Making the Grade
4 Companies Set to Thrive During Coronavirus Shutdowns
Our mission here at Profit Trends is simple: “Opportunity first. Panic never.”
Every dark cloud has a silver lining… particularly in investing.
So while everyone else is panicking and doing their best Chicken Little impressions, we want to keep our heads and position ourselves for future gains.
That’s why today I’m going to share four investments with revenue growing at least 30%. But these businesses could be poised to jump even higher because of the coronavirus shutdowns.
First, let’s set the stage with what we know…
The Bad and the Ugly
It seems there will be no summer vacations this year.
International flights from the U.S. and the U.K. are down a staggering 20% for the five-week period ending February 23. And it’s probably only gotten worse since then.
International travel to the U.S. is projected to drop 6% over the next three months. This will be the largest international inbound decline since the 2008 financial crisis.
Amazon (Nasdaq: AMZN) and Alphabet (Nasdaq: GOOGL) – like many other companies – have halted all nonessential travel.
Major conferences and events around the globe have been canceled. The Tokyo Olympics is up in the air at the moment.
Coronavirus fears triggered the fastest 10% correction in market history. And the economic impact from the spread of the virus also forced a crash in airline stocks.
Casinos, theme park operators and mall retailers are taking it on the chin as well.
But the effects go beyond that.
For example, Twitter (NYSE: TWTR) has told its entire workforce of 5,000 people to telecommute.
The World Bank and the International Monetary Fund are replacing in-person gatherings with virtual ones.
In Washington state, schools are being closed. More closings will likely follow.
Even the NBA is taking precautions and telling players not to “high five” fans. Instead, they should “fist bump” to minimize the chance of spreading the virus.
Globally, the number of coronavirus cases has topped 95,000 and more than 3,200 people have died.
Those are the realities.
With all that in mind, let’s highlight some real opportunities out there.
4 Good Companies Growing 30% or More
If you’re a loner, the coronavirus precautions are ideal: Stay away from people, don’t shake hands and stay at home.
But if you’re a company, business can’t simply grind to a halt. There are deals to be made. Project deadlines to be met. Meetings to attend. Collaborations that need insight.
Investors need to look at these companies that are helping employees and students continue to thrive amidst coronavirus shutdowns.
1) Slack Technologies (NYSE: WORK) shares are down 38% from their 52-week high of $42.
But the business technology platform could see a coronavirus boom as more companies encourage employees to work remotely to prevent the spread of the disease. If the outbreak continues, especially in the U.S., we could see a big shift to messaging apps like Slack or Microsoft (Nasdaq: MSFT) Teams.
Slack will report fourth quarter results next Thursday after the closing bell. Expectations are for $174.14 million in revenue with a loss of $0.05 per share. And we’re going to be listening for any commentary on the coronavirus impact.
2) Zoom Video Communications (Nasdaq: ZM) is in the same position as Slack. With so many conferences and face-to-face meetings canceled, the video platform is ripe for an uptick.
The video conferencing service competes with the likes of Google Hangouts. But as the markets have been clobbered by coronavirus fears, Zoom Video shares have been on a tear, surging 69% in 2020.
They’re now a little more than 5% below their 52-week high of $121.93. We’re looking for revenue next quarter to jump at least 66% to $185.368 million.
3) DocuSign (Nasdaq: DOCU) is poised to be an under-the-radar winner in the current coronavirus environment as well.
The e-signature giant offers plenty of upside with existing and new clients. Even though there’s a clampdown on travel and face-to-face meetings, deals still need to be signed. For DocuSign, which specializes in electronic signatures and digital agreement suites, this represents a real opportunity.
The company will report fourth quarter results next Thursday. Analysts are looking for revenue to grow 33.4% to $266.5 million.
4) 2U (Nasdaq: TWOU) shares are down more than 63% over the past year.
But the educational technology company has been granted a second life as schools and universities shutter their doors to protect students. Its online education platform offers more than 70 degree programs from nearly three dozen universities. And it supports more than 160 courses for continuing education.
For the first quarter, revenue is projected to jump 43% to $175.15 million.
Year to date, these four companies have posted gains – even during the coronavirus market meltdown.
But this could merely be the beginning for them.
We know the coronavirus is going to have an economic impact for at least two quarters. We’ve already seen that in companies that have issued revenue warnings and supply chain disruptions.
We also know that contagion stocks tend to skyrocket quickly during the peak crisis news cycle, then collapse.
And we know there are hedges to rely on during turbulent market periods.
But these four companies are poised to benefit from a global shift in the way business is being done beyond just this epidemic.
Those are the types of momentum plays that can reward investors for months to come.
So don’t make panic-induced mistakes. Embrace the opportunities.
Here’s to high returns,
4 ETFs to Play the Fourth Industrial Revolution
May 19, 2020
The Gaming Industry’s Record March Is Only the Beginning
April 28, 2020