The Coronavirus virus has caused a halt to the global economy. The velocity in which money travels around the economy is vital, along with our productive capacities. Both of these are severely restricted, with high street stores closing, lockdown measures and an end to a lot of office work.
This has inevitably had a lot of consequences for businesses that thrive on socializing. Coffee shops, for example, Starbucks, have taken a huge hit to their share price. And whilst many businesses will become insolvent throughout the following months of lockdown, it might be worth investing in these stable companies that are temporarily affected. After all, we can be confident that Starbucks has enough cash reserves, financing and mainstream popularity to get back to where they were very quickly after the pandemic has ended.
Some are suggesting that investing in a market tracker, such as the FTSE 100 index, as being a good option during this crash. Whilst it’s not diversified geographically, there’s no reason to believe that the market will not recover in a reasonable time — buying the dip is one of the oldest stock investment techniques there is.
Alternatively, we can look for stocks that are on the rise since the beginning of the pandemic. Businesses that are actually benefiting from the disaster. Not to say that they’re automatically opportunistic, but that their services happen to be perfect for a self-isolated lifestyle.
Markets around the world
The thing with economic crashes is that they can be very regional. However, once the major economies, exporters, importers, and providers of debt enter a deep recession, it’s bound to have knock-on effects around the world.
The Coronavirus crisis is a little different. The knock-on effect isn’t as overwhelming as the actual direct infections. Being a highly contagious virus, it has spread globally extremely quickly and doesn’t appear to be slowing down.
This has meant that we’re less focused on how to market X will affect market Y, but instead we are seeing markets all around the world immediately impacted.
In China, the Shanghai Composite Index crashed by 9% in one day after opening after an extended Lunar New Year holiday. They actually recovered, but have crashed again since March 10th. Likewise, the UK saw the FTSE 100 crash during the second week of March, in which it has only made a minor recovery.
5 stocks flourishing because of Coronavirus
Since the end of February, the DJIA has been falling. It broke its own record various times in the past month for the largest day-point drop, and so this has, of course, affected all stocks on American exchanges, and arguably the world. The firms below are no different — many dropped by huge amounts of these specific days. Thus, these stocks are comparing great relative to the market and in spite of the market.
Netflix — NASDAQ: NFLX
On March 16th, the price opened at 306.63. Three weeks later, the stock opened at 367.47. This is an impressive climb, and considering the price was as low as 292 in December, it seems although Netflix has very much outperformed the market. What’s the surprise here though, really?
Amazon — NASDAQ: AMZN
Being an extremely large presence on the NASDAQ, Amazon unsurprisingly got hit hard when the market crashed in March. Amazon is making a good comeback, though, and they’re almost back to pre-crash levels of 2185. There’s still some way to go, but Amazon appears to be unaffected by the virus itself and maintains one of the strongest outlooks of any big hitter.
Zoom — NASDAQ: ZM
Zoom had an incredible recovery from the crash, going from 107 to almost 160 in a matter of days. Whilst the product they’re selling appears to be recession-proof, they had some worrying news of the founder offloading $38m of the company stock recently.
Gilead Sciences — NASDAQ: GILD
Despite being very volatile as a stock, they’re touted as one of the hottest stocks to buy currently. They have grown by around 30% pre-pandemic in January, and they’re forecasted to continue this growth.
Domino’s Pizza — NYSE: DPZ
The reported sales increases from the Coronavirus has led Domino’s to be doing relatively well in this crisis. The stock jumped by a mesmerizing 25% in one day during February, as their sales were better than expected. The growth isn’t over, though. The stock always delivers reliable profits to shareholders and appears to be recovering from the March crash very well, as it went from 286 to over 340 in a matter of 2 weeks.
The reasoning behind each of these price rises is relatively obvious. With many of us forced into an existential crisis, having to stay inside our homes instead of going to work, there’s not much to do. We can’t go to bars, sports events or clothes shopping. As a result, Netflix subscriptions seem to be doing very well. Netflix is one of the first things that comes to mind when thinking about being stuck in-doors.
Likewise, with many shops closing down temporarily, many are relying on Amazon for non-essential products. And with restaurants closed, takeaway outlets such as Domino’s pizza have seen an increase in sales.
Another interesting facet of the crisis is the shift from office-based work to working from home. This requires a certain set of infrastructure. Many cloud-based business management systems are doing well, and Zoom, in particular, is a video call software, which is replacing physical meetings.
Lastly, there’s no surprise that in a healthcare crisis, big pharma is going to be doing well for themselves. Gilead Sciences is a company that has seen a price rise, as they show promising signs of developing a treatment for COVID-19 using their Ebola drug, Remdesivir. It’s always a bit of a gamble when a company’s price is relying on the development of a single drug, and trials are known to be extremely difficult. But given that the stock price was at 7-year lows in January, they’re on a strong trajectory and their place treating the Coronavirus looks promising.