With the U.S. Presidential election just a day away, investors are ignoring strong quarterly earnings reports and focusing on the uncertainties arising from escalating coronavirus cases across Europe and America. For the week ending Oct 30, the Dow, the S&P 500 and the Nasdaq declined 6.5%, 5.6% and 5.5%, respectively. This marks the Dow’s biggest weekly and monthly decline since March and the worst week for the S&P 500 and the Nasdaq since March.
Virus & Election
Firstly, addressing the coronavirus outbreak has been quite a challenge. New COVID-19 cases spiked over the past weeks, raising concerns among investors and compelling countries, especially in Europe, to reimpose lockdown measures. Similarly, cases have been climbing in all states across America with the death toll crossing 230,000 on the last day of October. Per a MarketWatch report, the United States has averaged 79,833 cases a day, up 42% from the average two weeks ago, as of Oct 31. And on Oct 30, the country recorded 101,461 new cases in a single day.
Dr. Scott Gottlieb, the former U.S. Food and Drug Administration commissioner, in a CNBC interview stated that “the epidemic is accelerating across the country” and citizens are now “at the beginning of the steep part of the epidemic curve.” He also said that in case the numbers keep climbing, December will be “the toughest month.”
France and Germany re-entered lockdown after a massive second wave of coronavirus infection threatened the two largest economies of Europe. People in France have been restricted from stepping out, except to buy essential goods or seek medical attention. In fact, employees are to work from home mostly, with exceptions if the employers deem that it is impossible to work remotely. Germany that plans to lockdown from Nov 2 to 30, has agreed to keep schools open and allow shops to operate under strict regulations. However, bars, restaurants and theaters are expected to remain shut.
Along with the dramatic rise in coronavirus cases, the Nov 3 election also leaves investors shaken. The Donald Trump verses Joe Biden polls are not only influencing the economy but are also putting stocks on a rollercoaster ride. The election is crucial for stock markets as one who holds the majority control can make key changes in policies and that include the much-needed stimulus package, which has been delayed since August.
5 Stocks to Play Safe
Given the current scenario, rise in coronavirus cases and uncertainties revolving around the U.S. Presidential election, markets might stay volatile for some time. In such a case, stocks from consumer staples, utilities and healthcare are considered safe or defensive.
Consumer staples, utilities and healthcare sectors deal in products and services that cater to basic needs and are in demand even during market gyrations. In fact, the pandemic has forced people to stay at home, keeping requirements for essential items like food and medicines intact. Here are five stocks that flaunt a Zacks Rank #1 (Strong Buy) and may return well on investment. You can see the complete list of today’s Zacks #1 Rank stocks here.
United Natural Foods, Inc. UNFI distributes natural, organic, specialty, produce, and conventional grocery and non-food products. The company’s expected earnings growth rate for the current year is 26.5% compared with the Zacks Food - Miscellaneous industry’s projected earnings growth of 7.6%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised more than 100% upward over the past 60 days.
The Boston Beer Company, Inc. SAM produces and sells alcohol beverages. The company’s expected earnings growth rate for the current year is 63% against the Zacks Beverages - Alcohol industry’s projected earnings decline of 0.6%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 26.7% upward over the past 60 days.
DaVita Inc. DVA provides kidney dialysis services for patients suffering from chronic kidney failure or end stage renal disease. The company’s expected earnings growth rate for the current year is 27.8% against the Zacks Medical - Outpatient and Home Healthcare industry’s projected earnings decline of 1.8%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 2.2% upward over the past 60 days.
Owens & Minor, Inc. OMI operates as a healthcare solutions company. The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Medical - Products industry’s projected earnings growth of 11.9%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 66.4% upward over the past 60 days.
Primo Water Corporation PRMW provides home and office bottled water delivery and water filtration services. The company’s expected earnings growth rate for the current quarter is more than 100% compared with the Zacks Utility - Water Supply industry’s projected earnings growth of nearly 11%. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 21.2% upward over the past 90 days.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
DaVita Inc. (DVA) : Free Stock Analysis Report
Owens Minor, Inc. (OMI) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Primo Water Corporation (PRMW) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research