For Some Stocks, This Could Be A Buyer’s Market

For Some Stocks, This Could Be A Buyer’s Market

almost 4 years ago2 mins

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European and American stock indexes fell again on Monday, but several big investors think the deepening bear market represents a golden opportunity to “practically steal” stocks poised to profit from pandemic pandemonium 👀

What does this mean?

Investment banks Jefferies and Raymond James last week highlighted companies they think could benefit from prolonged social distancing and self-isolation – regardless of an accompanying economic depression that could be the worst on record.

Jefferies singled out 47 stocks with fundamentally strong business models which it believes are currently cheap at the price. Some of these are unsurprising: biotech firm Gilead Sciences is developing a possible coronavirus treatment, while ecommerce giant Amazon is fielding even more demand than usual. (Check out our Inside Amazon Pack for tips on valuing Amazon shares yourself.)

The 15 largest Jefferies recommendations (Source: MarketWatch)
The 15 largest Jefferies recommendations (Source: MarketWatch)

Other potential investment opportunities are perhaps less obvious. Exercise bike peddler Peloton was raising eyebrows just a few months back – but with gyms shuttered, Raymond James thinks the firm is a good bet regardless of its typically cyclical nature. Then there are the unfashionable “defensive” companies whose steady income makes them a relatively secure call in turbulent times: utilities like Verizon, AT&T and Comcast. See our Media, Gaming, And Telecoms Pack for more on those… ☎️

Why should I care?

Some firms’ long-term growth prospects should be largely unaffected by the current economic contagion – and the likes of payments providers Visa and Mastercard may even benefit from trends like the growing distaste for dirty cash.

As one prominent investor pointed out at the weekend, many such companies’ shares may have been oversold recently by passive funds that invest in (or sell) entire indexes – making now, he claims, "a good time to be stock picking” 😳

That’s a risky business, however – even as a small part of an overall portfolio. Markets may well have further to fall, potentially dragging down even the strongest of stocks. For many investors, the best bet may simply be to hold fast until things improve…

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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