These stocks are positioned to endure COVID-19.
As the number of worldwide coronavirus cases surges past 450,000, governments across the globe are taking extraordinary measures to protect people. Entire countries like Italy, Spain and India are in lockdown, while in the U.S., at least 17 states have ordered residents to stay at home. With roughly one in every three Americans now trapped in their homes, companies that entertain people, provide necessary goods and services or allow employees to work remotely are only going to benefit. More people than ever before are being forced to stay home, and these are the stocks to buy that make isolation easier to survive.
Amazon (ticker: AMZN)
With many consumers unable to leave their homes, shoppers are turning to Amazon in larger numbers than ever before. Amazon’s diverse portfolio of businesses, from its e-commerce site to cloud computing, grocery delivery through Amazon Prime Fresh, and even its Twitch live-streaming service, are all uniquely positioned to profit from more people getting online. Of course, increased demand has led Amazon to deprioritize shipping nonessential items, focusing on household staples, medical supplies and other high-demand products. That shift in direction has angered many of its third-party sellers, but AMZN stock has held up well throughout the crisis. While these trying times may mean big changes to Amazon’s business, that business is booming.
Though it had originally spent the last five years investing heavily in its e-commerce business to compete with Amazon, Walmart is now well-positioned among grocery-store chains to profit from coronavirus. The results speak for themselves: Walmart’s e-commerce sales grew 37% in fiscal year 2020, and shares of Walmart recently hit an all-time high. And while Walmart’s business segments are perfectly positioned, so too are its stores — an incredible 90% of Americans live within 10 miles of a Walmart, making curbside grocery pickup a breeze for a growing number of customers who would rather shop from home. So even as online retail is surging, the world’s largest brick-and-mortar retailer isn’t about to be left behind.
Domino’s Pizza (DPZ)
Domino’s Pizza’s decision to build up its delivery service with a focus on quality rather than simply speed has turned out to be a savvy move. The pizza company is designed to profit from people choosing to order in rather than eat out, with 55% of its sales in 2019 coming from delivery. But even if customers want to take their pizza to go, Domino’s is ready — the company spent the last few years enhancing its carryout operation, creating fast lanes for to-go orders and building better ordering platforms. Plus, the company’s vast footprint of more than 6,000 locations in the U.S. makes it easy for hungry customers to swing by their local Domino’s before retreating back into isolation.
Like Amazon, Microsoft provides a variety of goods and services that suddenly seem perfectly suited for long periods of time stuck at home. For those who still must work, Microsoft’s suite of Office products has never been more important, and more people than ever are turning to Teams, the company’s work-chat service. In fact, last week Microsoft reported that Teams saw an impressive 44 million daily active users, more than double the last number it reported in November. And as for those who need a distraction, Microsoft’s Xbox has never been more appealing; Microsoft’s XBox Game Pass subscriptions doubled in the last quarter, and that number is sure to increase the longer children across the country stay home from school.
A rising tide lifts all boats, and as the tidal wave of employees who need to work from home hits the internet, work-chat app maker Slack has enjoyed the benefits. In its last earnings report, revenue slowed down and Slack provided lower-than-expected guidance, sending shares into free fall. But demand due to coronavirus has put some much-needed wind in the company’s sails, with Slack announcing last week that it had added approximately 7,000 new paid customers between Feb. 1 and March 18. Considering that the company only gained 5,000 new users throughout its entire last quarter, and another 5,000 in the quarter before that, it’s clear just how much Slack is benefiting from more people working from home.
Zoom has enjoyed a boom as coronavirus sweeps the globe. The video conference call company has made some smart choices in the last few weeks, such as removing its 40-minute time limit for calls made from free accounts, that have encouraged more users to give the platform a shot. The result is a No. 1 spot on Apple App Store and Android downloads, with more than 600,000 downloads on a single day and an estimated 20 million new mobile users in a single week. But perhaps the best thing to happen to Zoom is its breakout from just another work-from-home company, to the public’s go-to video app for playing games, enjoying a virtual happy hour or just hanging out with one another.
Netflix, the longtime king of streaming services, has recently lost ground to new competitors, but the well-established company will benefit greatly from people staying home and streaming more shows and movies; in fact, it has enjoyed a surge in downloads over the last few weeks, specifically in countries heavily affected by coronavirus. Unfortunately, due to coronavirus, Netflix has had to halt production of many of its upcoming shows, which will slow down new releases in the future. But if the looming recession that many economists predict does arrive soon, advertisers will cut their budgets to save costs — and Netflix, unlike many of its streaming competitors, doesn’t rely on ad revenue, so it will remain relatively unscathed.
With so much social distancing, there’s a greater need than ever before to connect with one another. Enter Facebook, which has reported a surge in usage across its family of products; in fact, in areas affected by coronavirus, calls on WhatsApp and Messenger are double their usual number. But Facebook’s widespread reach also allows it to play a unique role providing information about coronavirus — for instance, the company started a Coronavirus Information Center on Facebook and has launched a WHO Health Alert on WhatsApp. If it plays this right, Facebook may regain some of the stature it lost during the 2016 election as a reliable source of news and information, which will translate to higher usage and higher revenue.
Stay-at-home stocks primed to beat the coronavirus bear market:
— Amazon (AMZN)
— Walmart (WMT)
— Domino’s Pizza (DPZ)
— Microsoft (MSFT)
— Slack (WORK)
— Zoom (ZM)
— Netflix (NFLX)
— Facebook (FB)
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8 Stay-at-Home Stocks Beating the Coronavirus Blues originally appeared on usnews.com