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Coronavirus Fears Holding You Back? 3 Smart Ways to Invest

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Over the past two weeks, its been a topsy-turvy ride for equities. While many astute investors had been expecting a pullback in equities after a more than 30% rally, very few actually expected the reason would be concerns surrounding a virus.

Investors are now worried about the potential economic impact of the fast-spreading coronavirus in China. The disease has claimed 118 new lives on Feb 20, and now the total number of deaths nationwide is at least 2,236. What’s more, Beijing reported 1,109 new confirmed cases of the disease during the same period, up from 349 reported the previous day. Alarmingly, the virus has now infected 75,685 people nationwide.

A recent report from South Korea’s Yonhap News Agency said that the virus has claimed its first life, and the mayor of Daegu has urged citizens not to step outside their homes. Italy’s Lombardy region also confirmed a new coronavirus case.

The United States has declared coronavirus as a public health emergency while the WHO recognized the impact of the virus to be widespread, affecting countries with weaker health systems. Nonetheless, the virus affects the respiratory organs and is quite similar to SARS (severe acute respiratory syndrome). Lest we forget, SARS, which erupted in 2002, resulted in the death of 800 and triggered a severe economic slump that fettered global stocks.

This might compel investors to remain on the sidelines. However, investors shouldn’t shun equities altogether. Here’re three ways you can put your hard-earned money to work in the stock market even though the coronavirus outbreak has unnerved market pundits worldwide.

Defensive Stocks to Fight Market Uncertainty

As the markets seem to be plagued with widespread uncertainty, defensive stocks seem to be the safest investment option. Such stocks are generally non-cyclical, or companies whose business performance and sales are not highly correlated with activities in the larger market. Their products are in constant demand irrespective of market volatility and such names include companies from the utilities and consumer staples sectors.

Utilities are deemed defensive stocks as not many people will be willing to live without electricity, gas and water. Food, beverage and tobacco companies are true defensive plays as demand for such staple stocks remains unaffected by economic downturns.

Stick to Dividend Payers

With things certainly not looking up for the stocks market, investors may consider picking solid dividend payers. This is because the best dividend stocks pay out healthy yields and have strong prospects, and are less susceptible to market gyrations. Their large customer base, sustainable business model, long track of profitability and strong liquidity allow them to offer sizable yields on a regular basis, regardless of market direction.

What’s more, they can even think of selecting elite dividend payers within the S&P 500 known as dividend aristocrats. And why not? This category of stocks outperforms other dividend payers on better quality business.

Eddy Market Adds to Gold’s Lure

Finally, investors spooked by the spread of the coronavirus and subsequently its impact on the stock market can consider putting their money in gold mining stocks.

After all, amid the ongoing uncertainty, the appeal for gold as a safe-haven asset has increased. And as the bullion metal glitters, gold mining stocks have a fair chance to gain.

Here’re the Choices

We have selected four solid stocks from the aforesaid areas that should make meaningful additions to your portfolio. These stocks flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).

PG&E Corporation (PCG - Free Report) engages in the sale and delivery of electricity and natural gas to residential, commercial, industrial, and agricultural customers in northern and central California. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 3.8% over the past 60 days. The company’s expected earnings growth rate for the current and next year is 4.3% and 4.4%, respectively.

Hormel Foods Corporation (HRL - Free Report) produces and markets various meat and food products to retail, foodservice, deli, and commercial customers. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 0.6% over the past 60 days. The company’s expected earnings growth rate for the current quarter is 4.6%.

Chevron Corporation (CVX - Free Report) engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. Chevron is currently part of the 2020 dividend aristocrats list. It has a dividend yield of 4.66%, compared with the industry average of 2.55%.

The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has increased 8.3% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 28.1% and 12.8%, respectively.

Kirkland Lake Gold Ltd. (KL - Free Report) engages in the acquisition, exploration, development, and operation of gold properties. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved 1.5% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 71.2% and 102.2%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

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