Fastly’s concerns about the evaporation of its TikTok revenue. I don’t think the demand for faster internet content delivery will dry up at all. And I expect Fastly’s recent acquisition of web security company Signal Sciences to pay off.
I fully realize that Fastly’s valuation is at a breathtaking level, with stocks trading at over 40 times sales. But the company is still small with a market cap of less than $ 12 billion. And its market opportunity remains really great. It won’t surprise me if Fastly defies expectations and skyrockets 100% or more next year.
3. Innovative industrial properties
Innovative industrial properties (NYSE: IIPR) classified as the Best Performing Real Estate Investment Trust (REIT) Stocks in 2020. It was not a close competition, by the way. Shares of IIP climbed nearly 150%, about 50% higher than No.2 stock of the REIT.
However, IIP is no ordinary REIT. The company focuses on the US medical cannabis industry. The bread and butter of IIP is to make sale-leaseback agreements. In these deals, medical cannabis operators sell their properties to IIP and then lease them to the company. These transactions generate capital for medical cannabis operators. And they generate consistent income and cash flow for IIP.
I think the IIP might have the easiest path to double again in 2021 of the three stocks on our list. All the business has to do is keep buying and renting additional properties. This will increase IIP’s profits, which in turn will cause its stock to rise.
Finding more properties probably won’t be very difficult. Thirty-five states have legalized medical cannabis, and many of these markets are still in their infancy. IIP currently owns properties in less than half of these states. With its excellent growth prospects and attractive dividend, this REIT could be a big winner for investors next year.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.