With the dramatic changes inherent in the novel coronavirus pandemic, it was no surprise that virtually all investment sectors tumbled in the immediate aftermath. However, a few markets actually benefited from the carnage, either because they were directly associated with a solution or the “new normal” brought with it fresh opportunities.
In addition, the unprecedented crisis inspired an extraordinary and historical response from the federal government. Setting aside the political divisiveness, both Democrats and Republicans came together to launch the CARES Act. Among the benefits of the federal relief program were $600 weekly payments to bolster state unemployment benefits to laid off workers, as well as a one-off stimulus check.
These measures may have inspired a dramatic burst in trading volume on popular platforms like Robinhood. Typically attracting a younger user base, Robinhood investors bet on companies that were familiar to them – technology stocks, primarily – in addition to so-called coronavirus stocks to buy.
Such pandemic-driven names include the usual suspects, such as Netflix (NASDAQ: NFLX), Kroger (NYSE: KR) and Gilead Sciences (NASDAQ: GILD). With lockdown orders forcing people to stay indoors, it’s no wonder why stocks to buy levered to online entertainment have flourished. As well, existential motivations drove the investment case for KR and GILD early into the crisis.
But the problem with most Covid-19 plays is that they’re obvious to everyone. Further, competition can threaten the valuation premium such stocks receive, as is currently the case with Gilead in light of breakthroughs from rivals.
While not taking anything away from conspicuous pandemic-related stocks to buy, you may want to diversify your portfolio with relevant companies that are off the beaten path. Here are five such names to consider:
Atlas Air Worldwide Holdings
As you know, the airliner industry isn’t having a great time with the pandemic. Though the nationwide surge in new confirmed Covid-19 cases appear to be leveling off, it’s doing so at a high threshold. In addition, many states have hotspots, leading to greater concerns of an uncontrollable catastrophe.
According to an internal government document obtained by Yahoo News, the U.S. death toll from the novel coronavirus could hit 182,000 by the fourth week of August. That doesn’t inspire confidence in air travel. Subsequently, information from the Transportation Security Administration (TSA) indicates that travel volume is still down about 26% from the year-ago period.
Naturally, airliners and most aircraft-related stocks fell. But that’s not the case, though, for Atlas Air Worldwide Holdings (NASDAQ: AAWW). Far from it.
Instead, AAWW stock is up nearly 87% year-to-date. Unlike traditional airliners, Atlas Air offers a diversified business portfolio. One aspect of its business, air cargo solutions, helped keep the economy moving while most of its human operators sheltered in place. This helps explain why the damage done to its quarter ending March 31, 2020 – revenue down 5.3% year-over-year – wasn’t as dramatic as its airliner counterparts.
Moving forward, AAWW stock should have two growth catalysts: business executives concerned about the coronavirus and U.S. military servicemembers could make use of Atlas Air’s chartered flight solutions. In the former, executive-level trips usually taken on commercial airliners could be redirected to private chartered flights. With the latter, growing geopolitical tensions could bolster military activity.
If you’re looking for relevant and stable growth stocks to buy, you really can’t go wrong with the video game industry. Once a niche hobby, the market has exploded in terms of popularity thanks to the gaming subculture becoming mainstream. As well, this is a multi-billion-dollar industry, in large part to sector innovations such as e-sports.
What should intrigue investors about Glu Mobile (NASDAQ: GLUU), though, is its namesake platform. Prior to the pandemic, Newzoo.com released a report stating that in 2020, the “global games market will generate revenues of more than $160 billion, increasing +7.3% year on year.” Interestingly, this would be one of the slowest-growth years in video games.
However, industry insiders pointed to new consoles arriving at the end of 2020 as a potential catalyst for a “new phase of growth.” But will the coronavirus dent sentiment for expensive console purchases, especially if we have an economic crisis?
It’s possible and therefore, investors may want to hedge their bets with GLUU stock. Mobile games are inherently cheaper than their computer- and console-driven counterparts because users already own the platform – the smartphone or tablet.
Presently, GLUU stock may represent a good deal as it’s been in a consolidation phase since early May. Also, Glu Mobile’s quick ratio of 1.5 indicates strong liquidity, a good sign during a crisis.
When it became apparent that the coronavirus would become a serious threat in the U.S., millions of Americans scrambled to grocery stores, stocking up on essential goods. As a consequence, several “boring” stocks to buy, such as Clorox (NYSE: CLX), garnered headlines.
Even now, CLX is charging higher, as elevated coronavirus cases have people still stocking up on disinfectants and other protective products. But what about Fido?
That’s a question that PetMed Express (NASDAQ: PETS) would love to answer. An online pet pharmacy, PetMed naturally practices social distancing and contactless services. Thus, while our daily lives have been disrupted because of the pandemic, your furry friends can still have access to the veterinary products they need.
It’s really the same thesis that underlines Amazon (NASDAQ: AMZN), just for the four-legged audience. And this audience is massive and getting bigger every year. According to the American Pet Products Association, we collectively spent $95.7 billion on our pets in 2019. Within this tally, $19.2 billion is allocated to supplies, live animals and over-the-counter medicine, while $29.3 billion came from veterinary care and product sales.
Still, Wall Street didn’t like the mixed earnings report from PetMed Express, beating on revenue but missing slightly on earnings. Quickly, investors dumped PETS stock. However, this is probably overaggressive selling. In its second quarter for this year, PetMed delivered $96.2 million in top-line sales, up over 20% year-over-year.
Further, the company has excellent liquidity and zero debt, making PETS a great recovery idea among coronavirus stocks to buy.
In the immediate fallout of the Covid-19 pandemic, buying food, water, and even guns made sense. We just didn’t know whether this mysterious disease was just another flu or the plotline of the film “Contagion” becoming reality. But marijuana? Only cannabis users would think such things.
Yet several states considered medical cannabis (and in some cases, recreational) to be essential services. That’s a far cry from what would have happened if the coronavirus struck even a decade ago. According to the Pew Research Center, a majority of Americans support marijuana legalization, a trend that started during President Obama’s administration.
This sentiment shift supports the broader narrative of dispensaries and cultivators like Curaleaf Holdings(OTCMKTS: CURLF). Taking a big hit (no pun intended) in March, CURLF stock has punched back, forming a strong bullish trend channel.
In the company’s first-quarter earnings report, it delivered $96.5 million, up a whopping 173% from the $35.3 million in the year-ago quarter. Future revenue growth is possible, thanks counterintuitively to the Covid-19 pandemic.
With Curaleaf’s cannabidiol (CBD) business, the company is able to market non-psychoactive cannabis products in the U.S. One of the possible benefits of CBD is as a stress-reliever. Given all that we have suffered, this revenue stream can help boost CURLF stock.
The electric vehicle (EV) space isn’t just based on interest in clean-energy technologies. When the coronavirus first struck China, it forced multiple automotive plants to shutter temporarily. Well, that’s a big problem as so much of the global auto supply chain depends on Chinese production facilities.
In other words, you can’t build a car with only 99% of the parts. Thus, Covid-19 caused people to consider alternatives.
Enter EVs. With fewer parts – and especially fewer moving parts – than combustion-engine vehicles, EVs (all other things being equal) offer superior reliability and more insulation from global supply chain disruptions. Better yet, the commodity that drives EVs, lithium, can be sourced right here in the U.S.
And that’s the main thesis supporting American Lithium (OTCMKTS: LIACF). An exploration and mining specialist, American Lithium holds a significant land position in Tonopah, Nevada, which the company claims is “one of the most promising and underdeveloped lithium sedimentary basins in North America today.”
As an added bonus, the Tonopah project is located within a three to four-hour drive from the Tesla (NASDAQ: TSLA) Gigafactory.
Admittedly, LIACF stock is the riskiest name among this list of stocks to buy. As American Lithium has no revenue, it’s difficult to apply traditional fundamental analysis to this opportunity. However, with its potentially viable real estate and the mercurial demand for EVs, LIACF provides great upside for the speculator. As well, Andrew Bowering, founder, director and financial officer of American Lithium explained in an email to me:
It is very common in the resource sector to see companies trade at hundreds of millions of market cap, on route to getting something into production themselves, or more commonly, bought out by someone larger in the industry. Major mining companies don’t have the flexibility of employees, budgets or scheduling, to be able to explore and advance grassroots prospects through the exploration and development cycle. As a result, they buy deposits from juniors or simply buy the juniors more often than not. There are many great examples of M&A [mergers and acquisitions] in the mining industry.
The lithium space is going to see M&A activity for certain as it’s such a new industry. With the lithium ion battery only recently being in high demand, there is very little traditional industry supporting mechanisms such as long term pricing contracts, futures contracts, metal trading houses, well established research and trend analysis, etc., that the small to intermediate developers can’t get big bank funding to develop themselves. Either battery producers, or battery end users, will be forced to vertically integrate or the major industrial mineral miners, and even petroleum companies, will joint venture or acquire newly discovered and economically determined lithium assets.
Quite simply, there are very few good deposits of lithium worldwide, and even less in North American, where the US Government has declared lithium a strategic metal. Investors seeing the writing on the wall for battery demand to grow significantly, are quick to move into the space capture some of the future profits.
Intriguingly, American Lithium has confirmed the existence of big lithium deposits at the surface of their project. Currently, the organization is conducting a feasibility study to determine the economics of processing that lithium and the decisions that come with it – self fund the operation or seek a partner or a buyer.
Again, this narrative comes with risks. However, the supportive background suggests this gamble isn’t completely crazy.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. He may consider a long position in LIACF stock in the next 72 hours.
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