When markets get wacky, even the best companies can’t avoid the maelstrom. Investors were already tiptoeing on broken glass, knowing that the longest U.S. stock market bull run in history was getting long in the tooth.
Then, when the market foresaw the potential damage that could be caused by the COVID-19 pandemic, it quickly created a vortex that would suck almost everything into it.
Bizarro Market
In the last week, markets flipped into an alternate universe. Every major stock got crushed, while suddenly those holding onto stockpiles of toilet paper and soup reigned supreme.
In such unique circumstances, we wondered which companies were weathering the storm of volatility. To do this, we used Finviz to pull up a visualization of S&P 500 performance, then investigating the segments of the market that were doing well in spite of the recent plunge.
| Stock selection | Performance (Mar 5-12) | Components |
|---|---|---|
| S&P 500 | -18.0% 📉 | The 500 largest U.S. companies by market cap |
| The Pandemic Economy | +12.7% 📈 | Soup, bleach, pizza, and telecommuting stocks |
A few companies not only avoided the chaos — they actually thrived over the last week.
Let’s look at why!
Not Getting Bugged Down
With global travel, events, and social gatherings screeching to a halt, it’s obvious that this is not a winning situation for any typical economy.
However, it’s hard for everyone to simultaneously be a loser, and it’s always inevitable that some stocks will benefit from any crisis — or at least not get hit as hard as their peers.
- Zoom Video Communications (ZM)
There’s no doubt a pandemic is tough on brick-and-mortar companies, but for most white-collar workers the show must go on. As a pure-play stock in the video conferencing category, Zoom is uniquely positioned as companies shift to more remote work. - Domino’s Pizza (DPZ)
With people wanting to avoid crowds because of COVID-19, it’s natural to want to order in. Domino’s, as well as other companies that focus on food delivery, stand to benefit in the short term from the virus. - Campbell Soup Company (CPB)
Campbell is the quintessential counter-cyclical stock, and even more so in a prepping environment. When the global outlook is gloomy, people want to stockpile — and soup is a major pantry staple. - Teladoc Health, Inc. (TDOC)
If sitting in a doctor’s office with dozens of other sick people can be avoided, it seems it would be regarded as a prudent decision. For this reason, remote health services are an obvious focus for investors during the pandemic. - The Clorox Company (CLX)
Wash your hands. Wash your hands. Have you heard that you should wash your hands to avoid the spread of the coronavirus? Clorox benefits from this sudden interest in sanitation and cleanliness. - Everbridge, Inc. (EVBG)
When times are uncertain, global decision-makers want to get as much quality information as possible. Everbridge offers a risk intelligence platform that provides this service. - Virtu Financial, Inc. (VIRT)
Whether markets are going up or down, large amounts of volume and volatility are a good thing for financial services companies that make money from high-frequency trading.
Not all of these companies are in the green — some have simply traded sideways — but on average, they’ve seen a 12.7% bump in price over the last week.
Whether that will last in a fast-changing news environment is another story.
Article Courtesy of VisualCapitalist.com
Photo by Daniele Levis Pelusi on Unsplash
