[Editor’s note: “7 U.S. Stocks to Buy on Coronavirus Weakness” is regularly updated to included the latest analysis of the rapidly evolving coronavirus situation and which stocks to buy.]
The outbreak of Covid-19, a novel coronavirus strain which originated in China but has since gone global, is a big deal. To date, it has infected over 1 million people across the globe, killed at least 50,000, kept billions of people in their homes, brought the global economy to a screeching halt, and caused U.S. stocks to fall off a cliff.
But, not all is hope lost, and now may be the time to actually look for U.S. stocks to buy on the dip. For a few reasons.
First, according to my modeling, the coronavirus pandemic has peaked in certain Asian countries, is peaking in certain European countries, and will peak within the next two weeks in the U.S. Thereafter, spread of the virus globally should slow, before being completely stomped out in May or June.
Second, the U.S. economy has ample firepower from tons of fiscal and monetary stimulus to rebound, albeit gradually, in the summer once the virus is under control.
Third, U.S. stocks are pretty cheap right now, with many top-quality stocks trading at their lowest valuations in years, if not decades.
So, as opposed to running away from stocks during this scary time, I’m running towards them, building a portfolio of long-term winning assets at heavily discounted prices.
I’ve already picked some Chinese stocks to buy once coronavirus fears fade. Now, I’m picking seven U.S. stocks to buy once coronavirus fears fade. Those seven strong U.S. stocks to buy include:
- Apple (NASDAQ:AAPL)
- Nike (NYSE:NKE)
- Advanced Micro Devices (NASDAQ:AMD)
- Netflix (NASDAQ:NFLX)
- Intel (NASDAQ:INTC)
- Amazon (NASDAQ:AMZN)
- Microsoft (NASDAQ:MSFT)
Coronavirus Stocks to Buy: Apple (AAPL)
Global technology giant Apple has been hit hard from multiple angles thanks to the coronavirus outbreak.
At first, when it was isolated to China, Apple had to close all of its corporate offices, stores, and contact centers in China. Many of the factories from which Apple sources its hardware products were shut down, too. That created huge demand and supply chain disruptions for Apple.
Now, though, the virus has gone global — and the shutdowns that were isolated to China, are happening everywhere. Across the globe, Apple has closed its stores, and its supply chain is being disrupted.
These are big issues for Apple. But they are also temporary issues.
Just look at China. Spread of the virus has died down over there. Apple has re-opened all of its stores. Most of its supply chain has come back online, too.
The rest of the world will follow suit within the next few months. By summer, most countries across the globe will have fully contained coronavirus. Apple will re-open stores. Factories will ramp up production. And the Apple growth narrative will start to fire on all cylinders again, just in time for its big 5G iPhone launch in the back-half of the year.
Shares of global athletic apparel giant Nike have been pummeled on concerns that the coronavirus outbreak could materially impact the company’s operations across the globe.
Make no mistake. They will. Consumers in many parts of the world aren’t leaving their homes these days, much less going out and buying Nike apparel. Yes, Nike has an e-commerce website. But most consumer dollars today are being allocated towards consumer staples purchases, at the expense of consumer discretionary purchases.
Big picture — so long as the virus sticks around, Nike won’t sell a lot of product.
But, this pressure won’t last forever.
As noted, the situations in China and South Korea have vastly improved. In those countries, Nike’s stores are open and operating at normal hours with healthy traffic. Strength in those economies will help offset weakness elsewhere across the world during April and May.
By summer 2019, other countries will be where China and South Korea are today. Quarantining will end. Consumers will shop again. Nike will re-open stores. Everything will get back to normal, and Nike’s growth trajectory will resume at a healthy pace.
Thus, once the outbreak ends globally, NKE stock will rebound.
Advanced Micro Devices (AMD)
Shares of red-hot chip maker Advanced Micro Devices have plunged amid concerns that the coronavirus outbreak will dampen chip demand globally and spark significant supply chain disruptions in Asia.
These concerns are rationale. But their longevity is being overstated.
Demand will be dampened so long as the outbreak sticks around. Base case is for the outbreak to largely die down within the next two to three months. When it does, chip demand will come roaring back, with more vigor than before, because trade tensions have de-escalated and there’s more liquidity now than there was in 2019.
Similarly, China is already starting to re-open factories. The more the outbreak dies down globally, the more supply chains across the globe will get back to operating at full capacity.
Thus, while the supply/demand situation in AMD’s core markets is troubled today, it won’t be troubled for much longer. Maybe a few more months. So, when you see AMD stock down 30% on issues that will only last a few months, that looks like a good long-term buying opportunity.
Streaming giant Netflix has had it easy during the coronavirus sell-off. Shares are “only” down 12% from their 52 week highs.
But, this relative strength doesn’t mean you shouldn’t buy the dip in NFLX stock. Instead, any weakness in NFLX stock here is worth buying with both hands.
This company should actually win during the coronavirus outbreak. The more consumers stay home out of fear of catching the virus, the more likely they are to subscribe to and watch Netflix, because Netflix is the best at-home entertainment option out there… by far. So, if anything, Netflix’s numbers should actually improve during the outbreak.
In market panics, you tend to get indiscriminate selling (investors sell everything, regardless of the company and regardless of the price). If we start to get that — and Netflix stock starts tanking — then that is a golden opportunity to buy the dip in a company that is both shielded from coronavirus risks and a long-term winner.
The bull thesis on global semiconductor giant Intel is very similar to the bull thesis on Advanced Micro Devices.
Specifically, Intel stock has plunged on fears that the coronavirus outbreak will dampen global semiconductor demand. That will happen. But only for a little bit. Come summer 2020, demand will come soaring back, thanks to a fresh round of fiscal stimulus from central banks, easing trade tensions, and huge next-gen tech growth catalysts like the launch of 5G.
Meanwhile, Intel just reported a blowout fourth-quarter earnings report and delivered a robust first-quarter guide, the sum of which imply that demand in the company’s core markets is strong enough to withstand coronavirus headwinds.
In other words, it will take more than a short-term pandemic to derail the 5G/AI/data/self-driving demand trends that underlie Intel stock. When those demand trends return, dirt-cheap INTC stock — shares trade at 10-times forward earnings — will rebound.
Alongside the rest of the market, shares of e-commerce juggernaut Amazon have fallen off a cliff in February and March on coronavirus fears. But, zooming out, all appears well in the Amazon kingdom.
At the end of January, Amazon delivered strong fourth-quarter numbers which smashed revenue and profit expectations, and included a healthy guide. The e-commerce business continues to capitalize on a shift towards online shopping, and the cloud business continues to dominate the enterprise cloud infrastructure market. The ad business has tremendous upward momentum. Moreover, revenues and profits are running higher at an impressive pace, and there’s no sign that this pace will slow anytime soon.
Has anything about that changed because of the coronavirus outbreak?
For a quarter or two, yes. Maybe consumers shop less, or maybe enterprises spend less on their cloud migrations. And maybe merchants stop advertising as much on Amazon. But all of those impacts will be short-lived, because come summer, warmer weather coupled with strict quarantining, swift government responses and a potential vaccine will ultimately kill this outbreak. In turn, Amazon will promptly get back to firing on all cylinders.
So, big picture, don’t let near-term headwinds scare you out of a long-term winner like Amazon stock.
Cloud technology giant Microsoft has tumbled over the past few weeks on concerns that the rapidly spreading outbreak of coronavirus will kill demand for the company’s cloud computing products.
But, will that actually happen?
For a time, yes. But such pain will be temporary. And, once the virus passes through, companies will continue on their enterprise cloud migrations, and demand for Microsoft’s suite of cloud computing tools will re-accelerate.
Big picture, then, maybe Microsoft’s number got slightly dinged in the first quarter. There will probably also be some damage in the second quarter. But, in the third and fourth quarters, the numbers will be flawless (as they usually are).
From this perspective, any and all near term weakness in Microsoft stock is a golden buying opportunity into a company which, thanks to cloud computing tailwinds, is set to be a winner for the next several years.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long NFLX and MSFT.