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Forget S&P 500's Worst-Ever Q1: 5 Stocks Not to Fool You in Q2

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The S&P 500 just saw its worst first quarter ever (down 20%), thanks mainly to the coronavirus outbreak. Global recessionary fears resurfaced in the quarter and oil prices nosedived to a two-decade low of $20 a barrel.

The fast-spreading virus outbreak triggered widespread lockdowns in many countries, with travel restrictions in place. Plus, a tiff between Saudi Arabia and Russia regarding the prolongation of the output cut pact resulted in an oil price war. Overflowing supplies amid lackluster demand sent oil spiraling down.

What Lies for Q2?

While we are yet to see the peak of the contagion, we can expect a rebound in the global economy once the virus scare subsides. China — the epicenter of the virus — can be considered a guiding light in this regard. The Asian country dealt with coronavirus mainly in January and February, while the rest of the world started to get inflicted from around mid-February.

China’s Manufacturing and Non-Manufacturing PMI numbers for February slipped to a record-low level only to roar back in March. Manufacturing PMI reached 52.0 and Non-Manufacturing came in at 52.3 for March, well above the February readings of 35.7 and 29.6, respectively. Note that a reading greater than 50 indicates expansion.

It means if extensive lockdowns work as planned and the contagion is contained, other economies should benefit from the solid pent-up demand. Massive monetary and fiscal policy easing will also help economies sail through.

Against this backdrop, we highlight a few stocks that are good picks for Q2.

Stock Picks

In order to pick some hidden gems, we have chosen some S&P 500 stocks that have gained or lost very little in the Wall Street bloodbath of March (S&P 500 was down about 11%). These stocks are trading at least 10% below their 52-week high prices currently and have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Clorox Company (CLX - Free Report)

The Zacks Rank #1 company comes from the soap and cleaning materials industry. The industry has a favorable Zacks Rank (top 37%). Plus, the outbreak strengthened demand for cleaning products. The company is expected to see steady or rising demand until things normalize. The stock has added about 8.7% past month and is about 19.1% below the 52-week high.

Campbell Soup Company (CPB - Free Report)

The Zacks Rank #2 maker of convenience food products comes from the consumer staples sector, which is one of the sectors which stayed strong amid the coronavirus-related shutdown. The demand for staples has soared in the past month, thanks to consumers’ panic-buying trends. The industry, which Campbell Soup belongs to, carries a favorable Zacks Rank (top 29%). The stock has gained 2.3% past month and is 19.8% below its 52-week high.

NortonLifeLock Inc. (NLOK - Free Report)

The Zacks Rank #1 provider of cyber security products, services and solutions comes from a favorable Zacks industry (top 37%). The rampant usage of Internet amid lockdowns enhanced the need for cyber security. The stock has advanced 0.4% in the past month and is 34.8% below its 52-week high.

NVIDIA Corporation (NVDA - Free Report)

The Zacks Rank #2 semiconductor company comes from a favorable Zacks industry (top 37%) and sector (top 19%). The stock is off only 2.4% in the past month and is about 16.7% below its 52-week high.

Newmont Goldcorp Corporation (NEM - Free Report)

The Zacks Rank #1 gold mining stock comes from a favorable Zacks industry (top 29%). Solid prices of gold bullion amid the still-alive safe-haven trade should benefit the stock. Oil is one of major inputs of mining companies, so cheap oil is another plus. NEM is up 1.5% in the past month and is 13.8% below its 52-week high.

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