Motley Fool’s Best Stock Picks Of 2020
The Motley Fool’s Stock Advisor service has been one of the most successful stock picking services of the last two decades. The Stock Advisor portfolio has returned 322% since launching in 2002 compared to 116% for the S&P 500.
(Note: All performance numbers are as of May 2022)
In the midst of the COVID-19 pandemic in 2020, the Motley Fool’s team leaned heavily into tech stocks and companies that were poised to benefit from major shifts in remote work and consumer behavior. We’ll look back at some of the Motley Fool’s best stock picks of 2020 and see how they’ve performed over multiple timeframes.
What is The Motley Fool?
The Motley Fool is an investment idea and stock picking service founded by brothers Tom and David Gardner in 1993. The Gardner brothers sought to create an investment platform that was accessible to self-directed investors and that went against the grain of traditional financial opinion.
Today, The Motley Fool offers online investment articles, podcasts, and a variety of premium stock picking newsletters. Its services include Motley Fool Millionacres, Motley Fool Rule Breakers, Motley Fool Everlasting Portfolio, Motley Fool Rule Your Retirement, Motley Fool Options, and Motley Fool Stock Advisor. The Stock Advisor newsletter, which was launched in 2002, remains the platform’s flagship service and has more than 700,000 subscribers.
Motley Fool Investment Style
The Motley Fool’s Stock Advisor newsletter offers two new stock picks each month. The stock picks were originally chosen by Tom and David Gardner. As of 2022, stock picks are issued by Motley Fool’s team of analysts who follow the investing methodology established by the Gardner brothers.
The analyst team focuses on stocks that are poised for explosive growth. Rule Breakers picks tend to concentrate in the tech sector, while Everlasting picks often focus on emerging sectors or disrupters within established industries.
Stock Advisor picks are intended to be long-term buys. The newsletter suggests that new picks will be in the portfolio for a period of at least five years, and there are still several stocks in the portfolio that were first recommended in 2002. In fact, only one out of 24 stock positions opened in 2020 has been closed.
Motley Fool Stock Picks 2020
Many of the Motley Fool’s stock picks in 2020 sought to capitalize on the upheaval caused by the COVID-19 pandemic, including a shift to remote work and a significant increase in online shopping. Many picks outperformed the market in 2020 and 2021, but have suffered more than the broader market during the sell-off in the first half of 2022. The Motley Fool has held firm on the majority of these picks, and the current sell-off may represent an opportunity to buy at a discount.
While Motley Fool offers plenty of fresh stock picks every year, they also reiterate past stock picks when they see a good buying opportunity.
All performance data is as of May 2022. We will revisit the performance of these picks within the year.
- Date of original pick: 11/16/2012
- Date of 2020 pick: 1/2/2020
Tom Gardner first picked Tesla in 2012, when relatively few analysts were bullish about the company’s ability to disrupt the automotive industry. Fast-forward to today, and that pick has resulted in gains of more than 10,000%.
Gardner re-recommended Tesla at the start of 2020, prior to the COVID-19 pandemic, because he believed that the company still has room for growth. He cited not only Tesla’s continued dominance in the electric vehicle market, but also the fact that Tesla is pioneering autonomous vehicle technology and battery technology that can give its vehicles a long-term moat.
Gardner’s 2020 pick came just before an enormous run-up in Tesla’s stock price, yielding returns of more than 600% even after the 2022 sell-off. Notably, Gardner re-recommended Tesla again in May 2022.
- Performance since original pick: 10,245%
- Performance since 2020 pick: 630%
- Date of original pick: 7/15/2016
- Date of 2020 pick: 4/2/2020
Shopify was first added to the Stock Advisor portfolio in July 2016, then re-recommended in back-to-back months in 2018 and again in April 2020. Tom Gardner picked the stock because it enables small businesses to take part in ecommerce without giving up control of their stores to Amazon.
The stock was one of the major winners of the growth of ecommerce before the pandemic, returning 930% since the 2016 recommendation and 162% since the first 2018 recommendation. It also gained 224% in the first 12 months after Gardner re-recommended it in 2020, although the stock has given up all of those gains in the first half of 2022.
- Performance since original pick: 930%
- Performance since 2020 pick: -6.20%
- Date picked: 6/4/2020
Cybersecurity firm Crowdstrike was a new addition to the Stock Advisor portfolio in 2020. Tom Gardner saw the increasing importance of cybersecurity in a remote-first world as a reason to invest in this stock during the COVID-19 pandemic. He cited Crowdstrike’s high user retention rates and strong leadership as reasons for picking this stock over competitors.
Since his pick, Crowdstrike stock has benefited from events like the Colonial Pipeline hack and the war in Ukraine. In the 12 months after Gardner’s pick, the stock gained 122%, although the recent tech sell-off has reduced the stock’s net gain to 45%.
- 12-month performance: 122%
- Performance since 2020 pick: 45%
- Date picked: 7/16/2020
ASML Holding was another new addition to the portfolio in 2020, this one made by David Gardner. ASML Holdings makes the machinery required to produce semiconductors, so Gardner described this as a “picks and shovels” play in a world that is increasingly dependent on computer chips. He particularly liked that ASML has used excess profits in the past to repurchase its shares and pay a healthy dividend to shareholders.
The importance of ASML Holding to a wide variety of industries is reflected in the fact that it suffered far less than most tech companies during the recent sell-off. The stock is down only 33% from its November 2021 highs, and the Stock Advisor pick maintains a 44% gain.
- 12-month performance: 77%
- Performance since 2020 pick: 44%
- Date of original pick: 10/3/2019
- Date of 2020 pick: 3/19/2020 & 4/16/2020
Zoom was added to the Stock Advisor portfolio by David Gardner in 2019, at a time when remote work was an option only a handful of major companies were offering. He re-recommended the stock on the cusp of the COVID-19 lockdowns, and again a month later once the importance of enterprise-scale video conferencing had become clear to many.
Gardner was impressed by the company’s rapid growth and future potential in a world where remote work would be increasingly common. He also pointed to the company’s leadership and its ability to quickly correct mistakes that happened early in the pandemic.
At the peak of Zoom’s stock price in 2020, Gardner’s original 2019 pick was up 630%. One year after his first 2020 re-recommendation, the stock was up 150%. However, the stock has underperformed the market since late 2020, in part because of the rise of many competing video communications platforms.
- Performance since original pick: 16%
- Performance since 2020 pick: -18%
Motley Fool’s Lifetime Performance
The Motley Fool re-recommended several of its all-time best-performing stocks in 2020, including stocks like Tesla and Shopify. These proved top performers in 2020 and 2021, although the harsh sell-off in the first half of 2022 wiped out many of the gains in the portfolio. New picks like Crowdstrike and ASML have also been hit hard by the sell-off, although they maintain unrealized gains.
The Motley Fool’s overall performance suggests that these picks may pay off in the long run. Since launching in 2002, the Stock Advisor portfolio has gained 322% compared to 116% for the S&P 500. Considering only positions that are currently open in the portfolio, Stock Advisor has outperformed the S&P 500 by 205% even after the 2022 sell-off.
In fact, the bearish market conditions may represent an opportunity for aggressive investors to pick up many of the Motley Fool’s 2020 picks at prices lower than those at which they were originally recommended. We’ll provide an update on the performance of these stocks later in the year.
Conclusion: Motley Fool’s 2020 Stock Picks
The Motley Fool’s Stock Advisor portfolio invested in tech and pandemic-related stocks in 2020. Many of those picks saw significant gains in 2020 and 2021, and many are holding onto solid gains even after 2022’s massive stock sell-off. For aggressive investors, now may be an opportune time to invest in or double down on some of the Motley Fool’s best 2020 stock picks.