Explosive IPOs, TV streaming wars and the ‘Amazon of Latin America’ - self-directed investor Regan Pearson looks back at three companies that rocketed to stardom in 2019

I think many investors will look back fondly on 2019.

The S&P 500 Index* grew around 25% between January and the start of December prodded higher by falling interest rates. It was the year of the IPO. Or, in the case of shared space company WeWork, the IPO that wasn’t. And, sadly, the world lost investing legend Jack Bogle, founder of The Vanguard Group.

Through all of this, several companies took our hands warmly and showed us visions of the future that sent them rocketing to stardom. For me, three companies, in particular, stood out.

*The S&P 500 includes 500 companies that combined value represents about three-quarters of the US share market which is why it's the benchmark so many investors use to understand what the markets are doing.

1. Roku Inc. (ROKU)

In the great streaming wars of 2019, streaming enabler Roku has emerged an emphatic winner. Growing user numbers and new streaming services like Disney+ (DIS) fueled the share price from US$33 at the start of the year to US$150 per share in early December, a monster 354% increase!

Wait, what is Roku? Roku sells streaming devices for your TV and licences streaming software to TV manufacturers to enable easy connection to services like Netflix (NFLX), Spotify (SPOT) and Amazon Prime (AMZN), which is why these services are on your smart TV. Increasingly the company has also been making money through targeted advertising and has its own streaming channel.

Although Roku is expecting to be unprofitable in 2019, company guidance suggests net revenues for the full year could grow by up to 50%. Over 10 billion hours were streamed through Roku’s platform in the third quarter of 2019 alone, an increase of 68% year-on-year.

2. Beyond Meat Inc (BYND)

Plant-based meat company Beyond Meat had one of the most explosive IPOs of 2019. The company made its share market debut with an IPO price of $25 per share. But insatiable demand quickly sent the share price ballistic. Over the next few months, shares rose to an eye-watering US$234 per share, a post IPO rise of more than 800%.

Beyond Meat uses proteins from beans, and vegetable fats like coconut oil, to create more sustainable food alternatives to farmed food and has been gained strong sales traction with inclusion on big-name menus like McDonald’s (MCD) and Dunkin (DNKN). Although Beyond Meat reported a small profit in the third quarter of 2019, the share price has since started to fall back down to earth. Shares were trading at around US$75 per share a the start of December.

3. MercadoLibre (MELI)

MercadoLibre operates the largest online marketplace in Latin America. It’s like a cross between Amazon (AMZN), eBay (EBAY) PayPal (PYPL) and it’s growing fast. In the nine months to September 30, 2019, MercadoLibre grew net revenues by a whopping 60% year-on-year. But it is the strong use of its payment processing platform, MercadoPago, that really thrust the company into the spotlight in 2019.

MercadoPago is becoming increasingly popular for processing payments in Latin America, both online as well as in traditional ‘bricks and mortar’ stores. This hasn’t gone unnoticed by US payments giant PayPal who in March injected a massive US$750 million into MercadoLibre as part of a capital raising.

The support helped to light the fuse on MercadoLibre’s share price, which rocketed 96% between January and December 2019.

Looking to what lies ahead

All three companies offer us a taste of where the world might be heading as we glide towards a new decade. But tread carefully. As Beyond Meat shows, when expectations for strong growth get projected forward it can create added risk for investors if sentiment changes or if growth unexpectedly slows.

Regan Pearson is a contributing writer for Hatch. The views and opinions expressed in this blog are the author’s own and not necessarily the views or opinions of Hatch. The author has no position in any of the stocks mentioned.