Coronavirus Sell Off and 8 stocks to buy
Full press announcement in Morningstar
The concerns about coronavirus are quickly evolving and could lead to the long-awaited stock market decline. Neither the extent of the fall nor the precise time of recovery are easily predictable. What is clear though, is that based on historical trends, in the long term the market recovers and continues to go higher. In the past we have had SARS, Ebola Anthrax and none of them have created prolonged drops. Similarly, over time, coronavirus fears will get factored in and growth will resume. Investing in the stock market is not appropriate for those who need immediate liquidity but if your time horizon is the next 10-years or longer, then these corrections should be viewed as an opportunity. If you are under exposed to the following companies, then consider buying them on a pull back:
- Amazon (AMZN): This company has changed the industry landscape across the world. Brick and mortar retailers continue to suffer because of Amazon’s control. The scale of its operation enables the company to broaden its scope and dominate different categories such as now online grocery delivery.
- Alibaba (BABA): This is another significant player in the fast-growing online retail space. Although the company’s presence in China make’s it vulnerable to the corona outbreak, any stock price decline caused by this factor would present an opportunity. The company is a beneficiary of the international trend where an increasing segment of the population wants to transact online.
- Costco (COST): Costco’s business model makes it a viable alternative to Amazon. Customers looking for the in-store and low-price alternative will continue to gravitate to this company. The subscription-based approach creates an added revenue stream which make it one of the most profitable retail enterprises. Costco has experienced a recent coronavirus induced sales surge due to its customers wanting to stockpile on household supplies.
- Netflix (NFLX): This company has revolutionized the way content is viewed. Online streaming is now predominant in every household and Netflix is the pioneer in this space. Since inception its business model is based on staying ahead of the curve when it comes to understanding consumer needs. A stark contrast to this was Blockbuster whose entire market share was captured by Netflix. Other competitors such as Amazon prime, Hulu and Disney plus have emerged and to remain competitive, Netflix has focused its business on premium content development and international growth.
- Facebook (FB): This social media behemoth has transformed how people interact. Facebook has managed to engage its audience through mobile platform in a way that hasn’t been done before. It has continued to make strategic acquisitions like Instagram and WhatsApp to cater to different demographics. Digital advertisements on Facebook are not only beneficial for businesses, but consumers are also very receptive in the manner they are presented. Even though there will be regulatory pressures facing this company, its business will thrive over an extended period.
- Twitter (TWTR): Twitter has an enormous userbase, so much so that it was considered instrumental in getting President Donald Trump elected. The challenge this company has faced is in monetizing its success. The day it can successfully do this, the stock price could surge.
- United Health (UNH): This company has faced some pressure as candidate Bernie Sanders gained in popularity. No matter which candidate is elected the private insurance option well remain a viable alternative in the US. Amongst the insurance providers United Health remains the best of breed with a pristine balance sheet.
- JP Morgan (JPM): Financials have been under pressure due to falling interest rates which compresses their margins. In the long-term interest rates will eventually go back up and JP Morgan will be able to sustain the low rate environment due to economies of scale. This well-run global bank will always be a central player in the financial sector
It is very important that before a position is initiated in any of these stocks, you seek professional advice from a qualified financial advisor.
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