The economic damage that the novel coronavirus will leave in its wake is expected to be significant and lasting — though most agree that the Federal Reserves’ intervention and the government’s commitment to protecting U.S. businesses will help speed up the recovery. While the market offers investors with a long timeline stacked full of great stocks to buy now, the choices are a bit more sparse for those looking to profit from a quick rebound.
For example, travel stocks are likely to take a long-term hit and the damage is unlikely to be repaired before 2021 at the earliest. However, there are other industries that will see things pick up much sooner once the fog has lifted.
The following are three stocks I think will rebound quickly once the damage of the coronavirus starts to dissipate:
If you’re willing to look two or three years into the future, the stock market offers plenty of bargain stocks to buy — even in industries like air travel that have been hit hard. Choosing a shorter-term play is riskier, especially now that the market has started to rebound. However, there are still plenty of bargains to be had that look poised to thrive once consumers are starting to spend once again.
With that in mind, let’s take a deeper look into what makes each of these promising stocks to buy on a post-coronavirus rebound.
Stocks to Buy for a Post-Coronavirus Turnaround: Alphabet (GOOG)
You can’t talk about stocks to buy in this market without bringing Google into the mix. The firm is sitting atop a $90 billion cash pile and a rock-solid balance sheet carrying a very modest amount of debt. In short, it has just about everything you need to weather a storm like this one.
This week, the firm announced plans to cut back significantly on hiring as advertising revenue declines amid the coronavirus crisis. So, there could be more pain ahead for GOOG stock as the market digests what’s expected to be the firm’s first ever yearly revenue decline.
But the surge in online traffic amid lockdowns should help the firm further cement its position as a leader in the online advertising space. Plus, Google has the money to invest in its future while the rest of its peers struggle to keep the lights on.
Although its certainly speculative, I wouldn’t be surprised to see Google buy Lyft (NASDAQ:LYFT) before this downturn is over, putting its autonomous driving arm further ahead in the race to develop a usable self-driving fleet of cars.
Berkshire Hathaway (BRK.B)
Another firm that looks likely to come through this crisis on top is Warren Buffett’s Berkshire Hathaway. The famed investor has admittedly made some bad moves over the past few years, but this downturn could be his time to shine.
Buffett has always advised to “be greedy when the market is fearful,” and if the Oracle of Omaha took his own advice over the past few weeks BRK.B stock could be on its way higher. The company had a whopping $128 billion in cash on the books heading into the pandemic crash, giving Mr. Buffet a lot of dry powder to pick up beleaguered shares.
The turnaround for BRK.B stock could be coming soon — the firm is due to report results on May 1, at which time we’ll find out whether Buffett put that cash to work a few weeks ago when the market bottomed. If he did, you can expect the stock to be on a firm upward trajectory from here on out.
The retail sector is risky right now as coronavirus concerns exacerbate store closures at struggling brick and mortar stores. That’s particularly evident with JC Penney (NYSE:JCP), as the department store struggles to stay afloat. However, JCP going under could be a boon for beauty retailer Ulta, whose competitor Sephora had shops within the beleaguered department store.
When lockdown restrictions are lifted, Ulta is likely to see store traffic explode as people get out and about again. Plus, Ulta has been able to to continue selling its merchandise online as people do at-home beauty treatments in-lieu of visiting a salon.
Cowen analyst Oliver Chen noted that Ulta’s past history of beating guidance points to competent management that will see the firm through these tough times. So far this year, Ulta stock has lost 18%, leaving plenty of room for a robust recovery once consumers return to stores.
Laura Hoy has a Finance degree from Duquesne University and has been writing about financial markets for the past 8 years. Her work can be seen in a variety of publications including InvestorPlace, Benzinga, Yahoo Finance and CCN. As of this writing, she did not hold a position in any of the aforementioned securities.