If you looked strictly at the numbers, the June jobs report was a stunning confirmation of an economic recovery. With states reopening their doors for business following the initial wave of the novel coronavirus, the labor market added 4.8 million jobs, again exceeding expectations. However, a deeper look reveals why investors should be selective in their choice for stocks to buy.
Although the sequential comparisons look great, we must first take into account that millions are still out of work. With an overall unemployment rate of 11.1%, this figure is still staggering relative to pre-pandemic averages, which fell below 4%. Further, initial jobless claims continue to number in the millions, which is simply unprecedented in the modern era. Therefore, many of the best stocks to buy this month will feature resiliency to economic pressure.
But the most worrying factor this month and perhaps for the rest of the year is the explosive spread of the coronavirus. Several states are now seeing record jumps in both infections and hospitalizations. If that wasn’t enough, Dr. Deborah Birx, who helped lead the White House’s coronavirus response, admitted that government officials were surprised at the virus’ spread.
To put it another way, more people are beginning to acknowledge the seriousness of Covid-19. Potentially, this could result in mass-scale mitigation efforts as the country returns to a pandemic mentality. While that’s not great news for those hoping for a return to normal, these nine stocks to buy could enjoy a resurgence of demand:
- Kroger (NYSE:KR)
- Home Depot (NYSE:HD)
- Teladoc Health (NYSE:TDOC)
- Archer Daniels Midland (NYSE:ADM)
- Uber (NYSE:UBER)
- Wheaton Precious Metals (NYSE:WPM)
- Zillow Group (NASDAQ:Z, NASDAQ:ZG)
- Inovio Pharmaceuticals (NASDAQ:INO)
- Remark Holdings (NASDAQ:MARK)
For maximum utility, I’ve separated these companies into three categories (with three stocks each): higher probability names with limited upside, a balanced approach between upside potential and risk, and finally, the downright speculative trades.
July is turning out to be a wild month. Take advantage with these best stocks to buy.
Barring any extraordinary events, the month of July will mostly focus on the novel coronavirus. And because of this likely dynamic, I believe Kroger is well positioned to benefit. That’s why I’m putting the grocery giant atop this list of best stocks to buy.
When the Covid-19 pandemic first began wreaking havoc on our country, most Americans did the logical thing: stock up on food, water, and other key essentials. Indeed, the smart ones saw the writing on the wall early and got in before the crowd. And if you were truly astute, you bought KR stock during the March doldrums.
But when infection rates peaked in the first go-around, the bullish case for Kroger became less compelling. Between mid-May to mid-June, KR stock meandered aimlessly. But with hospitalizations reaching record levels in many areas, I think we’ll see a return of demand.
Better yet, the American people have mostly adapted well to previously foreign protocols, such as face masks and social distancing. Thus, the idea of stockpiling for a disaster has become second nature.
Home Depot (HD)
As a home repair and renovation specialist, Home Depot is simply one of the best stocks to buy in any environment. Bull market or bear, Murphy’s law doesn’t care. I learned that lesson the hard way when my smoke detector started screaming at three in the morning – it’s always three in the morning, isn’t it? – forcing me to replace the batteries.
Fortunately, I was prepared. I had my 9-volt batteries and a telescoping ladder. Further, I have an ample set of tools and accessories should anything else go awry. The pandemic has been a lesson of basic preparedness for all of us, driving the narrative for HD stock.
Another reason to consider shares is that 2020 is turning out to be a rotten year. From the pandemic to economic woes to outbursts of violence throughout this nation, we’ve been through a lot. Unfortunately, we’re only halfway through.
As it stands, we’re facing a record-breaking hurricane season. While this is somewhat of a cynical play, I believe having some exposure to HD stock makes sense.
Teladoc Health (TDOC)
You can make the argument that Teladoc Health would have been one of the best stocks to buy irrespective of the coronavirus. Although I previously didn’t like the idea of buying TDOC stock following an already robust upswing, I can appreciate its fundamental catalysts.
Most bulls will focus on Teladoc’s technological aspects as well as its economic value-add. With this platform, you can receive expert medical advice from the comfort and privacy of your own home. Logically, this saves the user time from having to sit in traffic and wait around once in the clinic/office.
However, Teladoc also addresses iatrophobia, or the fear of doctors. By getting patients to open up about their medical conditions, doctors and nurses can potentially improve health outcomes, perhaps dramatically so. This is a great non-coronavirus-related tailwind to consider.
But with Covid-19 hospitalizations popping up across the nation? You don’t want to fight the tape like I once did.
Archer Daniels Midland (ADM)
On the surface, food-related companies seemingly represented the best stocks to buy during the pandemic. No matter who you are or how much money you have, you need sustenance. Therefore, this sector seemed like a no-brainer.
However, things just didn’t turn out the way I envisioned. While companies like Kroger, Costco (NASDAQ:COST) and Target (NYSE:TGT) performed well, individual food stocks to buy left much to be desired. So, if this resurgence turns out to be the dreaded second wave, I’m going with Archer Daniels Midland and ADM stock.
As you know, Archer Daniels focuses on food processing and ingredients. They provide the solutions and components that all food manufacturers need to take their products to market. With ADM stock, you’re not banking on any one name but rather, the industry.
Moreover, Archer Daniels is particularly intriguing for those interested in plant-based meat companies but don’t want to risk the volatility of buying Beyond Meat (NASDAQ:BYND) shares. With ADM, you get exposure to this exciting space but potentially mitigate the wildness.
If the present spike in national coronavirus cases worsens, the food delivery industry may offer some of the best stocks to buy this month. Initially, what came to mind with a possible second wave was GrubHub (NYSE:GRUB). But seeing that GRUB has been skyrocketing, the contrarian in me – okay, I’ll be honest, the cheapskate in me – began eyeballing Uber.
Please don’t get me wrong – this is one of the riskiest stocks to buy. While I love the Uber Eats business model, especially during this crisis, there’s nothing comfortable about this idea. As primarily a ride-sharing investment, UBER stock could get very ugly if Covid-19 again spreads aggressively.
But here’s where my speculative thinking is going. Before the pandemic, Uber already wanted to diversify into the food delivery space. Therefore, if we enter a quarantine-like reality again, the company will receive free, organic marketing.
Also, Uber has great brand appeal. It’s very possible that consumers will make the transition from its ride-sharing business to its food deliveries. Ultimately, I like UBER stock as a rational gamble.
Wheaton Precious Metals (WPM)
It seems like no matter what the market environment, gold is always risky. Therefore, you should take the idea of Wheaton Precious Metals being one of the best stocks to buy with a grain of salt. It’s not that I don’t believe in WPM stock because I do. Rather, this is a sector that has produced much disappointment.
Still, I hate to use this phrase, but this time could be different. For one thing, it is different. While we’ve suffered serious pandemics before – most notably the H1N1 pandemic of the late 2000s – we’ve never seen state and federal governments impose stay-at-home orders. Unsurprisingly, this imposed a hard stop on the economy, making WPM stock quite intriguing.
Primarily, the doom and gloom prognostications that will shoot gold to five-digit prices are just a tad more credible today. Frankly, the Federal Reserve doesn’t have many monetary weapons other than to adopt as accommodating a policy as possible. Theoretically, this should be very good for gold.
I also like Wheaton for its business model. As a streaming company, Wheaton doesn’t have the direct risks associated with all-or-nothing mining projects.
Zillow Group (Z, ZG)
Admittedly, Zillow Group doesn’t strike you as a reliable opportunity. Rather than being one of the best stocks to buy, there’s a case for it being among the worst. A dubious double package, the pandemic has also brought economic hardship. And that’s not the dynamic you want for Z stock.
But from another angle, Zillow Group isn’t without its tailwinds. Yes, housing sales for hot real estate markets have dropped recently. But prices for homes that closed have jumped higher, which is a nationwide trend. This implies that there are bidding wars for what little inventory is available, which theoretically bodes well for ZG stock.
Also, the coronavirus is forcing many people to reconsider life in the (expensive) city. Several millennials have already made the move to smaller locales because of the quality of life improvement. And with remote work becoming readily accepted, we could see people across various demographics move out. Of course, this would be a net positive for ZG stock.
Inovio Pharmaceuticals (INO)
Based purely on technical growth, Inovio Pharmaceuticals has easily been one of the best stocks to buy for 2020. But as more people realized the enormous opportunity of INO stock, the higher the risk was that at some point, somebody was going to be left holding the bag. Well, that day came after the company released its Phase 1 results for its coronavirus vaccine candidate.
According to Inovio, 94% of trial participants “demonstrated overall immunological response rates.” While that’s a positive, the data wasn’t complete. Specifically, Damian Garde and Adam Feuerstein pointed out that the company “did not disclose how many patients produced antibodies that neutralize the coronavirus — data key to determining whether the vaccine could protect against infection. The company did not immediately respond to a request for more information.”
Investors reasoned that if Inovio had resoundingly positive data, they’ll produce it. Thus, INO stock suffered panicked selling.
However, it’s important to keep in mind that no one company can produce a vaccine for the country, let alone the world. Inovio is an important cog in a broader gear. Also, Inovio’s candidate INO-4800 “is the only nucleic-acid based vaccine that is stable at room temperature for more than a year and does not require to be frozen in transport or for years of storage, which are important factors when implementing mass immunizations to battle the current pandemic.”
If you’re willing to stomach extreme volatility, INO stock still offers much upside.
Remark Holdings (MARK)
In my opinion, Remark Holdings is the riskiest name in this list of stocks to buy for July. If we were in any other circumstance, I honestly don’t see myself posing MARK stock as a possible idea. I’m just laying this out there for full transparency.
However, if you have the iron will to stare down serious volatility, Remark is remarkably well suited for the new normal. The company came to fame this year due to its thermal scanners. Unlike traditional methodologies of temperature checking, you can rifle through multiple subjects. Obviously, this capacity is critical if you’re going to conduct business in the post-pandemic era.
Also, Remark offers artificial intelligence-based facial recognition and behavioral analysis solutions. Again, this has strong security implications as governments roll out pandemic mitigation protocols.
Nevertheless, MARK stock isn’t without its drawbacks. Most notably, running a fever is just one of many symptoms of Covid-19. Of course, fevers are not exclusively associated with the coronavirus. Plus, the disease can spread asymptomatically, which could render thermal checks useless.
Finally, facial recognition is a controversial technology. There’s a reason why Amazon (NASDAQ:AMZN) put the brakes on law enforcement’s use of this innovation. Given the current social climate, I doubt people will give Remark a pass.
Still, if the U.S. wants to keep the economy rolling while we incur a second wave, it needs tech-based solutions. In this case, even the perception of effectiveness may give MARK stock surprising upside.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he is long gold.