10 Big Stocks That Should Keep Avoiding the Coronavirus Stock Market Panic

February 1, 2020 by Jon C. Ogg

The bull market is now more than a decade old, and the massive stock market strength of 2019 was seeing a continuation into January. Earnings were coming on strong from the market leaders, and most economic data was looking good. Interest rates even looked like they were going to be flat for most or all of 2020. Then came the market fears as China’s coronavirus has spread and become a global health scare. As of February 1, 2020, the number of coronavirus cases has risen to 12,000 and at least 259 deaths have been reported.

When bad things happen and regions or parts of economies get shut down, it has an immediate spillover into the stock market. Not all companies get hit the same, and some even continue to thrive. But when tourists and travelers stop going to hotels, when flights get canceled, when cruises become a major concern, when restaurants and stores shut down, and when big destinations that draw crowds are closed and big events are canceled, it all comes with a major economic impact and many sectors feel the pain immediately.

There is now no possible way to consider that the coronavirus impact in China and beyond will not create a serious hit to China’s gross domestic product for at least the first quarter of 2020. The only question now is whether other nations can avoid the hit when everyone does so much business there.

24/7 Wall St. frequently looks for defensive stocks that do well even when the stock market sells off. That is partially the case for 2020, but in finding stocks that still do well even when there is a growing fear of contagion or pandemic, the view becomes rather different.

We have gone through the large-cap stocks that are based in the United States and that either are in the S&P 500 or are well-known to the markets with multi-billion-dollar market capitalization rates to see which companies are, at least so far, acting as if they are somewhat immune or resistant to the current fears around the market.

American Water Works Co. Inc. (NYSE: AWK) did close down 0.4% at $136.20 on Friday, but it had been up earlier in the day and hit a new all-time high of $137.73. Being America’s largest water utility and serving water to about 14 million people in 46 states comes with some advantages. Businesses can slow down, but everyone still has to drink water (and hopefully use their baths, showers and toilets).

American Water Works shares have risen almost 11% so far in 2020, and the nosebleed valuations of 35 times forward earnings haven’t reached a point of deterring investors yet, even if those valuations for new money are getting harder to justify easily.

Amazon.com Inc. (NASDAQ: AMZN) just reported stellar earnings and its guidance was good enough to keep the strength of the AWS cloud operations running high along with its core Amazon delivery business. Amazon shares closed up 7.4% at $2008.72 on Friday, and the shares hit a high of $2,055.72. Amazon stock is now up almost 9% so far in 2020.

Admittedly, Amazon may be the lease defensive name of these, but it should now have great chart support down closer to $1,900, and 5% near-term downside seems to be considerably less risk than some other tech giants that had risen much greater in 2019 and earlier in January. Amazon is immune to Asia, but it has less dependence there than some of the major tech giants do.

Coca-Cola Co. (NYSE: KO) was down almost 0.8% at $58.40 on Friday, but its shares saw a solid earnings gain this week, and it did hit a new high of $59.08 on Friday as well. Coca-Cola is generally a go-to defensive name anyway, and it now sells water and many other sports and daily beverages aside from its core Coca-Cola and soda beverages.

Coca-Cola’s stock chart (see below) has exhibited a breakout from a long-term peak as well. Its shares are up 5.5% so far in 2020.

Colgate-Palmolive Co. (NYSE: CL) is one of the go-to defensive stocks in most down market days, but it managed a 4.3% post-earnings gain on Friday to close at $73.78. Its more recent level of closer to $71 that was resistance on the chart may now offer strong support for limited downside.

Colgate’s $63 billion market cap is nowhere close to the largest of the consumer products makers (P&G).

Duke Energy Corp. (NYSE: DUK) is not the only utility that has seen its shares rise, but it is among the largest utilities in America and still has valuations that are not out of line with the market and the utilities sector. Duke Energy stock closed up almost 0.2% at $97.63 on Friday, with a $71 billion market cap.

Duke’s shares hit a new high of $98.05 on the day while still having close to a 4% dividend yield. The stock is now up over 7% so far in 2020.

Hormel Foods Corp. (NYSE: HRL) has been a monster stock over time as the company continues to move way beyond its old Spam image into newer products that younger buyers actually want to eat. The stock did fall 1.3% to $47.26 on Friday, but it hit an all-time high of $48.01 earlier in the day.

Hormel stock managed to barely close up for the week, but its shares are still up about 5% so far in 2020. With close to a 2% dividend yield, this food company is up about 50% over the past two-and-a-half years.

Newmont Corp. (NYSE: NEM) is riding the gold train higher and is the most valuable U.S. gold player with a $37 billion market cap. Gold is back up to almost $1,600 per ounce as a safety trade against any global fears, and Newmont’s close of $45.06 was up 0.2% on Friday, with a valuation of 23 times forward earnings. It also has a 1.2% dividend yield, but many investors expect that to rise if gold remains at these levels for an extended period.

Newmont shares are now up almost 4% so far in 2020 (and up about 35% from a year ago). Its all-in sustaining costs are projected to remain close to $900 for the next couple of years and to go even lower in the outer years.

NextEra Energy Inc. (NYSE: NEE) may have traded down 0.6% to $268.20 on Friday, but the stock also hit a new high of $270.66 on the day. The largest utility in America, with a $131 billion market cap, seemed expensive even when it was the first utility worth $100 billion, but having a larger exposure to clean and green energy is giving it more recognition through the environmental, social and governance (ESG) theme.

NextEra is up over 10% so far in 2020 (and about 50% over the last year). So what if it’s trading at 27 times forward earnings.

Quest Diagnostics Inc. (NYSE: DGX) did sell down by about 1.2% to $110.67 on Friday, but the shares had been up at the start of the day at a new high of $112.89. Shares of Quest still rose 2.7% last week, and the stock is up over 3.6% so far in 2020.

To make matters more precise about the coronavirus and a strong flu season, Quest’s operations of running lab tests are likely to get even more business every time someone catches a cold or doesn’t feel well as they want to find out how sick they really are.

Republic Services Inc. (NYSE: RSG) is among the top waste management players of them all, and people are going to produce endless amounts of garbage whether the economy does well or not. Its shares were down just 0.7% on Friday at $95.05, but its chart has been rather impressive, with most days rising in 2020.

Republic Services still managed a 0.4% gain for the past week, and the shares are up 6% so far in 2020, with a $30 billion market cap.

Again, these are not the only strong stocks holding up during the market panic. These are current names that should have at least some insulation against coronavirus fears in 2020. Even if they do not go higher, they now either have major chart support or should hold up better than the broader stock market if major selling pressure continues.

A candle-glance chart montage from StockCharts.com has been provided below for each stock.