Stocks to Buy on Coronavirus Weakness

What Stocks are Worth Buying During Coronavirus Pandemic

Legendary investor Warren Buffett once said, "Be fearful when others are greedy and greedy when others are fearful." Buffett has used this time-tested strategy to amass vast wealth in the stock market -- and you can, too.

The COVID-19 coronavirus pandemic has brought immense amounts of fear into the market. Many short-term focused investors have panicked, and stock prices have plunged in response. But therein lies your opportunity. By keeping your wits and maintaining a long-term perspective, you can calmly begin to buy shares of great businesses at bargain prices, thereby positioning yourself to profit handsomely as the markets eventually recover.

If that sounds appealing, read on to learn about ten outstanding companies that are poised not just to survive, but thrive, during the pandemic -- and whose stocks can help you earn a fortune from the recent market downturn.

COVID-19 is a formidable enemy. The disease caused by the novel coronavirus is spreading rapidly around the world, sickening hundreds of thousands of people and leaving economic carnage in its wake.

Fortunately, some of our best companies are helping us combat COVID-19. In turn, these businesses are set not just to survive, but thrive, during these difficult times and emerge even stronger from the crisis.

If you buy shares of the following stocks now, you'll likely earn substantial returns on your investment, while helping to support the companies that give us the best chance at containing the coronavirus pandemic.

Hillyer Riches is an Accountant in Caulfield providing taxation accounting and business advisory services.

The Reasons for Buying

The outbreak of COVID-19, a novel coronavirus strain which originated in China but has since gone global, is a big deal. To date, it has infected over 1 million people across the globe, killed at least 50,000, kept billions of people in their homes, brought the global economy to a screeching halt, and caused U.S. stocks to fall off a cliff. But, not all is hope lost, and now may be the time to look for U.S. stocks to buy on the dip. For a few reasons.

First, according to my modelling, the coronavirus pandemic has peaked in certain Asian countries, is rising in certain European countries, and will peak within the next two weeks in the U.S. after that, the spread of the virus globally should slow, before being wholly stomped out in May or June.Second, the U.S. economy has ample firepower from tons of fiscal and monetary stimulus to rebound, albeit gradually, in the summer once the virus is under control. Third, U.S. stocks are pretty cheap right now, with many top-quality shares trading at their lowest valuations in years, if not decades.

So, as opposed to running away from stocks during this scary time, I'm running towards them, building a portfolio of long-term winning assets at heavily discounted prices.

It's been an incredibly rough past four weeks for investors, and the rapid global spread of coronavirus disease 2019 (COVID-19) is to blame. This lung-focused illness has been confirmed in nearly 219,000 people and is responsible for more than 8,800 deaths, according to Johns Hopkins University as of early March 19. While stringent mitigation measures designed to ensure that the global healthcare system doesn't become overwhelmed are necessary, these actions have also ground economic activity to a near-halt. 

The result has been a complete beatdown for global stock markets, and significant paper losses for even the most storied investors.Investors don't have to drown in the sea of red, that is the coronavirus-battered stock market.The pandemic-fueled stock plunge has created some golden opportunities for people eager to invest — if they know where to look, according to experts.

"It's a good time to pick stocks because we've found that in this backdrop or similar environments, this has been a very indiscriminate sell-off, so now there's a lot of opportunity for investors," said Jill Carey Hall, senior U.S. equity strategist at Bank of America.It's a good time, for example, to get a discount on blue-chip companies like Microsoft, whose Teams workplace collaboration platform is getting plenty of use as more people work from home, according to Anthony Denier, CEO of the trading platform Webull.

Denier pointed to Disney as another big name to buy during the downturn. The coronavirus has battered the entertainment giant by forcing it to close theme parks, but it's still a reliable business with a good management record, Denier said.

"If you wanna look at a long-term investment that has gotten beaten down, I think Disney's a great place to start," he said.

Discount stores where shoppers have stocked up during the coronavirus panic could prove resilient during a downturn as consumers shift their spending to cheaper goods, Bank of America's Hall added.She did not name specific companies. But Costco's share price declined only 5.8 percent from February 20 through Thursday, compared to a 27.8 percent drop in the S&P 500, while Dollar General's fell 13.7 percent.

"If we are in an environment where we're expecting an economic recession you tend to see the lower-end consumption stocks like low-end stores, as there is that trading-down element during an economic downturn," Hall said.Some buzzy companies have seen massive boosts to their stock prices as Americans hole up in their homes to stem the spread of the virus.Shares in teleconferencing provider Zoom have jumped more than 17 percent since February 20 as companies shift to remote work and schools move classes online. And meal-kit service Blue Apron saw its stock price more than double Wednesday to $16.25, a possible indication that consumers expect to cook more and eat out less during the crisis.

(The excitement has since waned — Blue Apron shares climbed as high as $28.84 Thursday only to close down about 11.7 percent at $14.35.) But some lesser-known names might be better bets than companies such as Blue Apron that will only see short-term benefits from the shifts the pandemic has brought on. The coronavirus pandemic has sent global markets reeling as investors brace for how the spread of the virus will hinder global growth.

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Still, there are some bright spots in the market, according to a Wednesday note from a team of analysts led by Doug Anmuth at JPMorgan.E-commerce in particular "will benefit as closings of physical stores & fear of public places should accelerate the secular shift of retail online, which we believe will prove sustainable even after the crisis ends," Anmuth wrote.

People around the world have been told to practice social distancing to curb the spread of the virus. That's meant cancelling trips, working from home, ordering food in, and stockpiling staples such as non-perishable food and toilet paper.As people increasingly look for the best ways to work and live in the confines of their homes, JPMorgan also sees that subscription-based services including Netflix and Peloton "should be at least stable or benefiting from the current environment," according to the note.

Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) may appear to be a risky buy given all the litigation it's facing. The company has recently had to deal with lawsuits relating to its vaginal mesh products in Australia, opioids (in multiple states), and its talc baby powder products, which are perhaps its most high-profile problem. Its ongoing legal battles are far from over.

While Johnson & Johnson has challenges ahead, it would be far too early to predict doom and gloom for a company that in 2019 reported free cash flow of $20 billion. The healthcare giant remains secure and financially sound. Lawsuits may chip away at its bottom line, and negative press may harm its value with some investors, but there are still some excellent reasons to invest in the stock today.

Healthcare titan Johnson & Johnson recently joined the fight against COVID-19. J&J is investing more than $1 billion in the development of a novel coronavirus vaccine. It expects to start human clinical studies by September, to obtain emergency use authorization from the U.S. Food and Drug Administration by early 2021. In the meantime, J&J is ramping up its production capabilities for the vaccine to be able to make more than 1 billion doses if it proves to be effective.

Zoom Video Communications

In addition to accurate testing and effective treatments, social distancing remains one of the best ways to slow the spread of COVID-19. Zoom is helping to make this possible. As millions of people are forced to remain at home due to the disease, Zoom's video conferencing technology is being used by thousands of schools and businesses to communicate with students and employees. Zoom has had its fair share of privacy and security issues, but its user base has nevertheless exploded to 200 million people per day, up from roughly 10 million at the end of last year. Zoom should continue to add new users at a rapid clip, boosting its revenue and profits -- and returns to shareholders -- along the way.

Like Teladoc, Zoom's business is exploding due to the pandemic. The company's video conferencing technology is being used by thousands of companies and schools to communicate with their employees and students while they're offices and facilities are closed due to COVID-19. Zoom is adding users at a breathtaking clip, and its revenue is likely to surge in the quarters ahead.

Netflix

Like Facebook, Netflix is likely to benefit from people having more downtime during the COVID-19 pandemic. For as little as $8.99 per month, people can gain access to a nearly unlimited amount of movies and shows to watch. Netflix could also see increased growth in some of its international markets, many of which are instituting lockdowns and home-based quarantines due to COVID-19.

Streaming giant Netflix has had it easy during the coronavirus sell-off. Shares are "only" down 12% from their 52-week highs. But, this relative strength doesn't mean you shouldn't buy the dip in NFLX stock. Instead, any weakness in NFLX stock here is worth buying with both hands.This company should actually win during the coronavirus outbreak. The more consumers stay home out of fear of catching the virus, the more likely they are to subscribe to and watch Netflix because Netflix is the best at-home entertainment option out there by far. So, if anything, Netflix's numbers should actually improve during the outbreak.

In market panics, you tend to get indiscriminate selling (investors sell everything, regardless of the company and regardless of the price). If we start to get that — and Netflix stock starts tanking — then that is a golden opportunity to buy the dip in a company that is both shielded from coronavirus risks and a long-term winner.

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Amazon

Few businesses will benefit more from people staying at home than Amazon.com. With thousands of retail stores closing around the U.S. and across the world, Amazon and other online retailers are enjoying booming sales. The e-commerce giant's massive global fulfilment network is helping to keep people supplied with the household essentials they need. And in the process, it's likely to generate handsome profits for investors.

Amazon is a good buy for very similar reasons. It doesn't pay a dividend, but the tech stock is near its 52-week low as well. It still has a high forward P/E of more than 50, but that's not unusual for the online retailer, which investors typically value thanks to its growth highly. It's also doing its part to try and help battle the coronavirus, partnering with the Gates Foundation to help deliver test kits in the Seattle area.

And as people struggle to find household supplies in their local stores, Amazon may also see a more significant influx of traffic on its website. With same-day shipping available in many cities in the U.S., it may be the best option for consumers who don't want to or aren't able to leave their homes. Amazon's PillPack is also convenient for patients who need their medication delivered to their door.

Amazon's not a stock that investors should count out for long. It's one of the top shares on the NASDAQ for a reason, and as calmer heads prevail, it likely won't take long for investors to buy up the stock again.

Alongside the rest of the market, shares of e-commerce juggernaut Amazon have fallen off a cliff in February and March on coronavirus fears. But, zooming out, all appears well in the Amazon kingdom. At the end of January, Amazon delivered substantial fourth-quarter numbers which smashed revenue and profit expectations and included a useful guide. The e-commerce business continues to capitalize on a shift towards online shopping, and the cloud business continues to dominate the enterprise cloud infrastructure market. The ad business has tremendous upward momentum. Moreover, revenues and profits are running higher at an impressive pace, and there's no sign that this pace will slow anytime soon.

Has anything about that changed because of the coronavirus outbreak? For a quarter or two, yes. Maybe consumers shop less, or maybe enterprises spend less on their cloud migrations. And maybe merchants stop advertising as much on Amazon. But all of those impacts will be short-lived, because come summer, warmer weather coupled with strict quarantining, swift government responses and a potential vaccine will ultimately kill this outbreak. In turn, Amazon will promptly get back to firing on all cylinders.

So, the big picture, don't let near-term headwinds scare you out of a long-term winner like Amazon stock.

Apple

Global technology giant Apple has been struck from multiple angles thanks to the coronavirus outbreak. At first, when it was isolated to China, Apple had to close all of its corporate offices, stores, and contact centres in China. Many of the factories from which Apple sources its hardware products were shut down, too. That created huge demand and supply chain disruptions for Apple. Now, though, the virus has gone global — and the shutdowns that were isolated to China, are happening everywhere. Across the globe, Apple has closed its stores, and its supply chain is being disrupted.

These are significant issues for Apple. But they are also temporary issues.

Just look at China. The spread of the virus has died down over there. Apple has re-opened-opened all of its stores. Most of its supply chain has come back online, too.

The rest of the world will follow suit within the next few months. By summer, most countries across the globe will have fully contained coronavirus. Apple will re-opener-open stores. Factories will ramp up production. And the Apple growth narrative will start to fire on all cylinders again, just in time for its big 5G iPhone launch in the back-half of the year.

Procter & Gamble

Along the same lines as Kroger above, household goods producer Procter & Gamble (NYSE: P.G.) has held up far better than the broader market. Compared to the noted 29% plunge in the benchmark S&P 500, P&G has seen its share price retrace by a more pedestrian 6%. The secrets to Procter & Gamble's success during the coronavirus crash are threefold. First of all, P&G makes cleaning supplies and toilet paper, which in many cases have topped consumers' shopping lists. Procter & Gamble is behind popular names such as Charmin, Bounty, Puffs, Gain, and Tide, to name a few.

Secondly, P&G predominantly provides basic-need goods. Think about it this way: Consumers are going to need to brush their teeth, do their laundry, and buy toilet paper regardless of how poorly the U.S. economy is performing. This gives P&G quite a bit of predictability to its cash flow, as well as a lot of pricing power.

Third and finally, Procter & Gamble is working on one of the longest dividend increase streaks among publicly traded companies -- 63 years. Dividend stocks are often profitable and have time-tested business models, making them perfect to buy during uncertain times.

Facebook

Many people who are unable to work or go to school will have much more time on their hands in the coming weeks, and much of that time is likely to be spent on Facebook. Whether it's communicating with family and friends or catching up on the news, more people are likely to use the social media platform more often. Many businesses, desperate to generate online sales during the COVID-19 pandemic, will advertise on Facebook -- and Instagram, which is owned by Facebook -- to meet their customers where they are spending their time.

Coca-Cola

Another well-known stock that should be scooped up aggressively by income seekers is beverage giant Coca-Cola. Shares of Coca-Cola have fallen by around a third since mid-February, which has subsequently pushed Coke's dividend north of 4%. Mind you, and this is a company that's increased its payout for 58 consecutive years.

Coca-Cola's secret sauce is its geographic diversity and consumer engagement. In terms of the former, Coca-Cola is currently operating in all but one country worldwide (North Korea), providing it plenty of predictable cash flow in developed markets, as well as ample opportunity to grow sales in emerging markets. It's also worth noting that Coke has a whopping 21 beverage brands that are generating at least $1 billion in annual sales.

In terms of engagement, Coca-Cola has several ways it's reaching users. Its packaging and holiday-themed imaging have always helped it stand out and connect with consumers of all ages. Lately, we've even seen Coca-Cola turn to social media influencers to broaden the reach of its message.

The point is that no matter what is thrown Coke's way, it just keeps innovating and reaching new customers. That makes it an exceptionally safe dividend stock never to sell.

FedEx

FedEx is another stock that could be an attractive buy during this crash. Like Johnson & Johnson, it's a dividend stock, and although it hasn't raised its payouts in more than a year, it does pay $0.65 every quarter, representing a 2.6% yield per year. It's also trading near its 52-week low, and at a forward P/E of less than 10, it's looking cheaper by the day.

FedEx is a good bet during the coronavirus situation -- as COVID-19 continues to spread, there will be demand for more deliveries as consumers look to avoid crowded stores. That's where the freight and logistics company can benefit from an uptick in traffic, which could make for some strong quarters ahead. Online shopping plays a significant role in the economy, and while there might be some short-term pain for FedEx's stock, over the long term, it may recover a lot sooner than others will.

Nike 

Shares of global athletic apparel giant Nike have been pummeled on concerns that the coronavirus outbreak could materially impact the company's operations across the globe.Make no mistake. They will. Consumers in many parts of the world aren't leaving their homes these days, much less going out and buying Nike apparel. Yes, Nike has an e-commerce website. But most consumer dollars today are being allocated towards consumer staples purchases, at the expense of consumer discretionary purchases.

Big picture — so long as the virus sticks around, Nike won't sell a lot of products.

But, this pressure won't last forever.

As noted, the situations in China and South Korea have vastly improved. In those countries, Nike's stores are open and operating at regular hours with good traffic. Strength in those economies will help offset weakness elsewhere across the world during April and May.By summer 2019, other countries will be where China and South Korea are today. Quarantining will end. Consumers will shop again. Nike will re-opener-open stores. Everything will get back to normal, and Nike's growth trajectory will resume at a healthy pace. Thus, once the outbreak ends globally, NKE stock will rebound.

 

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