Jul 04 , 2020
As The Coronavirus Pandemic Lingers And The Stock Market Roils, Here Are Four Stocks You Should Buy
Introduction
The coronavirus pandemic has plunged the country into a recession. Although the unemployment rate has starkly reversed from the disturbing depth of April when it peaked at 14.7%, it is still far above the 3.5% of February. Even the record 4.8 million jobs added in June could do only little to cushion the effects of the pandemic.
At least, 20 million Americans are still receiving unemployment claims. According to the Congressional Budget Office, it would take the labor market at least 10 years to fully recover from the devastating impact of the pandemic. The spate of new infections that is leaving many workers in the lurch is already threatening any early possible recovery.
The Stock Market.
Financial markets also have not been spared. Although the stock market responded to the job gains of June with gusto, with the Dow Jones Industrial Average (DJIA) rising 400 points before retreating, it is still far below its pre-pandemic highs. More so, since it is an election year, the political future is tenuous.
This circumstance has substantially contributed to the high volatility of the stock market. Nevertheless, here, we help you sift through the highs and lows to find the following four stable, low-risk stocks that can make solid investments even at this precarious time.
Facebook (NASDAQ: FB)
In particular, one sector has seemed insulated from the throes and headwinds of the pandemic. It is tech. As a matter of fact, the pandemic has rather fed the power of most of the companies in it. Due to the rapid spread of the virus, many countries started imposing lockdowns and restricting their citizens’ movement in accordance with the WHO’s guideline of “social distancing.”
Facebook.
However, the help of technology, social media especially, to help us stay connected without having to be physically together later made the world’s apex health authority change the guideline to “physical distancing.” As a result, business for social media outfits went on to boom. And Facebook being already well-established within the industry only had its competitive advantage enhanced.
No wonder, in Q1, year over year, its revenue expanded by almost 20%, average revenue per user (ARPU) grew by 8.3%, daily active users (DAUs) increased by 11% and profits almost doubled. Besides WhatsApp and Instagram which it owns, the long-term driver of Facebook’s growth is its ever-increasing average revenue per user which is also the highest among its peers.
Despite the company’s notorious reputation for mishandling user data, it still continues to be the best avenue for advertisers to reach consumers.
eBay (NASDAQ: EBAY)
Very much like tech, e-commerce is another sector that has rather grown despite the cataclysmic impacts of the pandemic. Many brick-and-mortar retail stores have had to close. Shoppers now do not have a choice other than buying online. In fact, the retail digital marketing automation platform, Listrak has reported a 40% increase in e-commerce sales since the U.S. started enforcing sheltering-in-place.
By March 30, for example, online baby product sales alone have surged with 237% week-over-week increase and a staggering 1,197% month-over-month increase. Although industry’s big names like Amazon and Shopify have been dominating the news, eBay is although a smaller one whose stock, as a notable advantage, could be a good buy considering its reasonable valuation of just 14 ✖️.
Over the past five years, eBay’s earnings per share have compounded at a rate of almost 40%. Analysts expect it, going forward the next five, to grow its earnings at an annual rate of at least 10%. Hence, when you invest in eBay, you would be investing in a stock that is not only currently reasonably valued in the market but also with ample opportunities for growth.
Moody’s (NASDAQ: MCO)
Do you want a stock that has stood and passed years of reliability checks? Moody’s Investors Service, usually referred to just as Moody’s, is here. The company in the bond credit ratings industry has been in business for over 100 years and is considered one of the Big Three Credit Rating Agencies. With a standardized scale, by ranking the creditworthiness of potential borrowers, Moody’s helps investors to measure expected losses in case of default.
Moody’s. ©️WSJ.
No list of stable and reliable stocks would be complete without Moody’s. Besides being a solid business itself, the credit rating agency has also had a sterling year-over-year stock market performance. In fact, over the past 10 years, for instance, the company has recorded an annual return of 24%. So far this year alone, it is up by over 15%.
Moody’s holds close to 40% of the total bond credit ratings market share. At 60%, this segment of its business also accounts for the greatest bulk of its income. Nevertheless, the company has also launched and bolstered an alternative revenue stream via which it provides risk analytic services to asset managers, pension funds, and more.
Fiverr (NASDAQ: FVRR)
As earlier pointed out, the pandemic has not equally hit companies. In fact, for some, it has only made business better. One of those companies is Fiverr. The online marketplace has clearly benefitted from the unemployment crisis the ongoing coronavirus pandemic engendered. Evidently, amidst it, demand for freelancers has surged.
Fiverr. ©️Quartz.
Even with or without the pandemic, Fiverr has been rolling out strategies to capitalize on potential market opportunities beyond its traditional U.S. user base. For instance, to drive long-term local adoption, it started an optimized localized marketing campaign. To that effect, recently, it launched its first three localized markets for the German, Spanish, and French markets.
Another plan that would contribute to Fiverr’s continued relevance is its upmarketing strategy. This is an attempt by the company to reach its next tier of customers, that is, companies with as many as 500 users. Presently, majority of Fiverr’s active buyers are entrepreneurs and small businesses with no more than 15 employees. According to a recent shareholder’s letter, high-value buyers have also continued to grow.
The global freelancing market is huge and Fiverr is still in its early transformative days. Hence, the company should only continue to expand. Its new artificial intelligence (AI)-powered products and international expansion are expected to be some of the key drivers of its growth.