For the first two-and-a-half weeks of June, positive economic data bolstered the bullish thesis. First, the May jobs report revealed that the economy added 2.5 million jobs, reversing forecasts of sustained doom and gloom. Second, U.S. retail sales for that month was up nearly 18% over April, indicating that the consumer was back. Thus, “stay-at-home” stocks to buy seemingly lost their relevance.
Certainly, when you have huge crowds packing beaches and other public events, the paradigm is seemingly returning to at least some semblance of normal. Interestingly, many of the people that are out and about seem to care very little about mitigation measures like wearing masks or social distancing. Additionally, many Las Vegas casinos saw enthusiastic gatherings as they opened their doors to the public. Simply, millions were tired of being cooped up at home.
However, any action has a reaction. And the latest coronavirus infection reports indicate that a handful of states, particularly Arkansas, Arizona, North Carolina and Texas are seeing a conspicuous rise in hospitalizations. Therefore, I wouldn’t be too quick to ignore so-called quarantine stocks to buy.
Interestingly, opinions about the health crisis are also split between political ideologies. Before President Trump was set to hold his first campaign rally in Tulsa, Oklahoma, several fans and supporters lined up early to ensure their place. Despite the risk of spreading the coronavirus in big, indoor events, many were not worried. We’ll see how this turns out but in my opinion, this isn’t the smartest thing to do.
Also, nationwide protests calling for social equity and justice have sparked concerns about spreading the novel coronavirus. With heightened emotions and a lack of social distancing, I’d say this is a legitimate concern.
Here are nine stocks to buy if we find ourselves going back inside, whether voluntarily or not.
Netflix
Streaming giant Netflix (NFLX)
seemed like a ridiculously logical
play on the coronavirus outbreak.
And by ridiculous, I just mean that it
appeared too good to be true. With
schools and businesses shutting
down, many had nothing left but
time on their hands. What better
way to spend it then binge-watching
your favorite shows? That was the intuitive narrative behind NFLX stock.
Of course, there’s something to be said about losing your hostage audience once the coronavirus faded. But so far, that hasn’t impacted NFLX stock, which continues to dominate the markets. Primarily, Netflix added a whopping 16 million subscribers in the first quarter.
I think there’s a good chance that the company keeps much of these gains. Compared to traditional TV services, Netflix is cheap and flexible, attributes that will drive shares higher over the long run.
Additionally, even with states reopening, entertainment options are limited. For instance, we may not get the box office back in near-full capacity until July. And when they do reopen, you have to imagine that they will impose strict mitigation protocols.
In contrast, streaming is cheaper, healthier, and more convenient. Therefore, NFLX remains a top name among stocks to buy.
For those in the know, Trade Desk
(TTD) is an incredibly compelling
name that will advantage the
transition from linear television to
connected TV. With the cord-cutting
phenomenon accelerating,
advertisers are scrambling to
effectively reach their audience
under this paradigm shift. Trade Desk specializes in maximizing those ad dollars through a combination of market research and data science.
Unsurprisingly, TTD stock has ranked highly among most lists of stocks to buy. Furthermore, the underlying company blitzkrieged their latest earnings report, exceeding targets for both profitability and revenue. As well, management promised to make strong investments in high-growth areas, including global expansion.
Sounds great, except for this coronavirus deal. However, in an email that I received from Trade Desk’s team, they reported during the initial phase of the pandemic that advertisers were still advertising. When you consider the remarkably strong performance of TTD stock in April and continuing momentum in June, it reasonably appears that advertising demand remains robust.
Plus, the cord-cutting trend predates the coronavirus pandemic by many years. Therefore, TTD is one of the best long-term stocks to buy in any circumstance.
Trade Desk
Streaming has many advantages,
among them the ability to watch
content when you want to. Further,
streaming platforms provide
flexibility, where you only pay for
the content you actually watch. And
these are the core reasons why
Roku (ROKU) has consistently
topped lists of stocks to buy in the
over-the-top market. With coronavirus, ROKU stock may enjoy a surprising catalyst.
As with Netflix, many folks will of course tune into Roku’s intuitive platform. When you’re hunkering down, mimicking your favorite characters from “The Walking Dead,” you quickly realize that self-quarantining is boredom personified. Nothing helps whittle away the hours more than streaming your favorite programs.
But those who are on traditional TV services will quickly realize that they’re limited in their options. In contrast, platforms like Roku facilitate on-demand viewing. This coronavirus-led downtime may help people realize what they’re missing out. Theoretically, this augurs well for ROKU stock.
Though shares have been volatile recently, I’d focus on the long-term picture. As everyone comes out of the quarantines, they’ll recognize the cost savings associated with cutting the cord. That will be a huge lift for ROKU.
Roku
Typically, anything is better with pizza,
which has driven the long-term case
for Papa John’s (PZZA). Long a
favorite among the “corporate”
branded pizza, PZZA stock took an
unnecessary dive when Papa John’s
founder John Schnatter used the
worst racial slur you can utter in
America. Worse, he apparently
uttered it during a business conference call.
You can file this under the dumbest ways to nuke your career. Frankly, I wasn’t too sure if the company could recover. Usually, these types of controversies don’t end well. At the same time, it’s unfair to stigmatize the entire organization, seeing as how many good people work there. Appropriately, Papa John’s saw an opportunity in one of America’s darkest hours and delivered on their post-Schnatter image.
Quickly revamping their operations to incorporate contactless food delivery – buyers can pre-pay and pre-tip, eliminating the need for any physical exchange – Papa John’s has met the coronavirus challenge with aplomb. Not surprisingly, PZZA stock has been a top performer since the second half of March.
Papa John’s
It’s a tired statistic but I’m going to
mention it anyways. Thanks to the
mass proliferation of e-commerce,
online revenue represents more than
11% of all retail sales. It’s one of the
pivotal reasons why Amazon (AMZN)
is found in galleries featuring the
best long-term stocks to buy.
Additionally, the company is the
ultimate disrupter, sticking its nose into everything from cloud computing to groceries.
As such, you might want to buy AMZN stock just so that you don’t get steamrolled. While Amazon is sucking the life out of the mom and pops, there’s no stopping this behemoth.
The company’s dominance also got me thinking: self-quarantining for many folks – particularly the younger generation – may not be a bad gig. After all, digitalization for retail focuses almost exclusively on bringing commerce into the comfort of your living room. Since Amazon shopping addicts self-quarantine anyways, AMZN stock looks to avoid the worst of the coming volatility.
Plus, I think it’s worth mentioning that Amazon stock is enjoying a tremendous run in the second calendar quarter of this year, despite some recent market rumblings. This sets up a hopefully strong showing in the summer months and for the rest of 2020.
Amazon
Two things come to mind when I
think about Alphabet (GOOGL) as a
possible candidate for stocks to
buy: SEO and advertising. Although
I didn’t check, I’m sure that inquiries
regarding the coronavirus have
dominated Google’s search engines.
I myself probably contributed to a
good 10% of those searches. And
that intense interest leads to advertising opportunities.
Moreover, GOOGL stock has received a direct catalyst from the pandemic due to Alphabet’s streaming entertainment business. With its Google Play platform, consumers were easily able to download movies, TV programs, music, and books. If some folks preferred to go to physical retailers for these items, Alphabet essentially received free marketing to help convince them to make the switch.
As well, people who are still stuck at home voluntarily or otherwise won’t have much to do. This encourages more web surfing, and thus more opportunities for online advertisements. Even for a huge company like Alphabet, the increased traffic should be notable, thus driving the case for GOOG stock.
Alphabet
During this crisis, companies like
Twitter (TWTR), Alphabet, and
Amazon offered some of their
employees to work from home, even
before states’ shelter-in-place orders.
Now, it seems like this tactical
adjustment will become permanent,
at least for leading tech firms.
This is tremendous news for gig economy names like Fiverr (FVRR). As the mainstream accepts remote work, FVRR should see long-term gains. However, shares are also overheated, which makes traditional employment agency Robert Half International (RHI) comparatively more attractive.
Of course, RHI stock comes across as a yesteryear investment, particularly because of the paradigm shift that has impacted the working environment. However, it’s fair to note that Robert Half has adjusted its business model, accommodating remote interviews and giving its corporate clients access to a network of remote professionals.
Moreover, because of the horrific losses in the labor market, very few people are in a position to turn down opportunities. Thus, “ghosting” won’t be an issue, providing another potential lift for RHI stock.
Robert Half International
Due to the advent of software
innovations and cloud computing,
it’s easier than ever to work from
home. Now, most employees would
prefer telecommuting, but they often
run into resistance with their bosses.
Call me cynical, but I believe most
employer-employee relations
operate on a leery, skeptical
platform. However, the coronavirus may shift this thinking toward a productive path. Certainly, it has moved the needle for Slack Technologies (WORK) and WORK stock.
However, that needle may have moved a bit too much. Recently, Slack released results for its fiscal first quarter. While the company beat Wall Street estimates, it had a tough comparison to Zoom Video Communications (ZM), which has been utterly killing it during this crisis.
But the biggest distraction for investors was likely Slack’s billings number, which suggested a negative impact from Covid-19. Partially, this is due to concessions that the company made to financially struggling customers.
Logically, WORK stock has become a less-desirable name following the fiscal Q1 report. However, the steep 14% drop immediately after the earnings announcement will attract contrarians. After all, remote work platforms have become more relevant, not less.
Slack Technologies
When the coronavirus first wreaked
havoc stateside, certain businesses
were impacted much more than
others. Among them, ride-sharing
specialists like Lyft (LYFT) and Uber
(UBER) saw their equity prices
plummet. However, the latter has
recovered more convincingly than
the former. While UBER is positive
for the year, LYFT stock is still seeing red.
In the pre-pandemic paradigm, many investors chose Lyft for its credible path to profitability rather than the expansion hungry Uber. But part of that growth entailed an early start into the delivery business, which Lyft lagged in until April, when the company followed suit. Still, you can say better late than never.
And at some point, it’s reasonable to expect that people will start venturing out. Currently, there are service gaps due to drivers unwilling to carry passengers. Over time, this headwind should fade, making LYFT stock a risky but compelling play on a recovery.
As of this writing, the author Josh Enomoto did not hold a position in any of the aforementioned securities.
Lyft
