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5 Smart Ways to Profit From the Coronavirus Crisis

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Stock markets across the globe retreated as concerns of economic fallout from the coronavirus outbreak deepened. All the major U.S. bourses entered bear-market territory and several companies have raised alarm bells about the outbreak weighing on their earnings, and supply chains getting disrupted.

The Fed and the ECB did apply monetary measures to calm markets, but that did little to soothe investors. After all, interest rate cuts and easy access to credit doesn’t address issues caused by a pandemic that has kept consumers from traveling, shopping and gathering at public places.

But even though majority of investors are in a state of shock, savvy investors do know how to profit during uncertain times like these. And here’re five ways you can put your hard-earned money to work in the stock market even though the coronavirus outbreak has unnerved market pundits worldwide.

Buy a Pandemic-Proof Stock

A stock that is fundamentally strong enough to provide hedge against any coronavirus-led selloff is Netflix, Inc. NFLX. Firstly, it primarily provides streaming services, so any lockdown in response to the outbreak won’t have any impact on its subscriber count. In fact, Netflix added 8.8 million subscribers internationally last quarter, surpassing analysts’ expectations by more than a million.

Netflix’s subscriber growth was mostly driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos. Netflix currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved 12.1% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is a promising 118.4% and 48.4%, respectively.

Think Long Term

Despite the virus crisis, digital transformation is a continuous process. And the best stock to capitalize on this trend is Microsoft Corporation MSFT. While its Office 365 commercial suite of products does help in sharing files, schedule meetings and even connect remotely, it’s commercial cloud segment plays a pivotal role in digital transformation.

In second-quarter fiscal 2020, the company saw Intelligent Cloud grow a healthy 27% quarter over quarter. What’s more, over a year, Microsoft has generated $43.76 billion worth in revenues from its Intelligent Cloud offering.

Microsoft currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its current-year earnings has climbed 4.9% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 14.9% and 18.3%, respectively. In the next five years, the company’s projected earnings growth rate is 13.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

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Stick to Dividend Players

Given the coronavirus-fueled volatility, investors may consider picking solid dividend payers. This is because the best dividend stocks pay out healthy yields and have strong prospects, and are less susceptible to market gyrations. Their large customer base, sustainable business model, long track of profitability and strong liquidity allow them to offer sizable yields on a regular basis, regardless of market direction.

In this regard, developer and operator of energy infrastructure Sempra Energy SRE should make a meaningful addition to your portfolio. The Zacks Rank #2 company has a dividend yield of 3.03%, more than the Utility - Gas Distribution industry’s dividend yield of 2.81%. The Zacks Consensus Estimate for its current-year earnings has risen 3.2% over the past 60 days. The company’s expected earnings growth rate for the next quarter and current year is 12.7% and 5.2%, respectively.

Pick Stocks That Directly Benefit From the Crisis

Professional money managers should certainly look to buy stocks that are involved in research and development of vaccines for the deadly virus as well as those that are aiming to prevent the rapid spread of the virus. Notable among them are Co-Diagnostics, Inc. CODX and Moderna, Inc. MRNA.

Molecular diagnostics company Co-Diagnostics has introduced an easier-to-use molecular diagnostic test known as the Logix Smart Coronavirus COVID-19 test. The company has received a CE mark approval from the European Union to make the test commercially available. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its next-quarter earnings has moved up 28.6% over the past 60 days. What’s more, the company’s expected earnings growth rate for the next quarter is 44.4%.

Similarly, clinical stage biotechnology company, Moderna has manufactured a new vaccine for the treatment of coronavirus. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 6.2% over the past 60 days. The company’s expected earnings growth rate for the current and next quarter is 7.5% and 9.8%, respectively.

Bet on Emerging Market Stocks

Per UBS analyst Mark Haefele, emerging market stocks have outperformed the broader S&P 500 by almost 5.8% last week. Thus, with emerging market stocks holding up better than U.S. equities, investing in one of them in such torrid times won’t be a bad proposition.

And the one that might fit the bill is HDFC Bank Limited HDB. The company mostly provides banking and financial services in India. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 34.9% and 24.7%, respectively.

Zacks Top 10 Stocks for 2020

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Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
Sempra Energy (SRE) : Free Stock Analysis Report
 
HDFC Bank Limited (HDB) : Free Stock Analysis Report
 
Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
Co-Diagnostics, Inc. (CODX) : Free Stock Analysis Report
 
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