The fear of the coronavirus from China has become palpable. The latest numbers say over 10,000 have been infected in the U.S., and over 150 have now died.
And, according to the U.S. government, we could see the pandemic last up to 18 months or longer, and “include multiple waves of illness,” as noted by CNN contributor Christina Maxouris. Hospitals are also sounding the alarms on short supplies with the outbreak showing no signs of slowing.
To limit the spread, “social distancing” is being recommended.
“Social distancing will affect industries where physical presence of the customer is essential. However, many industries will be able to adjust to it, provided that the infrastructure is ready. The necessary infrastructure is broadband capacity for live broadcasting at a much larger scale than now and delivery capacity for consumer-facing businesses,” said Dr. Aleksandar “Sasha” Tomic, Associate Dean of Strategy, Innovation and Technology at Boston College’s Woods College of Advancing Studies, in an email to InvestorPlace.
“All of the adjustments will take time and will favor large companies as they can throw in resources necessary for scaling of the remote operations (e.g. broadcast and/or delivery). So, in the near term there will be quite a bit of disruption, which will even out in the medium and long term,” he added.
For investors, let’s take a look at three of the top “social distancing” stocks already moving.
Social Distancing Stock: Zoom Video Communications (ZM)
Zoom Video Communications (NASDAQ:ZM) has been one of the most explosive of the social distancing stocks. Since February, shares have soared from $70.32 to a high over $130. All as people downloadto the company’s app to gather virtually.
Download numbers have been up not just for Zoom, but for many of its peers all across the globe.
Analysts are just as impressed. Needham analyst Richard Valera, for example, initiated a buy rating on the stock with a target price of $140.
“We think Zoom’s exceptionally easy to use meetings product has both enabled and benefited from a long-term secular shift towards working from home,” wrote the analyst. “We think Covid-19 is driving an enduring acceleration of this shift. In the near-term, our checks confirm significant increases in business activity, especially in Covid hotspots, which admittedly could be mitigated by delays in closing larger enterprise deals.”
Activision Blizzard (ATVI)
Shares of Activision Blizzard (NASDAQ:ATVI) are gaining momentum as a social distancing stock. In the last couple of days, shares of the gaming stock have run from $50.51 to $57.50 before retreating a bit today. It’s not hard to see why. As people are stuck at home, video games can offer a cheaper form of entertainment. And its many multiplayer games give people an outlet with their friends.
In fact, analysts say ATVI stands to gain traction from distancing and “cocooning,” as noted by Investor’s Business Daily contributor Patrick Seitz.
“Video games could benefit from any prolonged ‘cocooning,'” Baird analyst Colin Sebastian said. “Interactive entertainment can be counter-cyclical, as a relatively inexpensive form of entertainment vs. activities such as travel, dining and movies.”
Grubhub (GRUB)
Virus or no virus, we have to eat.
That’s driving interest to shares of Grubhub (NYSE:GRUB) at the moment, thanks to its ability to deliver food to millions. After all, it’s easiest to practice social distancing if you can complete nearly the entire transaction for your meal from miles apart.
In fact, new restrictions limiting some restaurants to takeout and delivery could be a big revenue driver for the company.
Better, Grubhub is one of four major delivery companies in the U.S., and the only pure play. After pulling back in recent days, the stock has started to recover at a price a bit north of $36.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
