The novel coronavirus has shown us a lot about our economic infrastructure and which direction our world is heading. Tech is the solution to our problems, and this horrific pandemic has illuminated that. The ability for many American’s to function and work effectively without leaving their homes can be attributed to the tech sector.
Laptops, cloud-computing, online shopping, video conferences, and remote team collaboration are products of this 4th industrial revolution that allow the average individual to be increasingly mobile and flexible. If these technologies were not in place, the effects of the “self-quarantine” we are experiencing would have a much more detrimental impact on the economy. Tech is keeping our economy afloat and will continue to drive growth as its global necessity increases. I believe that the novel coronavirus has elucidated its necessity.
I think that Cisco has been unfairly punished by the novel coronavirus, with its shares down 27% from its high last month.
Cisco’s collaborative communication segments Webex and Jabber, which have been increasingly utilized as more and more workers are forced to work from home. These platforms have seen massive increases in utilization over the past few weeks. The enterprise’s cloud-based security software Umbrella and Duo Security are keeping mobile workers protected. These platforms will continue to gain traction as the necessity is increasingly evident.
The company’s offering primarily pertains to network devices and software. The move towards 5G is expected to resurge Cisco’s topline as network device updates become a necessity. The enterprise is highly diverse and has proven itself as a long-standing, sustainable business.
Cisco is highly liquid with $27 billion in cash & equivalent and a quick ratio of 1.42 (acid test). The enterprise is relatively unlevered with less than 30% debt to capital. CSCO is trading at an 11.3x P/E, its lowest level in 4 years. Despite some short-term demand headwinds, this stock appears to be a bargain.
This may sound like an obvious buy, but Amazon is going to profit off this novel coronavirus in the long run. People are rushing to order quarantine essentials from Amazon’s ecommerce site, and AWS is becoming necessary for those remote workers because it allows users to utilize their company server infrastructure wherever they may be.
The stock has been relatively resilient to the market crash for the previously mentioned reasons, having fallen only 15% from its February highs. AMZN represents an excellent long-term investment at its discounted levels.
ZM has been on a tear since the beginning of 2020, illustrating gains of 90% in less than 3 months. This virus has increased the necessity of this remote conference services company and exacerbated the stock’s prolific growth. Zoom went public less than a year ago but has shown its initial shareholders more than 110% price appreciation.
The necessity for remote video conferencing may become the norm once people become used to it during this indefinite quarantine. The enterprise exhibited 88% topline growth as well as reporting a profit in its first fiscal year as a public company. This level of profitable growth is extremely attractive to growth-seeking investors.
ZM has run-up quite a bit in the pandemic craziness, but I believe that this rally may still have legs. I wouldn’t be putting all my eggs in one basket on this one, but it is definitely a stock to keep an eye on.
I’m still not going all-in on any positions in the market right now, but I am beginning to slowly buy up robust stocks that I believe have been severely discounted. Expect the markets to remain choppy for the next couple of months and do not attempt to call a bottom, price-average down at levels that you are comfortable with.
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