It would be nice to think that the world has changed and finally put the novel coronavirus pandemic in the rearview mirror. But it hasn’t, and it would be unwise to believe and act otherwise. Still, with the science now in place to distance us from today’s ongoing restrictions, it’s time investors look at three companies battered by the pandemic as opportune stocks to buy.
It hasn’t always gone as smoothly for companies like Pfizer (NYSE:PFE), Moderna (NASDAQ:MRNA) and AstraZeneca (NYSE:AZN). But the drugs these companies are producing to ensure herd immunity are here with reinforcements waiting in the wings. It will happen. And for its part, Wall Street has been sort of appreciative with which stocks to buy as we look to life beyond Covid-19.
The stocks of drug companies saving lives have been a mixed bag since just prior to the first emergency use authorization approved in December. But that makes sense. A Covid-19 drug is far from a long-lasting income stream. And for most of those involved at this point, a portfolio of existing drugs and pipelines will ultimately mean a lot more to their ongoing businesses.
The market has also proven somewhat uneven with its treatment of stay-at-home stocks that have benefitted handsomely amid our socially distanced practices. Companies we took for granted as stocks to buy during the pandemic have actually gained ground the past couple months. Shouldn’t they all be lower? Maybe not.
Some of those trends may in fact be here to stay. Zoom Video (NASDAQ:ZM), Teladoc (NYSE:TDOC), Amazon (NASDAQ:AMZN) and several others have all thrived. Still, the performance of each has been varied. And 2020’s standout ZM continues to toil with a larger corrective move that it can’t seem to shake. That brings us to today’s list. These three stocks to buy should see more success as we return to a semblance of normal in the upcoming months”
The businesses for these companies have been ravaged by Covid-19. But with more hope on the horizon, they’re are shaping up as lower-risk, high-return stocks to buy for big-time profits in 2021.
Stocks to Buy: Delta (DAL)
Source: Charts by TradingView
The first of our stocks to buy is Delta. It’s no secret that famed investor Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) dumped its entire airline stake early on in the pandemic. After all, the Oracle of Omaha warned the world had changed for the industry.
That’s not quite right, however.
Airlines are still obviously in a more challenged environment. Covid travel restrictions persist and now the U.S. is contemplating Covid-19 tests for domestic airline travel. Through it all though Delta has proven itself an industry champ.
Technically, this stock to buy has just put together a successful test of prior resistance from June. The provided weekly chart also reveals this bullish price action has established a fresh pivot low within DAL’s uptrend as shares clear last year’s 50% retracement level for a second time. With stochastics in neutral territory and nearing a bullish crossover, Delta is a stock to buy today.
Favored Strategy: June $45/$52.50 Bull Call Spread.
MGM Resorts (MGM)
Source: Charts by TradingView
The next of our stocks to buy is MGM Resorts. Amid frozen vacations, lockdowns and tougher best practices at odds with the industry’s sinful pleasures, shares suffered early on. But today and with properties open, MGM’s push into the growing online sports betting market with BetMGM and a well-positioned price chart, it’s game on for investors.
On the price chart MGM has put together a forceful uptrend from its Covid-driven low. Today and following several weeks of consolidating gains after bursting through its prior 2009 – 2018 trendline, MGM stock is in a strong position to tackle an angular resistance line. Some might call the current pattern a handle within a cup or V-shaped base. I simply call it a winning play for bullish investors.
Favored Strategy: An out-of-the-money Bull Call Spread with stochastics crossover and breakout of angular resistance.
Royal Caribbean (RCL)
Source: Charts by TradingView
I haven’t saved the worst for last, but shares of Royal Caribbean have been the most challenged among these stocks to buy. And for good reason. Even today, the industry barely has a pulse. And for its part, Royal Caribbean recently announced operations will remain in drydock until the end of April.
The good news is RCL is well-positioned to weather the extended suspension and get to a sunnier business environment in the months and years ahead.
Technically, this stock to buy has put together an uptrend not unlike DAL and MGM stock. In this instance though, shares are still marginally beneath last year’s cycle 50% level. They’re lagging. But don’t focus on that relative weakness. After an initial rally through the well-watched Fibonacci level, a corrective pullback has formed a confirmed pivot low off uptrend support. Don’t expect this ship to set sail overnight, but it looks bullish.
Favored Strategy: Wait for weekly stochastics crossover for intermediate-term, out-of-the-money Bull Call Spread.
No Stocks Owned: On the date of publication, Chris Tyler does not hold, directly or indirectly, positions in any securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
