We’re starting to see a little light at the end of the coronavirus tunnel. State economies are slowly reopening and the market has recovered mightily from March’s historic losses.
It’s true that as we go forward, the lingering effects of stay-at-home orders, a spiking unemployment rate and desperate stimulus measures make for record uncertainty.
But we are also starting to understand which types of stocks ought to benefit when the crisis is resolved.
Here are 6 of the top-rated stocks to buy for a post-crisis rally:
- Co-Diagnostics (NASDAQ:CODX) (A)
- Humana (NYSE:HUM) (A)
- iBio (NYSE:IBIO) (A)
- Moderna (NASDAQ:MRNA) (A)
- Alibaba (NYSE:BABA) (B)
- Square (NYSE:SQ) (B)
Four of these stocks hold “A” ratings on my Portfolio Grader, while two hold “B” ratings. All make smart buys here.
If you’re looking for a post-crisis bump, no list of stocks to buy would be complete without somehow representing the healthcare sector.
Regardless of one’s personal thoughts on how to best handle the days ahead, one thing is certain: testing will be absolutely central to any return to normal.
For reasons both scientific and psychological, the widespread demand for Covid-19 testing is one of the only givens in these uncertain times.
CODX, a previously little-known diagnostics company, was founded in 2013 with a focus on the sale of reagents needed for coronavirus tests.
Although Co-Diagnostics shares fell after the most recent earnings report, the roughly $600 million CODX, which has been increasingly watched by investors, makes test kits that should be an important part of re-opening the U.S. economy in 2020, even if accuracy doesn’t hit the 100% level the company has claimed.
Health insurer Humana has been absolutely shining in 2020, despite the novel coronavirus wreaking havoc across the economy. Shares are up more than 60% year-to-date, and the Louisville, Kentucky-based health plan giant is coming off a killer first-quarter earnings report.
In sharp contrast to rivals like Anthem (NYSE:ANTM), which recently withdrew its full-year 2020 guidance, Humana posted blowout Q1 earnings. The company reported revenue of $18.93 billion against analyst expectations for $18.38 billion. On the earnings per share (EPS) side, HUM stock reported EPS of $5.40 versus the $4.84 consensus expectation.
The top- and bottom-line beats were also accompanied by an optimistic outlook for the rest of 2020; Humana guided for EPS between $18.25 and $18.75, for a median of $18.50, above the $18.44 per share consensus expectations.
If there is a coronavirus vaccine, the small-cap biotech iBio could end up being a major beneficiary. Although certainly more speculative in nature than a stock like Humana, the roughly $100 million IBIO could see shares continue to surge when a vaccine is rolled out. Shares of IBIO have already jumped about 500% in 2020, but there’s still upside to be had.
That’s because the company is boasting capacity of about 500 million doses should their much-anticipated vaccine come to fruition. Few investors take the time to think through not just the companies that are researching the vaccine itself, but those that will be necessary to manufacture and distribute the vaccine.
The New York, New York-based IBIO has a Texas manufacturing facility that should be able to make 500 million doses of a vaccine annually — the sort of capacity necessary when a vaccine is invented. In theory, this should be enough capacity to supply and vaccinate not just all of the U.S. (328 million people), but also the entire populations of Mexico (126 million) and Canada (38 million).
The source of some major market-moving news in recent days, Cambridge, Massachusetts-based Moderna is a clinical biotechnology company. As its ticker indicates, it uses messenger RNA (mRNA) in vaccines and other treatments for infectious diseases.
Promising early results in a coronavirus vaccine trial in human patients vaulted MRNA shares to all-time highs and helped send the entire market higher to boot. The phase one trial included 45 participants and saw the production of antibodies in 100% of them, a very encouraging sign as the entire world races to come up with an efficacious vaccine that can be manufactured and distributed at scale.
Who would’ve thought that one of the largest companies in China would be listed as one of the best stocks to buy in a post-crisis rally? Although Wuhan, China, was the early epicenter of the global pandemic, China’s swift moves to lockdown its sprawling country and rapidly rollout contact tracing mitigated the harm of the pandemic.
And BABA stock, for its part, has held up quite well. Like its closest American counterpart Amazon.com (NASDAQ:AMZN), Alibaba has actually leveraged it large market share and impressive logistics network to cement its status as a powerhouse in e-commerce, which has gotten an obvious boost as mandated lockdowns dried up demand across Chinese brick-and-mortar retailers.
Trading at 22 times earnings and with a market cap above $500 billion, BABA offers a unique combination of size, growth and affordability. On the growth side, it saw revenue jump 38% last quarter and earnings per share increase 55%.
Last but not least, payments company Square rounds out our list of the top-rated stocks to buy when the crisis resolves.
The provider of point-of-sale solutions for businesses has been a growth stock for some time now, and its solutions include contactless payments — something that should doubtlessly gain share in the months and years ahead as the pandemic changes consumer behavior.
Revenue has grown at a 41% clip over the last five years, and analysts expect profits to be the next metric to really take off in coming years, with consensus expectations calling for a 31% compound annual growth rate in earnings per share over the next five years.
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Source: Investor Place