Back to top

Image: Bigstock

5 of the Best Stocks to Buy for a Post-Pandemic Rally

Read MoreHide Full Article
The coronavirus pandemic has disrupted global supply chains and international trade. And with more than 100 countries closing national borders to curtail the spread of the deadly virus, travel has come to a grinding halt. The pandemic has weighed on corporate profit margins and impacted economic growth. The UN warned that the global economy could shrink up to 1% this year due to the outbreak, a reversal from its earlier prediction of 2.5% growth.
 
In the United States, nearly 5 million Americans are now expected to apply for jobless claims for the third straight week in mid-April as the pathogen took a bigger bite out of the domestic economy, pushing unemployment rate higher. Some even fear that the jobless rate may hit a record high since World War II, with some prominent economists apprehending a recession in the near term. The broader market has been on a roller-coaster ride this year, with the S&P 500 tanking 34% through Mar 23 after hitting a record high on Feb 19.
 
But investors shouldn’t lose hope! This is because the S&P 500 index rallied 27% through mid-April from Mar 23. And in the past year, the benchmark has lost only 2% through mid-April. The index also picked up strongly as the coronavirus curve flattened.
 
Now, imagine the magnitude of the rally when the pandemic is over. Certainly, the broader index is touted to enjoy its biggest rally ever in a post-pandemic world as a low interest rate environment will stimulate economic growth. After all, lower financing costs will improve borrowing and investing. When consumers pay less interest, they have more money to spend, which can increase discretionary outlays. Consumers may buy big ticket items like houses or cars as well. Similarly, low rate encourages businesses to purchase equipment which in turn boosts output and productivity.
 
The Fed trimmed benchmark federal funds rate a full percentage point to a range of zero to 0.25% last month. By trimming its short-term interest rates, the Fed aimed to pump cash into the financial system, and help banks provide more loans to businesses and households. 
 
By the way, with rates remaining so low, retirees will be compelled to invest in equities to generate enough income for meeting their expenses. And let us also admit that almost two-third of the U.S. economy is consumer-based. With lockdowns and restrictions put in place, there is a huge pent-up demand for travelling, eating out, going to movies and shopping, which will surely pep up the economy and consequently the markets.
 
Lastly, the U.S. lawmakers’ agreement on a sweeping stimulus package designed to curb the economic fallout from the coronavirus-induced public health crisis will certainly help markets scale north, more post the pandemic. 
 
The White House and the Senate struck a deal for rescue package worth $2 trillion, which stands out to be the biggest congressional bailout in U.S. history. At least $250 billion are expected to be set aside for direct payments to individuals and $350 billion to be provided to small business houses as loans. Nearly $500 billion to be set aside for distressed companies and $250 billion for unemployment insurance benefits.
 
The landmark agreement is expected to inject enough cash to bolster the economy and provide the required liquidity and help stabilize the financial markets.
 
Finally, the broader market has bounced back following fast-spreading deadly diseases, if history is any guide. For instance, the S&P 500 had posted solid gains of 20.8%, 18% and 10.4% in the 12-month period after the first occurrence of SARS, MERS and Ebola back in 2003, 2013 and 2014, respectively. 
 
5 Solid Stocks for a Post-Pandemic World
 
With the broader market expected to rally once the coronavirus is vanquished, investing in sound stocks positioned to gain in the long run seems to be the best investment option as of now. Such stocks flaunt a Zacks Rank #1 (Strong Buy) and have seen positive earnings estimate revision. Rising earnings estimates generally indicate that the stock will outperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Build-A-Bear Workshop, Inc. (BBW - Free Report) operates as a specialty retailer of plush animals and related products. The Zacks Consensus Estimate for its current-year earnings has moved up 22.2% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 50% and 450%, respectively. In fact, the company’s projected earnings growth rate for the next year is 54.6%.
 
Harvard Bioscience, Inc. provides scientific instruments, systems, software, and services. The Zacks Consensus Estimate for its next-year earnings has climbed 7.1% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 25% and 27.8%, respectively. What’s more, the company’s projected earnings growth rate for the next year is 30.4%.
 
Green Brick Partners, Inc. (GRBK - Free Report) operates as a homebuilding and land development company. The Zacks Consensus Estimate for its current-year earnings has risen 37.4% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 41.4% and 36.2%, respectively. In fact, the company’s projected earnings growth rate for the next year is 15.2%.
 
Kinross Gold Corporation (KGC - Free Report) engages in the acquisition, exploration, and development of gold properties. The Zacks Consensus Estimate for its current-year earnings has moved 11.6% north over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 50% and 41.2%, respectively. To top it, the company’s projected earnings growth rate for the next year is 4.2%.
 
Methode Electronics, Inc. designs, manufactures, and markets component and subsystem devices. The Zacks Consensus Estimate for its current-year earnings has advanced 2.7% over the past 60 days. The company’s expected earnings growth rate for the current quarter and year is 60% and 40.7%, respectively. In fact, the company’s projected earnings growth rate for the next year is 8.5%.
 
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.
 

In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Kinross Gold Corporation (KGC) - free report >>

BuildABear Workshop, Inc. (BBW) - free report >>

Green Brick Partners, Inc. (GRBK) - free report >>