During the devastating coronavirus downturn, these 3 stocks outperformed the rest and could be an investors best protection against future pandemics
The pandemic has changed our social behavior, shopping habits, and work routines, with recent events having had alarming developments. My own state, Arizona, recently ‘reopened’ and new cases of infections have been growing rapidly, reaching the top spot in the entire nation on June 10. In the case of a second wave of infection, which Dr. Fauci believes is inevitable and expected to sharply spike in September, or a new outbreak altogether, these three companies should survive and continue to thrive.
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Amazon (NASDAQ: AMZN), the trillion-dollar e-commerce retailer of everything and leading cloud provider posted surprising first quarter financial results at the end of April. Even though its Amazon Web Services (AWS) division hit over $10 billion in revenue for the first quarter ever, it still fell short of analysts’ estimates, at $10.22 billion versus $10.33 billion. Additionally, its EPS of $5.01 fell short of the $6.25 Wall Street had predicted; but its revenue of $75.45 billion beat out the $73.61 billion forecast for the corporation. Amazon’s yearly revenue has increased 720% since 2010 to $280 billion in 2019 and as of June 11, Amazon’s stock price is up 35% since the start of the year.
Amazon has a 38% e-commerce market share and a 33% cloud market share. It has made investments in India and acquired PillPack, an e-pharmacy company; both sectors are projected to exceed $200 billion and $175 respectively by 2026. Moreover, Amazon’s Prime membership is growing and is expected to grow even more with free two-hour Whole Foods delivery, an essential pandemic service; additionally, it is expanding its AWS offering by expanding to 16 availability zones and 5 new regions in the near future. Already formidable, the e-commerce behemoth will be even more of a force to reckon with in the coming years.
Netflix (NASDAQ: NFLX) is the leading and first-to-market over-the-top (OTT) subscription service that has seen spectacular stock price growth since its debut, and a 30% surge since the start of year, as of June 11. Originally a DVD-rental service, the company premiered its streaming service in 2007, five years after going public, and in 2020 had more Oscar nominations than any other studio. With theaters forced to close their doors, people had no choice but to stay home and stream, and that’s where Netflix benefitted. It added 15.77 million paid subscribers worldwide in Q1 — its highest gain in a single quarter and more than double forecasts.
Much like Amazon, Netflix was slightly impacted by the pandemic, earning $1.57 per share, 8 cents shy of analysts’ estimate of $1.65 but exceeded revenue expectations by $10 million at $5.77 billion. Film and television productions have been halted but the streamer says that it has a full slate of original content (most in post-production) for 2020 and well into 2021; little surprise as it spent $15 billion on content last year and was expected to spend even more this year. This investment in content had analysts predicting, before the pandemic, a 58% rise in revenue by 2021. Netflix’s continued investment in innovative programming like ‘Tiger King’ and ‘Ozark’ and its existing properties yet to get additional seasons like ‘Stranger Things’ and ‘The Witcher’ will ensure its growth in the future, particularly if there’s a resurgence.
For the life of me, I still cannot understand why people were hoarding toilet paper, but it certainly benefited Kimberly-Clark (NYSE: KMB), a manufacturer of the product along with others such as diapers and sanitary wipes. The company beat estimates for EPS of $2.13 in Q1 of 2020 and also beat revenue forecasts by 2.34% at $5.01 billion. Unlike the other companies in this article, Kimberly-Clark’s stock price did not have a stellar performance this year, rising only 3.5% as of June 11 since the start of year; its revenue is down 6.5% since 2010 at $18.45 billion in 2019.
Kimberly-Clark’s past performance was influenced by higher pulp prices, which have pulled back recently and continue to drop. This, combined with high demands for paper and hygiene products during this and future pandemics will ensure steady long-term growth for the company, which is expected to have revenue over $19 billion by 2021. The company pays a $1.07 dividend, a 3.08% yield.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Facebook, Netflix, and Stitch Fix. Read our full disclosure policy here.