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5 Stocks to Buy as Fears of Second Coronavirus Wave Escalate

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On Jun 24, U.S. markets witnessed their worst session of the month as fears of a second wave of coronavirus gripped millions, raising fresh doubts about the strength and longevity of an economic recovery. Travel stocks and other companies that were climbing amid reopening optimism got hammered with New York, New Jersey and Connecticut requiring visitors from virus hot spots to self-quarantine. 

With cases once again increasing and no immediate signs of finding a vaccine for the deadly COVID-19, fears are likely to continue. Although the government has indicated that another lockdown is quite unlikely as the economy needs to get back on its feet, it won’t come as a surprise if people once again start confining themselves to their homes. However, despite all the uncertainty, a few businesses found an opportunity to cash in, while most are still bleeding.

Stocks Plummet Again

On Wednesday, the Dow shed over 710 points or 2.7%. The broader S&P 500 tumbled  2.59%, with a decline in all 11 sectors. Energy fared the worst, while the tech-heavy Nasdaq fell 2.19%, coming off its record high after the United States reported a rise in coronavirus cases.

The highest daily tally of 34,700 new COVID-19 cases on Tuesday since 36,400 reported on Apr 9 and Apr 24 ignited fears of a new round of government lockdowns. Forecasts for economic damage from the pandemic have also worsened.

 

Advanced economies have been particularly hard hit, with U.S. output now expected to shrink 8%, more than 2% worse than the April forecast. Also, more than 40 million people have filed for unemployment benefits since the outbreak and even a whopping $3 trillion stimulus now seems not enough.

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. Moreover, social distancing measures have made people more self-reliant and homebound.

Although most sectors have taking a beating, a few have managed to cash in on the coronavirus crisis. The tech and consumer discretionary sectors are its two major beneficiaries.

Dependence on technology during the lockdown period and stockpiling on fears of the virus spreading gave a big boost to these two sectors. With demand for essential goods surging during the lockdown, companies dealing in consumer staples and discretionary witnessed a massive push that aided their profits.

Our Choices

We suggest five shelter-in place stocks that you may consider in the new locked-in world as there is no immediate sign of a vaccine or cure the virus.

Zoom Video Communications, Inc. (ZM - Free Report) has been benefiting from the work from home and online learning. Zoom uses AI to schedule video meetings and for a host of other things such as organizing attendee details and transcripting details.

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 174.4% over the past 30 days.  Zoom has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Reynolds Consumer Products Inc. (REYN - Free Report) produces and sells branded and store-brand products which includes cooking products, waste & storage products, and tableware. The company's flagship products include Reynolds Wrap(R) aluminum foil, Hefty(R) bags, and Hefty(R) party cups.

The company’s expected earnings growth rate for the current year is 29.7%. The Zacks Consensus Estimate for current-year earnings has improved 8.7% over the past 60 days.  Reynolds has a Zacks Rank #2 (Buy).

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 1.1%. The Zacks Consensus Estimate for current-year earnings has improved 17% over the past 60 days. Spectrum carries a Zacks Rank #2. 

Kimberly-Clark Corporation (KMB - Free Report) is principally engaged in the manufacture and marketing of a wide range of consumer products around the world. The company sells its products to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, retail outlets, manufacturing, lodging, office building, food service, and health care establishments, and high volume public facilities.

The company’s expected earnings growth rate for the current year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 60 days. Kimberly-Clark carries a Zacks Rank #2. 

Ollies Bargain Outlet Holdings, Inc. (OLLI - Free Report) offers products principally under Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, Real Brands! Real Bargains!, Sarasota Breeze, Steelton Tools, American Way and Commonwealth Classics. 

The company’s expected earnings growth rate for the current year is 14.3%. The Zacks Consensus Estimate for current-year earnings has improved 21.1% over the past 60 days. Ollies Bargain Outlethas a Zacks Rank #1. 

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.

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