While coronavirus is disrupting supply chains around the world, a handful of stocks could see a lift as panic-buyers flood the shops. Here are the top four stocks to monitor.
The Dow ripped meaningfully higher on Monday as investors buckled up for what is likely to be a bumpy ride. The coronavirus caused financial markets to plummet to historic lows last week, but despite a rise in new cases over the weekend, the stock market roared back to life on Monday. The rally was helped in-part by doomsday preppers, who cleared the shelves of everything from hand sanitizer to toilet paper.
While Monday’s rally is by all accounts fragile, some retail and consumer products stocks could see a longer-term lift as panic-shoppers stock up on necessities. Here’s a look at four stocks that could see sales surge as a result.
Bulk-buying is the hallmark of doomsday prep, and there’s no better place to do it than Costco. This week COST stock saw its share price surge after Oppenheimer analyst Rupesh Parikh noted that weekend traffic was higher than usual.
We expect material comp benefits for Costco. Our observations and conversations with store employees [and] management suggest a strong pickup in traffic starting Thursday through at least Saturday.
Social media confirmed the rush, with Twitter users sending in photos of barren shelves and lines wrapping around the building.
Streaming service Netflix could also have a bumpier quarter as more and more people stay indoors. While those adhering to self-isolation guidelines make up only a tiny percentage of the public, as more and more cases present themselves around the world, indoor entertainment will almost certainly gain traction.
As Bill Smead of Smead Capital Management put it,
The market likes Netflix under the assumption that hibernation comes at a premium.
With the risk of coronavirus on the table, $8.99 per month looks much more appealing than heading out to a crowded movie theater. For that reason, Netflix could see its subscriber numbers surge during the current quarter as coronavirus encourages consumers to hibernate.
Video conference technology Zoom is another place to look for a coronavirus boost. Governments around the world have asked employers to evaluate whether some employees can work from home to avoid the potential spread of the virus. That will require a great deal of technical support to keep operations running smoothly. Zoom will likely be a large part of that transition.
The firm’s remote conferencing technology, chat and mobile collaboration platform offer a solution for businesses that want to avoid public gatherings. This service will be especially useful for international firms as world-wide travel becomes more limited.
JC O’Hara of MKM Partners noted Zoom’s potential to run in the coming weeks in a report earlier this week saying,
We tried to identify what products/services/companies would potentially benefit in a world of quarantined individuals. What would people do if stuck inside all day? Rather than attempting to forecast how much lower these stocks may go, we decided to explore which stocks may hold up better.
There are a lot of reasons to like 3M stock outside of the coronavirus scare, but the firm is looking especially appealing as the demand for face masks continues to rise. To protect against the spread of coronavirus, many have started wearing face masks. The surge in demand has been difficult for firms like 3M to keep up with.
This week, the US Department of Health and Human Service has agreed to buy up leftover face masks once the coronavirus scare is over. While demand is robust now, companies like 3M that are churning out as many masks as possible could be left with overwhelming excess when the virus is contained. The government’s promise to purchase that excess adds a nice safety net.
There’s no guarantee that the economy will act predictably during this time, but these coronavirus stocks have a shot at outperforming the pack.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.
This article was edited by Aaron Weaver.