With the market looking set for another panicked week, there is a lot of doom and gloom, but these 3 stocks for staying at home could actually benefit.
After a number of weeks of horrendous stock market performances, it’s now more important than ever to take a leaf from Monty Python’s book and ‘always look on the bright side of life’.
Sure, the stock market appears to be collapsing all around us, ‘Baby Yoda’ toys are being delayed due to China’s manufacturing issues with Hasbro (NASDAQ: HAS), Apple (NASDAQ: AAPL) may run short on iPhones, and there’s a virus lurking around every corner. But aside from all that, some stocks may actually benefit from the increasing likelihood of everyone retreating to their underground bunkers and bedrooms.
Before we get started, this list is strictly about companies that should have little manufacturing impact due to the virus and are compatible with people staying at home for long periods of time. That excludes the likes of Teladoc (NYSE: TDOC) and Zoom (NASDAQ: ZM), which have been repeatedly reported on.
Without further ado, here are 3 stocks which will benefit from people staying at home:
1. Facebook
Let’s be honest, as much as we might dislike it and hate the ad-targeting, the lies, and the suspicious activity, there are still nearly 2.5 billion monthly active Facebook (NASDAQ: FB) users around the world, which means that Zuckerberg is doing something right.
As the coronavirus situation gets worse, which it is likely to do before it gets better, more and more people are going to become isolated at home in order to wait out the virus. We have already seen the likes of Big Tech companies such as Microsoft (NASDAQ: MSFT) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) tell their employees to work from home. This will inevitably lead to heightened levels of boredom and restrictions on work-computer monitoring. And what do people do in these situations?
They use social media, i.e. Facebook, Instagram, and Whatsapp.
As the company is also not reliant on manufacturing and has no presence in China, it does not rely on supply chains. There are concerns from analysts that Facebook’s core advertising business, which makes up almost 99% of its revenue, could be affected. However, it is just as likely that the social media giant will experience a spike in users as people look for a place to share memes, coronavirus related jokes, and most importantly, animal videos.
2. Netflix
In the words of Mad Money host Jim Cramer: “What works in this difficult environment are companies with products that you can enjoy from the comfort of your home.”
When you think of one company that is used almost daily in the comfort of the home, many people’s first thoughts will spring to Netflix (NASDAQ: NFLX). Much like Facebook, Netflix has no manufactured products, it won’t be affected by a slowdown in production or shipments, it’s just a service company through and through. It is definitely another stock that is immune to the coronavirus.
While the company is in the midst of a streaming war with Disney (NYSE: DIS) and its new Disney+ streaming service, it is still the top dog. I’ve yet to hear anyone use the phrase: ‘Disney+ and chill’.
As more and more people are forced to stay at home, they will turn to Reed Hastings and Co. for all of their entertainment needs, and despite Netflix’s growth saturating in the U.S., it is still growing rapidly internationally, boasting 160 million viewers in January’s earnings report. Netflix has been relatively untouched by the virus, at least compared to the wider market, remaining flat over the past month, compared with the S&P 500’s (NYSEARCA: VOO) roughly 11% decline in the same period.
3. Stitch Fix
It’s time for what may seem like a ‘left-field’ choice here, but it stands to reason that personalized styling service Stitch Fix (NASDAQ: SFIX) could be a beneficiary of the ongoing coronavirus damage.
The stock has fallen more than 5% in the past month due to the wider market sell-off, which actually presents a unique buying opportunity to get a bargain during the dip. Although retail shopping in brick-and-mortar stores is likely to suffer further, online shopping will not, and people will still need clothing.
In steps Stitch Fix, which can provide a stylish, personalized outfit, delivered straight to one’s home. With reported 18% client growth in its last report in October, Stitch Fix is on the rise as a business, despite its stock’s recent performance. It may suffer if shipping delays persist, as increased e-commerce shopping from consumers looking to avoid leaving the house continues to cause some logistical problems. However, having too much business can be a good problem to have.
Stitch Fix still has a lot of potential, with sales expected to rise 20% in 2020 alone, while U.S. and U.K. apparel markets are expected to be worth more than $500 billion by 2023: Stitch’s two largest markets.
Stitch can piggyback on the e-commerce tailwind that is sure to blow as more people begin to stay at home, and as a relatively undervalued stock, it could be a bargain.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Facebook, Netflix, and Stitch Fix. Read our full disclosure policy here.