3 of my best investment ideas in 2020
Posted On July 26, 2022
[view original post
The FTSE 100 is down 20% so far this year but I’m having one of my best investment years to date, so far. Stocks and shares in 2020 have been on a roller-coaster ride. After the stock market crash in March, some share prices have recovered much faster than others.
Amongst the strongest winners were US technology companies that benefited from millions of workers shifting to work from home. One way I tend to gain exposure to these high growth technology companies is with mutual funds and investment trusts.
My best investment idea in this space is Scottish Mortgage Investment Trust (LSE:SMT). Don’t let the name fool you, it has nothing to do with mortgages. It’s mostly invested in large, global, technology companies, including Tesla, Amazonand Netflix.
So far this year, its price has gained a pleasing 55%. This comes after a 26% gain in 2019. My view is that these large technology companies have great prospects, and I’m happy to keep this investment trust on my best investment ideas list.
Best of the best investment ideas
Somewhat ironically, my best of the best investments so far in 2020 is an online competition company called Best of the Best (LSE:BOTB). Its share price is up nearly 400% this year!
Even after such a strong share price performance, I’m confident enough in its prospects to continue buying on any weakness. After a series of profit upgrades over the past year or so, Best of the Best continues to deliver increased revenues and profits, ahead of market expectations.
This niche company was founded over 20 years ago, and built up its brand in UK airports with “spot the ball” competitions for prizes, including high-value cars. In recent years, it has gradually been moving the business online.
The initiatives taken to re-orientate its marketing strategy toward an online-only model seem to be proving successful. I’d say that BOTB has great quality metrics with earnings growth in triple digits, an undemanding valuation and no debt. Therefore, I am happy to keep it on my best investment ideas list for 2020.
I believe the best investment ideas are often found in under-researched smaller companies. I reckon small and mid-sized companies have more potential to become the giants of the future. As the investment veteran Jim Slater once said, “elephants don’t gallop”.
Another small company that forms one of my best investment ideas this year is Codemasters (LSE:CDM). The UK gaming sector is thriving, and this year’s Covid-19 lockdown has provided a further boost to game playing. The Codemasters share price is now up 40% this year.
The board recently announced that earnings will be significantly ahead of current market expectations, driven by a particularly strong performance of its Formula One title, F1® 2020 and continued strength of the company’s back catalogue.
With earnings growth, return on capital, and profit margin all in double-digits, I reckon Codemasters will stay on my best investment ideas list this year.