Forget FAANG, It’s All About DAWN

The COVID-19 pandemic has not only altered the investment landscape, but the consumer one as well; the new investment paradigm is DAWN

The term “FAANG” refers to a group of top-performing tech stocks that together are worth $3.5 trillion as of April 8, 2020. Its members are Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Netflix (NASDAQ: NFLX), and Google (now Alphabet, Inc. (NASDAQ: GOOG)). The COVID-19 pandemic has reshaped consumer needs in a profound way, shifting focus on products and services that support a social-distancing lifestyle and essentials like food and cleaning supplies. We present you with the DAWN of a new investment strategy.

1. Domino’s Pizza, Inc. 

Domino’s (NASDAQ: DPZ) is the biggest pizza chain in the U.S. by sales and holds about 35% of the pizza-delivery market share. In the last ten years, the company has seen its stock price surge 2,725% (from approximately $11 to $340). In 2009, Domino’s did something unheard of in the restaurant business: It changed the recipe for its pizza. Additionally, the company made many technical advancements and released a powerful app to improve ordering and delivery, prompting former CEO Patrick Doyle to declare Dominos to be a “tech business that sells pizza.” 

Domino’s has kept ahead of the competition by offering hotspot deliveries for locations without an address, like a beach or a park. Additionally, the company launched AI assistant DOM for automated telephone orders. Its continued investment in technology has boosted many aspects of the company’s bottom line. For example, Domino’s traffic grew by 7.4% from 2017 to 2018, whereas the overall pizza sector and QSR segment grew by 1.7% and 0.8%, respectively, in the same time period.

Domino’s has seen a growth surge lately thanks to the pandemic forcing restaurants to shut down and offer only take-out and/or delivery. In fact, with sales up 4.4%, the company is hiring 10,000 new employees to handle the incredible demand and offers contact-free delivery and pickup. These recent developments will ensure customer loyalty beyond the pandemic and Domino’s expects more growth as it plans to have 25,000 stores by 2025 to fortress their markets (decrease preparation and delivery times). 

2. Activision Blizzard, Inc.

Activision Blizzard (NASDAQ: ATVI) has the best-selling video game of 2019 in ‘Call of Duty: Modern Warfare,’ generating over $1 billion in sales and sending its stock price up by 26% for the year. With social-distancing becoming the norm, people are turning to entertainment options like streaming services and video games. Its release of ‘Call of Duty: Warzone’ on March 10, 2020, saw 6 million downloads in the first 24 hours, and grew to over 30 million shortly thereafter, setting a new record for game download growth.

As of April 7, Activision Blizzard’s stock outperformed the S&P 500 (NYSEARCA: VOO), up 2% since the beginning of the year, with the S&P dropping 18% in the same time period. This year, Activision Blizzard will be releasing an expansion to its insanely successful “World of Warcraft” collection, as well as a mobile version of “Diablo.” Furthermore, Microsoft (NASDAQ: MSFT) XBOX and Sony (NYSE: SNE) PlayStation will be releasing new consoles, which bodes well for all video game publishers.

3. Walmart

Walmart (NYSE: WMT) is hiring 150,000 employees to meet shoppers’ demands during the pandemic, as the company’s U.S. sales spiked 20% in March. Moreover, the company will be paying $545 million in special bonuses to reward its workers for operating during the pandemic. While most companies are lowering their projections, Walmart remains optimistic and expects to meet its sales forecast for the year.

Walmart is the largest brick-and-mortar retailer in the U.S., with nearly 5,000 stores and sales of $341 billion in fiscal year 2019. Its revenue has grown 27% from $401.9 billion in 2009 to $510.33 billion in 2019. The company’s grocery sales accounted for 55% of its revenue in 2019 and its online grocery pickup program is available at over half of its U.S. stores. Walmart is expected to complete the program expansion to reach all U.S. stores by 2022 and online grocery sales are expected to more than double by 2023, reaching $59.5 billion. This expansion, along with innovative tech investments to handle inventory and other in-store issues shows that Walmart is poised for continued growth.

4. Netflix

Netflix was the top-performing stock of the teens, growing 3,839%, from $7.87 to $309.99. This year, as most stocks tumbled, the company emerged from the rubble unscathed, gaining 13% as of April 7, 2020. As Netflix’s traffic hits all-time highs, in order to prevent network congestion, the company is cutting its bandwidth usage during the pandemic. With exciting original programming like “Tiger King” and “Ozark” dominating online discussion groups and people throwing Netflix Parties, it’s little wonder that the company is expected to grow its subscribers 3.8% YOY, more than double analysts’ estimates.

As Netflix is known for its original content, it has set up a $100 million relief fund for assisting creative personnel affected by production shutdowns.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.