Back to top

Image: Bigstock

6 Months of Pandemic and 5 Top Shelter-in-Place Stocks

Read MoreHide Full Article

It has been six months since the World Health Organization declared the coronavirus outbreak as a pandemic. About 200 days and more than 190,000 deaths later, the United States wears a new look. The domestic economy has taken a massive beating, with the country almost locked down for two months and businesses suffering like never before. The economy is gradually reopening but the picture is still gloomy.

More than 40 million people have filed for unemployment benefits since the outbreak and even a whopping $6 trillion stimulus now seems not enough. Wall Street too had a roller-coaster ride with stocks hitting a low in March. But the Dow exited the bear market on Mar 26, and since then all three major indexes have had a dream run before taking a hit once again last week followed by a rebound on Sep 9. While a few businesses found an opportunity to cash in on during the pandemic, most are still bleeding. The tech sector certainly remains the biggest winner and is likely to continue driving the market.

Coronavirus Infects Global Economy

The pandemic has rattled the entire global economy and the United States has been one of the major casualties. The White House was initially slow in its response to the pandemic but as cases started to soar, the country almost had to be shut down with people ordered to stay at home. Factories and stores had to be shuttered and the economy came to a standstill.

This saw companies losing billions of dollars and more than 40 million losing their jobs in just a few weeks. Travel, civil aviation, hotels and restaurants, and retailers were the biggest casualties. While biotech firms and pharmaceutical companies ramped up the development of a potential vaccine to treat the deadly coronavirus, the Fed announced multiple rounds of stimulus packages that totaled over $6 trillion to breathe life into the economy.

Six months down the line, states have started reopening and restrictions are being relaxed but with more COVID-19 cases being reported from several states, fears are still haunting.

Economy Braving the Pandemic

There’s a sea change in the pre- and post-pandemic world. Work and learn from home have become the new culture, while social distancing has changed business completely.

When coronavirus started spreading in the United States, predictions were bleak, which ended the bull market for tech stocks that drove the markets for the past few years. However, among the 11 sectors of the S&P 500, information technology has been the biggest winner six months into the pandemic.

The Technology Select Sector SPDR’s (XLK) 29.9% return in the past six months bears testimony to the fact that the tech rally has legs thanks to work and learn from home, and social distancing. Needless to say, shares of cloud-based software companies and cybersecurity companies that support shelter-in-place/work-from-home infrastructure have been outperforming the broader market.

Another big winner during this period has been the consumer discretionary space. Stockpiling on fears of the virus spreading gave a big boost to the sector. With demand for essential goods surging during the lockdown, companies dealing in consumer staples and discretionary witnessed a massive push, which drove their profits. The Consumer Discretionary Select Sector SPDR’s (XLY) has returned 28.7% in the past six months.

Our Choices

While there is no immediate sign of a vaccine or cure to the virus, here we suggest five stocks with a Zacks Rank #1 (Strong Buy) that would give your portfolio a shot in the arm. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zoom Video Communications, Inc.’s (ZM - Free Report) cloud-native unified communications platform, which combines video, audio, phone, screen sharing and chat functionalities, makes remote-working and collaboration easy.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 78% over the past 60 days. 

Salesforce.com, Inc. (CRM - Free Report) acquired Bonobo AI, a firm using automated analysis of customer phone calls, texts and chats to deliver actionable insights. This fits perfectly with Salesforce Einstein, the company's AI-powered software that uses data to identify previously unseen business patterns, deliver the hottest sales leads, predict which marketing copy will perform best and generally optimize how businesses operate and convert. 

The company’s expected earnings growth rate for the current year is 25.1%. The Zacks Consensus Estimate for current-year earnings has improved 25.9% over the past 60 days. 

Blackbaud, Inc. (BLKB - Free Report) offers a full spectrum of cloud-based and on-premise software solutions and related services for organizations of all sizes including: fundraising, eMarketing, advocacy, constituent relationship management, corporate social responsibility, financial management, payment solutions, analytics and vertical-specific solutions.

The company’s expected earnings growth rate for the current year is 24.1%. The Zacks Consensus Estimate for current-year earnings has improved 36.3% over the past 60 days. 

Spectrum Brands Holdings Inc. (SPB - Free Report) offers a portfolio of leading brands in several product categories like residential locksets, plumbing, electric shaving and grooming products, personal care products, small household appliances, specialty pet supplies, lawn and garden, and home pest control products and repellents.

The company’s expected earnings growth rate for the current year is 25.5%. The Zacks Consensus Estimate for current-year earnings has improved 24.2% over the past 60 days.

Central Garden Pet Company (CENT - Free Report) is one of the leading companies in the U.S. pet supplies and lawn and garden supplies space. Unique packaging, point-of-sale displays, logistic capabilities and a high level of customer service are some of its key growth catalysts.

The company’s expected earnings growth rate for the current year is 21.9%. The Zacks Consensus Estimate for current-year earnings has improved 21.1% over the past 60 days.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>