When news first spread about the coronavirus’ omicron variant, many folks must have had a sinking feeling in their stomach. After encouraging progress combating delta, initial reports suggested that omicron was much more transmissible. Soon, countries started shutting their borders to buy themselves time against the unknown. And that triggered new strategies for stocks to buy.
So far, though, it appears that omicron may not be the pessimist’s worst nightmare. While it’s still too early to make definitive statements, evidence suggests that omicron is more infectious but less deadly. Such mutations also present the possibility that Covid-19 could become endemic. And that too will necessitate some thought regarding stocks to buy. But what exactly does that mean?
While the concept of a permanent or semi-permanent presence of the coronavirus seems like an awful proposition on paper, in technical terms, endemic implies a relatively stable rate of occurrence. What has made the Covid-19 crisis difficult to manage is that its associated outbreaks and mutations are difficult to predict. Therefore, government bodies have to make difficult decisions because they are responsible for communities, not just themselves. In turn, this dynamic also brings changes to stocks to buy.
Mainly, this is because if Covid-19 becomes more predictable — such as the common cold, which by the way coronaviruses cause — it may change the culture of American society. For instance, multiple educational sources, including Duke Global Health Institute, noted that cultural norms in many Asian countries enabled them to handle the crisis better due to fewer objections of face masks and social distancing. A similar shift could easily boost certain stocks to buy.
While the fractured nature of politics and ideology may seem to make wholesale cultural shifts unlikely, you just never know — especially if we have another unrelated pandemic. Further, you can cynically benefit from even the worst social elements that this crisis caused. With that in mind, here are a few stocks to buy to put on your list if Covid-19 becomes endemic.
- Cardinal Health (NYSE:CAH)
- GlaxoSmithKline (NYSE:GSK)
- 3M (NYSE:MMM)
- IBM (NYSE:IBM)
- Costco (NASDAQ:COST)
- Pfizer (NYSE:PFE)
- Smith & Wesson Brands (NASDAQ:SWBI)
Given the latest news that the Federal Reserve will raise interest rates three times throughout 2022, along with an eventual cessation of its bond-buying program, stocks to buy of all categories may experience unexpected turbulence over the next several months. Therefore, caution and due diligence are your friends.
Stocks to Buy: Cardinal Health (CAH)
Should the Covid-19 crisis become a long-lasting affair, companies tied to the broader pharmacy industry may perform very well. At this point, it’s quite possible that those who have chosen not to be vaccinated will not change their mind. However, they’re going to need access to medicine if something should go awry in this pandemic or the next.
Ideally, I’d like to go with retail pharmacy plays CVS Health (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ:WBA). Both offer intriguing arguments, with the former demonstrating strong technical momentum. Unfortunately, the same can’t be said about Cardinal Health, which is down over 14% in the trailing six months since mid-December.
However, the multinational health services firm — which among its businesses provides hospital pharmacy solutions — is much more appealing for contrarians who insist on buying low and selling high (as opposed to buying high and selling higher). A Covid-19 endemic would likely boost Cardinal’s profile, making CAH an intriguing bet.
Also, despite global supply chain challenges — which may be a temporary headwind — Cardinal has demonstrated strong sales growth. Cynically, the coronavirus turning endemic would add relevancy, justifying CAH’s inclusion as one of the stocks to buy.
While Cardinal Health may be a contrarian wager, GlaxoSmithKline will require higher conviction among investors. On a year-to-date basis, GSK has gained nearly 18%. And over the trailing half-year period, it’s up over 7%. Although I wouldn’t say it’s blitzing the market, GSK has climbed the wall of worry that has impacted so many other securities due to inflation concerns.
But can shares keep climbing? If Covid-19 becomes endemic, you might want to add GSK on your radar of stocks to buy.
First, GlaxoSmithKline is the No. 1 over-the-counter respiratory medicine company per its website. Now, I’m not suggesting that its OTC pipeline is the answer to Covid-19. I’m not an epidemiologist nor are you going to see me pretend to be one. Rather, folks might be more than a little bit suspicious of those hacking and coughing in public. Thus, an incentive exists to take care of respiratory issues to avoid stigmatization.
Second, GSK also features a line of vitamins, minerals and supplements. Again, I’m not suggesting these things cure Covid-19. However, you can boost your immune system with supplements, which is rarely a bad idea.
Stocks to Buy: 3M (MMM)
The inclusion of 3M on this list of stocks to buy should Covid become endemic is a controversial one. I’m not going to start preaching from the pulpit but let’s be real: The anti-mask movement is a real phenomenon, leading to harsh opinions on both sides of the fence.
So will the subsection of American consumers who are tired of Covid mitigation efforts wear something like 3M’s N95 respirators, which are much bulkier than the “standard” masks most folks wear? You might have your doubts and I respect that.
Still, if we incur an endemic, then the idea of stocking up on some of these bad boys might not sound like a bad idea to consumers, regardless of their political opinions. According to one scientific study, “N95 masks have a much higher efficiency on virus penetration inhibition than surgical masks.” Should we have to live with Covid, it’s possible more folks will turn around to these effective mitigation devices.
If not, 3M also has a robust packing and shipping supplies business, with the underlying sector performing well during this crisis thanks to dramatic e-commerce sales.
In many cases, when people look at IBM, they do so with perhaps the same gaze they give to washed-up athletes. Maybe some sympathy, maybe some pity but likely, they’re not enthusiastic about the idea of its inclusion on a list of stocks to buy.
With a trailing 5-year performance of 21% in the red, IBM stock is not an easy proposition. Further, those with bullish ideas — including yours truly — have stressed its potential, but that potential never really appears to materialize. However, an endemic situation could help change this frustrating narrative.
Although detractors of Big Blue may focus on its legacy businesses, in reality, IBM is becoming an artificial intelligence powerhouse. And it put this acumen to good use during the coronavirus pandemic, partnering with the White House and the Department of Energy (along with other tech giants) to provide researchers with over 600 petaflops of computing capacity.
More directly, IBM’s intelligent virtual agent Watson Assistant helped those with questions about Covid-19 find their answers, enabling high-value professionals to focus on mission-critical assignments. Thus, a continuation of this crisis could finally swing the needle for IBM stock.
Stocks to Buy: Costco (COST)
Although the coronavirus pandemic will primarily be associated with negative health outcomes (to put it diplomatically), it also represented a grand sociological experiment. It would be fascinating to see if it were possible how Americans of prior generations would have responded.
Something tells me that they would have responded with far greater dignity. As the French writer Voltaire remarked, “Despite the enormous quantity of books, how few people read! And if one reads profitably, one would realize how much stupid stuff the vulgar herd is content to swallow every day.”
That, my friends, is the internet for you.
Of course, I’m alluding to the mad rush to buy toilet paper and other home essentials. I mean, if we all worked together, we could have gotten through the madness just fine. Well, apparently consumers have not learned the lesson, resulting in Costco limiting purchases of TP and bottled water a few months ago.
Naturally, the rise in demand for those goods coincided with spikes in Covid-19 cases. But news of global supply chain constraints also inspired the same hoarding behavior we saw in 2020. If the coronavirus becomes endemic, you should probably add COST to your stocks to buy.
Admittedly, due to the undulations of the global health crisis, I’ve provided both bullish and bearish arguments for Pfizer, simultaneously one of the most important and controversial companies during the new normal. Among the more unfortunate developments of this period is the rise of Covid conspiracy theories.
For anyone struggling with this issue or attempting to help others, I find it useful to use mathematically sound logic divorced from any political ideologies. Whenever somebody makes a grand but unfounded assertion about anything, the asserter must establish scope, scale and magnitude. In other words, how far, how wide and how deep is this conspiracy?
If all three metrics are dialed up to 11 (which they usually are), then the asserter has the burden of proof to determine how such a vast conspiracy could be kept under wraps. After all, the higher the reward, the higher the risk.
It’s possible, then, that should Covid become endemic, more people will take the time to understand the history and science of advanced vaccines due to acclimatization and declining emotional intensity toward the subject. As well, ample medical research pre-pandemic points to the severe risk of not vaccinating children. Therefore, Pfizer could do well if we must deal with Covid permanently.
Still, the resistance is strong so this thesis of PFE as one of the better stocks to buy is currently up in the air.
Stocks to Buy: Smith & Wesson Brands (SWBI)
Easily the riskiest name on this list of stocks to buy, if Covid turns endemic, I’m going to like my chances with Smith & Wesson Brands. Listen, I’m going to be straight up: The narrative is not a pretty one. Indeed, many would classify it as awfully cynical or worse. I get it. But I also understand sociology.
Intuitively, behind closed doors where no one is filming with their smartphones, I’m going to wager that millions of people believe the country at large has lost its marbles. Even before the pandemic, an outraged fan base sent death threats to former Chicago Bears kicker Cody Parkey — and his family.
Wishing the inferno of perdition on women and children, all because somebody missed a field goal in a silly football game that was supposed to be boycotted anyways because of political intrusions? If something so small, so insignificant catalyzed unbridled rage, was it any surprise how some people reacted during Covid?
Should we have to deal with the coronavirus indefinitely, no one can say for absolute certain what the general societal response would be. But established evidence points in an unpleasant direction, especially if influencers politicize the pandemic. That’s why I like SWBI, among other reasons.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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.