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The historic stock market rout may have a few hidden winners as the coronavirus crisis ricochets across the globe.
To be certain, the week-long selloff has laid waste to stocks in virtually all sectors, forcing the S&P 500 (^GSPC) into its fastest ever 10% correction and shaving some $5 trillion off the market’s value.
However, a clutch of names have managed to defy the downward trend or are at least outperforming the broader market’s bloodletting.
Some are pharmaceutical companies working on a coronavirus vaccine, while others are consumer-facing companies expected to benefit from homebound people trying to avoid public gatherings.
Big and (some) small pharma
To be sure, the pharma sector has been volatile since the virus first started battering markets. Analysts have warned that not every company that promises a vaccine can actually deliver one, and the path toward developing a treatment may take months, if not years.
Yet some names are emerging as longer-term bets: Among them are big pharma companies Johnson & Johnson (JNJ), Gilead (GILD) and Sanofi (SNY). Some smaller names include Moderna (MRNA) Inovio (INO) and Novavax (NVAX), all of which have seen fleeting boosts to their stocks amid the current carnage. Experts say attention to smaller companies is a stark contrast from the market response to the Ebola outbreak several years ago.
Moderna is leading the vaccine race with a candidate ready to be tested by the National Institute for Health, but it could run into problems scaling for the demand of an epidemic. Vaccines are unlikely to be ready by the end of this year, however.
Meanwhile, Gilead is ahead on the treatment front, with its antiviral Remdesivir in clinical trials both in the U.S. and in China. Separately, AbbVie's (ABBV) has its own antiviral candidate being put to the test in China. And Vir Biotechnology (VIR), meanwhile has partnered with a Chinese biotech firm, WuXi Biologics, to develop a treatment to Covid-19.
Home fitness, home office and home entertainment
The deadly pathogen has now spread to multiple continents, claiming over 2,700 lives. The spread has forced many around the world to stay indoors and away from others in either forced or voluntary quarantine.
As a result, some of the companies that provide at-home services have reaped major benefits during the historic market rout this week — as did consumer staples associated with germ-fighting.
On Amazon’s website Friday, hand sanitizers were flying off the virtual shelves, with several of the most commonly-used brands of the product out of stock — and surging demand drove up the prices on others.
While the broader market tumbled more than 10% as of Thursday’s close, video conferencing company Zoom Communications (ZM) shares have soared a whopping 11%, while at-home fitness provider Peloton (PTON) jumped 12%.
A bright spot among the so-called “FAANG” stocks, Netflix (NFLX) shares shed over 3% over the past week, but have still outperformed the broader market on expectations that couch potatoes around the world will ramp up their streaming as the virus spreads.
iQiyi (IQ) — often referred to as the Netflix of China — also got a boost this past week, as people in China stayed indoors.
“Workplace, educational and entertainment applications are obviously seeing a surge in usage in China as a result of more people working out of home at present because of health concerns,” Barclays analyst Kannan Venkateshwar wrote in a note Friday.
High yielding stocks that ‘fit the theme’
Meanwhile, BMO Capital Markets rated a slate of high-quality, high dividend-yielding stocks at Outperform on Friday, given that they “fit the theme” of the current selling environment.
These include health care companies like Anthem (ANTM), Amgen (AMGN) and Cigna (CI), and some consumer companies that could benefit from the stockpiling of food — names like Dollar General (DG), Kellogg (K), and Tyson (TSN).
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[Editor's Note] My No. 1 Stock For 2020
Paul Mampilly is a Wall Street legend.
(Barron’s crowned his hedge fund as the “world’s best” and Kiplinger ranked it in the top 1%.)
But a few years ago, he left Wall Street.
“I just grew tired of helping the rich get richer,” Paul explains. “So I started sharing my No. 1 investment picks with Main Street Americans.”
And his No. 1 stock picks have been phenomenal.
In 2016, Paul’s No. 1 pick — Tableau Software — shot up 199%.
In 2017, Paul’s No. 1 pick — Foundation Medicine — shot up 524%.
In 2018, Paul’s No. 1 pick — Roku — shot up 393%.
In 2019, Paul’s No. 1 pick — MTech Acquisitions — shot up 332%.
But Paul believes his No. 1 stock pick for 2020 could go even higher.
And the reason why is causing quite the stir.
“It’s a $10 stock that could climb in the days ahead,” he says during a recent interview. “It’s a company that will help the Dow to 100,000.”
Yes, you read that right.
He said: “Dow 100,000.”
If you think that sounds extreme, you’re not alone.
The host of the interview doubted Paul’s prediction, despite knowing that Paul correctly predicted every major market turn over the last two decades.
Then Paul did the unthinkable.
He showed the host one chart … a chart so powerful it silenced his critics.
Paul says: “As you can see, it’s not just the Dow that could climb to 100,000. Real estate will double. That’s why I call this new era America 2.0. And this company is at the forefront of it all. The stock is a steal at $10.”