These Stocks Will Thrive In A Post-Coronavirus World, According To Experts


TOPLINE

Despite the coronavirus pandemic causing unprecedented financial disruptions and a major shift in the lives of American consumers, a slowdown in new cases has made Wall Street more optimistic about eventually reopening the economy— and here are 19 stocks poised to thrive in the post-coronavirus world once widespread quarantine orders are lifted, according to analysts at Stifel and Barclays.

KEY FACTS

Both firms recommend big box retailer Walmart, which is well-positioned to capitalize on the growth of e-commerce—particularly the increase in online grocery shopping—during coronavirus. The stock is up almost 9% so far in 2020. 

Consumers have been relying on online deliveries from shipping giant Amazon, which has seen its shares rise more than 25% this year, more than ever: The prolonged nature of the pandemic is likely to “accelerate long-lasting e-commerce adoption,” according to Stifel. The company’s cloud software offering, Amazon Web Service, will also benefit from increasing work-from-home trends.

Stifel also highlights Salesforce as another top pick, thanks to its broad suite of cloud-based corporate solutions—some of which give it the ability to “outperform going into a recession.” 

Microsoft, whose shares have jumped almost 9% so far this year, will also emerge stronger after the pandemic , thanks to its growing platform of productivity and service offerings. Stifel expects Microsoft’s cloud service, Azure, to become its largest revenue stream in the coming years.

As most young people at home spend an increased amount of time using social media, stocks like Snapchat and Facebook are poised to benefit, Stifel says. In the same theme, the firm recommends Spotify as “arguably the best pure play on the secular shift toward digital audio consumption.”

Once the country does reopen, people will be able to get back to sports and outdoor activities: Stifel likes athletic apparel maker Nike, which continues to grow its digital presence, and indoor exercise bike maker Peloton, which can benefit from its industry-leading position in at-home fitness. 

One area that could see a major change in consumer habits is in cosmetics and personal care, according to Barclays. Companies like Coty and Estee Lauder are likely to benefit from a rise in “DIY beauty experiences” at home.

Another stock that could rebound in the post-coronavirus world is Wendy’s, which was “already focused on building a comprehensive digital platform” before the crisis began and could benefit as a result, according to Stifel.

The firm also recommends Home Depot, which should benefit from consumers who are spending more time at home and increasingly taking on home improvement projects.

As social distancing occurs around the country, more people are turning to video games, which are being played at record levels. Stifel’s top picks in this space include Take-Two Interactive and Electronic Arts, as well as Activision Blizzard—with its massively popular Call of Duty franchise.

As home builders see demand rebound after the pandemic, housing company D.R. Horton could benefit from that dynamic, according to Barclays.

Stifel likes Delta, which has “less exposure to typical airline competition” and whose financial position is “among the best” in the industry.

The firm also highlights Waste Management, which is making technological advances for its fleet that could result in up to $150 million of cost savings over the next three years.

Crucial quotes

“At the core, we believe the U.S. consumer could emerge from the pandemic more mindful, resourceful, and cost-conscious,” Barclays analysts said in a recent note. 

Although market uncertainty due to the pandemic still remains high, “we know that optimism and prosperity will eventually prevail,” Stifel analysts similarly wrote.

Further reading

Here Are 29 ‘Get Out And Go’ Stocks For The End Of The Coronavirus Quarantine (Forbes)

Here Are 20 Stocks To Buy In The ‘Coronavirus Economy,’ According To Market Experts (Forbes)

20 More Stock Picks For The Coronavirus Economy, According To Market Experts (Forbes)

What Is Warren Buffett Up To? Berkshire Swooped In During 2008, But What’s Its Power Play For 2020? (Forbes)

Full coverage and live updates on the Coronavirus



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Here Are The Latest Reports Showing The Impact Of Coronavirus


TOPLINEThe coronavirus pandemic continues to take a heavy toll on business activity as this week’s batch of dismal economic data stokes concerns on Wall Street and serves as a sobering indication of just how badly the outbreak is impacting the American economy. 

KEY FACTS

Weekly jobless claims soared again, rising by 5.2 million since last week. That brings the total number of unemployed Americans over the last month to more than 22 million—erasing nearly all of the job gains in the last 11 years.

The Commerce Department said on Thursday U.S. home-building activity collapsed in March with new housing starts plunging by 22.3% from a month ago.

Data released by the Federal Reserve on Wednesday showed manufacturing output fell 6.3% and industrial output dropped 5.4% in March— the biggest drops since 1946.

Amid widespread business shutdowns due to the coronavirus, retail sales also plunged to a new low in March, falling a record 8.7%, according to a Commerce Department report on Wednesday.

Another economic indicator, home builder confidence, suffered its worst monthly drop in history—plunging to its lowest point since June 2012, according to the latest report from the National Association of Home Builders/Wells Fargo Housing Market Index.

The New York Federal Reserve’s Empire State Manufacturing Index fell by its biggest margin ever, to a historic low of negative 78.2—far worse than anything seen during either the Great Depression or the 2008 financial crisis.

Similarly, the Philadelphia Federal Reserve’s index of regional manufacturing business activity also sharply declined last month, dropping to its lowest level since July 1980.

Crucial quotes

The latest economic data is “very grim,” Vital Knowledge founder Adam Crisafulli admits. “We know April is going to be a disaster, we know May is probably going to be a disaster—but the question is can you see things stabilize at bad levels and resume from there?” He points to the fact that investors “can take some comfort” in the jobless claims figures showing evidence of plateauing—while still at elevated levels, the numbers are “not nearly as high as some people were fearing weeks ago” Crisafulli says.

“We finally got some economic data for this week, and while expectations were already low, the data was even worse,” Bespoke Investment Group said in a note.

“The economy is clearly in ruins here,” Chris Rupkey, chief economist at MUFG Union Bank, told CNBC this week.

Big number: 37 million.

That’s how many American jobs could be lost by the end of May, according to a forecast from Goldman
GS
Sachs. While monthly unemployment rose to 4.4% in March—up from 3.5% in February, it serves as a lagging indicator to the weekly unemployment claims. Goldman predicts that number will rise to at least 15% by the third quarter. Citigroup
C
economists, on the other hand, predict that the unemployment rate will skyrocket to between 10% and 15% already in April.

Crucial statistics

The economic decline triggered by the coronavirus pandemic is expected to reach a peak during the second quarter, with most economists forecasting a more than 30% drop in GDP. Firms such as JPMorgan
JPM
predict an even bigger decline—of 40%—in quarterly GDP, while also predicting the unemployment rate to hit 20% in April. 

What to watch for

With earnings season kicking off earlier this week, early indications show that it’s not going to be pretty. The big banks, among the first companies to report first-quarter results, have so far posted weak earnings, warning that loan defaults are set to skyrocket. Institutions like Goldman Sachs, Bank of America
BAC
and Citigroup all posted earnings declines of 40% or more on Wednesday.

Further reading

Morgan Stanley
MS Profit Drops 30% Amid Coronavirus Crisis. Here’s How All The Big Banks Fared Last Quarter (Forbes)

Stocks Finish Higher As State Governors Consider Reopening The Economy (Forbes)

Just How Bad Is It? Here’s The Economic Damage The Coronavirus Will Cause, According To Major Banks (Forbes)

JPMorgan Forecasts 20% Unemployment And 40% Hit To Second-Quarter GDP (Forbes)

Full coverage and live updates on the Coronavirus



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Casino Operator Wynn Resorts Is Losing Up To $2.6 Million Per Day From Coronavirus Shutdown


Topline: Wynn Resorts, which operates high-end hotels and casinos around the world, said in its latest earnings call that it was losing as much as $2.6 million per day from closures in Macau due to the coronavirus.

  • The company’s business in China has taken a big hit from the fast-spreading coronavirus—which has now infected more than 31,000 people and killed 636, as Chinese officials in Macau recently asked all casino operators to shutter operations.
  • In addition to 40 other casino properties in Macau, Wynn Macau and Wynn Palace temporarily closed at midnight on Wednesday, though a smattering of hotel rooms and restaurants are still open for the few remaining guests.
  • With its luxury casinos in Macau now closed during what is usually a busy time of year, Wynn Resorts is bearing the brunt of losses ranging from $2.4 million to $2.6 million per day, according to CEO Matt Maddox.
  • The expenses were mostly related to the payroll of its 12,200 employees who work in Macau—the company has over 31,000 employees in total.
  • The Wynn Resorts CEO also reiterated the company’s focus on the health and safety of its employees: “I’d like to commend the government of Macau and China for the decisive action they continue to take to contain the coronavirus,” Maddox said during the company’s earnings call. “We’re in daily conversations with the government, and they’ve been terrific partners.”
  • While $2.6 million per day seems like a big financial blow, Wynn executives are confident that the company can weather the losses: “I don’t want to predict when operations will be back to normal, but they will be,” Maddox said.

Crucial statistics: The news caused Wynn Resorts stock to fall nearly 4% on Friday. Shares are down just over 10% so far in 2020. 

Crucial quote: “Macau is set up for a really great rebound. Tourism is one of the first things that rebound with events like this because people want to get out and move around. We feel good about the long-term aspect of Macau once the virus is completely contained.”

What to watch for: How big of an impact the Macau closures could have on Wynn’s first-quarter earnings in 2020. Wynn Resorts’ executives are confident that the company is in good enough shape financially to withstand any losses from the coronavirus. “We have a ton of liquidity,” said chief financial officer Craig Billings. “We have a couple billion dollars of availability between cash and revolver in Macau. That’s more than sufficient to last for, really, any period of closure.”



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