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Coronavirus Stocks: Companies Most Affected by the Outbreak

John Divine

The coronavirus, like the trade war, is a market-moving catalyst that Wall Street seems to ascribe more or less importance to on a daily basis.

The early stages of China's coronavirus outbreak sparked fear on Wall Street. Then, markets essentially ignored the deadly virus even as it spread globally. By late February, investors had graduated from the denial phase; the S&P 500 suffered its fastest-ever 10% decline as the impact of the virus on the global economy was finally acknowledged in prices.

Whether the brunt of the selloff is behind us or not, there are certainly still a number of coronavirus stocks that will be hurt materially by the viral outbreak of the coronavirus, also known as COVID-19. The virus, which first appeared in Wuhan, China in late 2019, is a close cousin to the severe acute respiratory syndrome, commonly known as SARS.

For the average investor, it's arguably more important to highlight stocks hurt by the coronavirus.

[See: The Complete Berkshire Hathaway Portfolio.]

By no means are the following companies an all-encompassing list. In fact, some of the names most catalyzed by coronavirus have been small-cap health care stocks or medical supply companies that saw speculative run-ups in their stock price.

From household names to overseas firms, what follows are a handful of businesses feeling the pain as the impact of coronavirus ripples throughout the global economy.

"Gaming companies, travel companies and retail have all pulled back," says Raj Gupta, executive director and research analyst for William O'Neil + Co., who highlights a few affected industries.

"We can expect companies to discuss the impact of the virus on earnings growth as earnings season progresses," Gupta says.

Here are five stocks most affected adversely by the coronavirus:

-- Carnival Corp. (ticker: CCL)

-- Wynn Resorts (WYNN)

-- Yum China Holdings (YUMC)

-- Euronav (EURN)

-- Nike (NKE)

Carnival Corp. (CCL)

Diamond Princess, a cruise ship owned and operated by Princess Cruises, which is in turn owned by Carnival, was quarantined for weeks, parked at a dock just off of Japan after one of its former passengers tested positive for coronavirus. By early March, more than 700 people of the ship's 3,711 passengers and crew had come down with the infection.

Now down about 17% since mid-January, CCL stock has been punished by the markets as the unfortunate situation has developed.

While the Diamond Princess nightmare makes CCL somewhat unique, it's far from the only name in the travel industry bound to take a hit as people avoid travel around Asia.

Wynn Resorts (WYNN)

Gambling giant Wynn Resorts is also one of the coronavirus stocks suffering financially from the outbreak. Once synonymous with Las Vegas, Wynn and other big-name gaming players have shifted their core businesses to China's Macao territory, which quickly became a gambling haven and now does about seven times more business than Vegas.

So it hurts when the government makes every Macao casino shut down, even if it's for a few weeks. That's what happened to the industry in February, and while the government allowed casinos to come back online in phases, gaming revenue in the gambling haven still cratered an incredible 88% in February.

Wynn Resorts was "losing $2.6 million a day" when casinos were shut down, says Kevin Koehler, associate portfolio manager at Miracle Mile Advisors.

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Wynn, as well as many of its competitors, has felt the swift wrath of Wall Street.

The stock is now down about 30% from its peak.

Yum China Holdings (YUMC)

Yum China, which owns fast-food chains like KFC, Pizza Hut and Taco Bell, is down nearly 10% year-to-date in 2020. It turns out quarantining tens of millions of Chinese citizens isn't terribly good news for its businesses.

It's no shock that a company with the word "China" in its name might be impacted more by coronavirus than the average U.S. stock, but it is alarming to fathom just how material this viral scare -- which still only affects a small segment of China's population -- can be to a near $20 billion company.

"Thirty percent of their stores have already shut down, which will undoubtedly hurt the company's forecasted revenue going forward," Koehler says.

Euronav (EURN)

Two other parts of the economy hit by the SARS-like bug have been shipping and energy. The inevitable slowdown in China's economy after the largest quarantine in human history means less activity and lower demand for goods and services.

For that reason, the shipping industry has been sold off by traders and oil prices have been plunging, falling from about $63 a barrel in early January to the mid-$40s by early March. That said, this combination has led to some unprincipled selling, according to J. Mintzmyer, analyst of Value Investor's Edge on Seeking Alpha.

Nike (NKE)

Last and certainly not least by market cap, the roughly $140 billion Nike is an example of how retailers, and even globally formidable retailers, can be hit by a black swan event like coronavirus.

"Nike has temporarily closed about half of (its) company-owned stores and stores managed by partners in China," Gupta says. "The stores that are open are operating under reduced hours and have seen reductions in foot traffic. There's no timetable for the closures and reduced hours."

About 17% of Nike's revenue comes from China, which is also its fastest-growing region, Gupta says, noting that China produces about 20% of Nike's products as well.

[See: 10 of the Best Stocks to Buy for 2020.]

The Takeaway

While the situation seems to be calming down, the coronavirus remains a major strain on the global economy. Under Armour ( UA, UAA) issued a soft 2020 outlook in mid-February, in part due to the infamous outbreak. It reflects just how sensitive today's interconnected economy is, and how U.S. investors need to keep apprised of global events when making portfolio decisions.
Even now, as markets take a breather following a steep late-February selloff, there are patients with coronavirus who span the globe. Risks may have been overestimated in some stocks, but unfortunately, this ordeal isn't over yet.

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