Holidays are ending, lockdowns are eased, and the ramp-up for back-to-school is starting again. Here are our 3 stocks for the end of summer.
Whether you are working from home, going back to the office, or taking it easy until the all-clear from COVID-19 is given, these three stocks should see you finish up the end of summer in a stronger position than how you entered it.
Walmart (NYSE: WMT) is taking on a big-tech giant, Chegg (NYSE: CHGG) is leading educational change, and Netflix (NASDAQ: NFLX) is continuing to smash expectations.
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Walmart is currently a darling of the Dow Jones Industrial Average. Despite a hit from the coronavirus, this retail giant has weathered it well and saw its stock recover its losses faster than expected — it is up 10% year-to-date as of August 25. Walmart is traditionally a brick-and-mortar store but in recent years has made moves online, allowing faster access to its products by its customers.
This company has become a regular rival of Amazon and with its soon-to-be-launched Walmart+, this discount chain will be looking to heat up its competition with the e-commerce giant. In fact, the timing of its launch is looking to coincide with the back-to-school frantic shopping that will inevitably take place in the latter weeks of this season.
This new product launch will also increase Walmarts growth potential. Being the largest private-sector employer in the world, growth can be slow due to sheer costs of running such a business — Walmart only grew 2% last year. Yet, with revenue coming in at $524 billion for fiscal 2020, there is clearly no problem with its business model. Digitizing its service further can only serve to reduce its large operating costs. The only way is up for Walmart and its new service will likely pave the way.
Chegg was perfectly positioned during early lockdown to benefit from the transfer from classroom learning to virtual learning. And benefit it did, with its stock growing 67% in Q2 and 75% from its previous February peak. As a company that facilitates online study, writing practice, and tutoring, it has been a useful tool for students and schools who have had to change their education methods.
At the end of Q1 Chegg reported 2.9 million subscribers, an increase of 34% year-over-year. By the end of Q2 this had increased to 3.7 million, a 67% increase year-over-year.
As students ready themselves for a return to school, Chegg might find itself to be an invaluable companion to continuing education for the next academic year. Half of those surveyed by Chegg said that they would prefer to incorporate online learning into their education and 92% of subscribers said Chegg helped them to achieve higher grades overall.
Additionally, there is still the looming threat of further lockdowns should coronavirus cases spike again which would lead to further reliance on digital learning platforms. Chegg is situated well to provide that infrastructure should it be needed.
Netflix is a smart choice to include in your portfolio by the end of summer. If you weren’t convinced before the lockdown, then its performance over the last 6 months should have you itching to invest in this stock.
What was already considered a saturated market before coronavirus, the U.S. still provided a further 12 million new subscribers over Q1 and Q2 as more people are driven to its content offering during lockdown. But the ‘Tiger King’-producer is not content with its 75 million subscribers in the U.S. and Canada. Analysts believe that this could increase to 90 million over the next 15 years as many households split-up with younger members leaving and buying houses of their own. Netflix is determined to be the undisputed leader in streaming entertainment.
As many entertainment services suffered during this pandemic, with movie and TV series productions on hold, Netflix has filled in the gap. Already possessing household name status, it will continue to be one of the largest, if not the largest entertainment provider coming out of lockdown.
But it is its international market which will be its main area of growth going forward. In the 12 months preceding June of this year, it added 46 million subscribers with 35 million of that being international. With markets such as Germany and Japan to focus on, Netflix will have plenty of space to keep growing in a post-lockdown world.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above. Read our full disclosure policy here.