Stocks That May be Worth Investing in During the Coronavirus
Making stock predictions can make you look like a fool.
Markets go up and markets go down, and predicting what one stock out of all of them will do can put you in a financial hole if you’re betting on it to win.
Holding stocks for the long-term, buying mutual funds that spread risk, and allowing compound interest to do its work by staying invested in the stock market are safer ways to get a good return on your money.
But sometimes it’s worth playing around a little.
If you have money to lose, some stocks may be worth buying for the sole reason that the coronavirus pandemic has pushed people inside. We say “money to lose” because like all stocks, the risk of losing everything is an option. Not a good one, but it exists.
Here are some pandemic-happy stocks that may do a lot better during the pandemic than others:
With gyms closed around the country, working out from home is popular. Saving money is popular again too, but not so much if you’re buying one of Peloton’s exercise bikes for about $4,300.
The company announced in early September that it was cutting the price of its signature bike by 15%, from $2,245 to $1,895. It also introduced a new $2,495 Bike+ with a rotating screen and Apple Watch integration.
Despite such high prices for exercise bikes, Peloton posted a profit for the first time ever this year. Sales of its high-end bikes and treadmills grew 172% year-over-year.
The stock is trading near a 52-week high. Argus analysts nearly doubled their price target for the buy-rated Peloton stock from $55 previously to $100 in mid-September. It’s one of the 10 best stocks for investors to buy now, according to the Motley Fool Stock Advisor.
Whenever gyms reopen, don’t expect Peloton machine owners to leave their new bikes in the garage. That could be more than enough incentive for bike sales and Peloton’s stock price to keep growing.
Stocking up on essentials was common early in the pandemic, and while that rush has slowed as shoppers realized toilet paper was always going to be in supply, Costco has benefited from the pandemic.
Essentials like food, cleaning supplies, and paper products have pushed Costco’s comparable sales up 14% in the fourth quarter. Other businesses that sell essential items at low prices, such as Walmart, Target, and Amazon, have also done well during the coronavirus.
Costco stock is near a 52-week high. As of mid-September its shares have gained 18%, beating the S&P 500’s 5% gain. Costco has been a great stock to own for years, so this isn’t unexpected. Its shares have gained nearly 500% over the last decade, not including dividends.
Costco is another company that the Motley Fool Stock Advisor recommends buying among its 10 best stock buys. The stock advisor service has outperformed the market by 3-to-1.
If you haven’t used or at least heard of the popular video-conferencing platform called Zoom, then you must be without internet service during much of the shutdown during the Covid-19 pandemic.
Schools and workplaces use it to meet with teachers and co-workers, putting the company formally called Zoom Video Communications at the center of working during stay-at-home orders.
Buying $1,000 worth of Zoom stock on Feb. 3, before the pandemic hit the U.S. hard, would have been worth $2,950 on Aug. 7, according to Acorns, an investing website.
The stock is up nearly 500% through the first nine months of the year. The company’s growth was booming before the pandemic, and demand for it has only grown during the pandemic.
Binge watching is a popular way to fight Covid boredom, and it’s paying off for Netflix.
A $1,000 investment in Netflix stock on Feb. 3 would be worth $1,436 by August according to Acorns. That’s not a gigantic jump, but the streaming video giant is the main name you need to know in that field.
Others compete and even win more trophies, but Netflix is the biggest streaming video company. It had 193 million paid streaming accounts worldwide at the end of June.
There’s probably at least one Logitech device in your home. Keyboards, mice, speakers, headsets and gaming products are some of the necessities the company sells to computer users.
During the pandemic, its sales have grown as more people work or attend classes from home.
For the first quarter of fiscal year 2021, it reported sales growth of 23% to $792 million. That’s a big jump from the previous year when full-year sales were up 6.7%, and for fiscal 2019 when annual revenue rose by 8.7%.
These numbers could continue to grow for years if people continue working from home. That’s worth thinking about.
Logitech stock is near a 52-week high and has a reasonable price-earnings ratio of around 25, making it a relative deal.
The Big Caveat
One thing to keep in mind with all of these stocks, or any company, for that matter, is that there’s no guarantee of anything.
You could invest and double your money, or you could lose all of it.
Past performance is no guarantee of anything, as the experts say.
Bad news will eventually hit and your favorite stock during the pandemic will likely take at least a short fall to remind you that nothing makes sense.
Not the pandemic. Not the stock market. Nothing.
You’ll have a better chance of succeeding with an index fund that you hold for years. Until you do that, you’re taking some pretty big chances.