It’s been a tale of two markets this year. Some hot stocks have been flying higher during the global pandemic. Other names have crashed and burned. While airline stocks have been grounded and energy stocks have powered down, the share prices of semiconductor companies and electric vehicle (EV) manufacturers have surged.
Despite all odds, some stocks have proven to be red hot for the year, and are likely to only get hotter in the final quarter of 2020. Tech stocks were hot for a while, and vaccine stocks have been in vogue.
Here is a look at four stocks that have been able to power through the pandemic — and impress along the way.
Hot Stocks That Are Only Getting Hotter: Snap (SNAP)
Social media app Snapchat has been on fire this year, with its stock up 415% since March. Today, the stock is trading at just over $41 a share. Part of SNAP’s success is due to its latest quarterly results, which surprised on the upside. After announcing results at the close of markets on Oct. 20, SNAP stock jumped more than 35%.
Needless to say, the novel coronavirus has not slowed down this company or kept it from adding users. In the third quarter, Snap’s daily active users (DAUs) increased by 18% year-over-year, with an added 11 million users after Q2. An average of 249 million people used Snap each day between the start of July and the end of September.
Moving forward, Snap plans to aggressively advertise to its users. It also plans to expand its innovative products. The company reported that total daily time spent watching the app’s short-form shows increased more than 50% year-over-year in Q3. For instance, the Snap original program “VS the World” — a series featuring mixed martial artist Conor McGregor — premiered on Sept. 12. It has already racked up 14 million viewers.
On top of that, Snap noted that more than 50 million users watch content supplied by its television partners each month. The app’s NBA basketball highlights channel saw a 20% rise in engagement in Q3 compared to the same period in 2019 (Page 3).
It’s clear that Snap is the hot social media play right now. And shares of SNAP stock are likely to only run higher in coming months.
During the pandemic, more consumers are shopping online as they shelter in place. Likewise, businesses are shipping more products to employees and customers who are working from home.
That’s all been great for the shipping and delivery business of FedEx. The company has reported several blockbuster quarters this year, sending its share price higher and higher. Since the market crash in March, FDX stock has risen nearly 210% and now trades right around $275 a share.
For the third quarter, FedEx reported earnings of $4.87 per share on revenue of $19.3 billion, handily beating analyst estimates for earnings of $2.69 per share on $17.6 billion in revenue. And with Christmas fast approaching — as well as the majority of shopping this year forecast to be done online — FedEx is expected to continue the success leading into 2021.
Wall Street also remains bullish on FDX stock. Analysts say they expect profit margins to improve at the company in coming months as spending on pandemic safety measures ease. They also note that FedEx is putting some much-needed distance between it and Amazon (NASDAQ:AMZN).
Plus, FedEx — like its fellow hot stocks — continues to innovate its business wherever possible. Recently, the company announced it is partnering with Happy Returns, an e-commerce return technology company. Soon, customers will be able to return products in person without a box or label. They can also expect to get an immediate refund or exchange from participating retailers. This kind of innovation should underpin FedEx’s business and enable the company to maintain the momentum.
Align Technology (ALGN)
Surprisingly enough, the next of the hot stocks is a dental tech company. Who knew that teeth were such a big deal?
Align — which manufactures clear aligners used in orthodontics (as well as three dimensional scanners) — has seen its share price vault 237% higher since March. Today, the stock is trading at $455. Immediately after the company announced Q3 results, too, ALGN stock jumped 33% (more than $100) in a single trading session. Evidently, the novel coronavirus has not stopped people from perfecting their smiles.
What’s more, Align Technology’s adjusted Q3 earnings per share came in at $2.25, well above the 54 cents that Wall Street had expected. The company’s revenue surged roughly 21% from its 2019 Q3 numbers to a record high of $734 million.
In fact, Align has surpassed consensus earnings per share estimates twice over the last four quarters. The blowout results were due to the unwinding of “pent-up demand” for the company’s Invisalign teeth aligners as Covid-19 restrictions eased.
The strong results have also been due to Align’s smart marketing. The company uses social media influencers like dancer Charli D’Amelio to raise awareness of its Invisalign product. And word definitely seems to be getting out. Shareholders of ALGN have every reason to smile.
Zoom Video (ZM)
The last of the hot stocks — video conferencing company Zoom — continues to defy expectations.
The company started the year trading at a little over $68 a share. Now, Zoom has risen 674% year-to-date, currently trading at around $521. And while many analysts continue to sound the alarm on the stock — warning that it has run too far, too fast — others continue to cheer as ZM stock moves higher. With the work-from-home trend continuing, the stock could continue to be a buy for the foreseeable future.
Zoom also continues to outperform despite rising competition from other video conference platforms such as Microsoft (NASDAQ:MSFT) Teams. Most of the current momentum behind ZM stock appears to stem from the fact that novel coronavirus cases are rising in the world — especially in Europe and North America.
But it’s important to remember that Zoom is not built on just an arbitrary, passing fad. With medical experts predicting that infections will trend upward through the winter, the demand for video conferencing is expected to remain strong.
Of course, this is great for Zoom and its shareholders. And on top of that strength, the company is also expanding its reach around the world and re-invigorating its products. In particular, Zoom is working to improve its video conference solutions, a development that will only make the platform more accessible, user-friendly, and in turn, investor-friendly.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.