The S&P 500 crashed 17% due to the coronavirus pandemic. Netflix, Disney, and Tesla are well-positioned to take off once the economy reopens.
Covid-19 has hit global markets hard, and the S&P 500 has no immunity over the virus. The bellwether index is down over 17% from all-time highs. While bulls have been aggressively buying the dip, investors who missed the massive bounce may benefit by looking ahead.
Here are three fundamentally sound companies positioned to surge once the global health crisis is over.
Entering the year, Tesla (NASDAQ:TSLA) was the hottest stock in the world after exploding nearly 130% in one month. The electric vehicle maker has since cooled off, considering that its Fremont facility is closed until May 4 due to coronavirus. But halfway across the world, the EV firm is flexing its muscles.
Tesla’s China sales remained strong in Q1 2020 despite coronavirus ravaging the country. The automaker was responsible for 25% of electric vehicle sales in China during the stretch.
In March, Tesla delivered 10,160 vehicles to China en route to a total delivery of over 88,000 cars–marking the company’s “best first quarter ever.”
Tesla appears to have survived the worst of the coronavirus pandemic in China. Likely, the company will also weather shelter-in-place orders in the United States. As a result, Tesla’s stock is likely to go up after the economy reopens.
One of the biggest winners of the coronavirus health crisis is Netflix (NASDAQ:TSLA). The on-demand video streaming company reported 15.77 million new subscribers in the first quarter. It’s no secret that lockdowns drove millions of consumers to rely on Netflix for entertainment.
While some analysts believe that Netflix’s growth would slow down once the economy reopens, the numbers tell otherwise.
One of Netflix’s strengths is the production of original content. The controversial documentary Tiger King drew 64 million households. We’ll likely see more of the same in the coming months after Netflix raised $1 billion to acquire and produce fresh content.
Also, Netflix’s customer retention is second to none. On average, 60% of users keep their subscription 24 months after signing up even amid price hikes and the emergence of new competitors.
People might start going out more after the crisis, but with Netflix’s ability to draw and retain subscribers, the company has yet to hit the ceiling.
Walt Disney (NYSE:DIS) is a shrewd company that takes care of its investors. The entertainment giant grabbed headlines for letting its 100,000 workers rely on unemployment insurance to save $500 million per month due to the pandemic.
The cutthroat decision puts the company in a position to hit the ground running once the crisis is over. To help ensure that the company survives the worst of the pandemic, Disney issued $7 billion in new debt to offset the $30 million in losses each day operations are halted.
With DIS trading nearly 35% below its all-time high, the stock is at a bargain. Of course, there’s no harm in waiting for it to drop even lower. But the stock will likely bounce back once Disney resumes the production of shows and the operations of its theme parks after Covid-19.