When the Dow Jones industrial average has seen a drop of close to 3,000 points in less than a week, and with the new U.S. community-acquired coronavirus case hurting the markets, most investors assume that everything would be down with the broader markets. After all, a 10% correction in the major indexes is not something the market usually sees in a short time. It turns out that the coronavirus pandemic fears may actually have some benefits for having such defensive business models.
24/7 Wall St. tracks some of the stocks that are either defensive in general or that are actually benefiting from the fears, although we have left off the risky small-cap stocks that have had coronavirus announcements but that are so speculative they still may not exist in a year or two. We screened out the companies with market caps under $2 billion to avoid speculative stocks, and we did not cluster many companies that are in the same industry to avoid covering sectors.
Not all “trade defensive” strategies worked. Even with the record lows in Treasury yields, the gas/electric utilities were not up on the day as fears that slower business activity would lower power demand.
Clorox Co. (NYSE: CLX) was last seen trading up 2.9% at $172.95, and it hit an all-time high of $174.17. With close to a 2.6% dividend yield, investors can take relief that Clorox bleach will kill just about anything good or bad. If the Clorox chemical is too strong, you can just use the wipes instead.
DexCom Inc. (NASDAQ: DXCM) had traded up in prior days but had pulled back until Thursday, with a 2.5% gain to $285.30. That’s down from a recent high of $306.71. People are going to want to keep up with their continuous glucose monitoring for diabetes whether or not the coronavirus is out there.
3M Co. (NYSE: MMM) is hardly an anti-coronavirus stock on the surface. It does make surgical/medical face masks and they are literally sold out everywhere. 3M currently has its masks on a global allocation as well, so it likely won’t ever have to worry about price pressure there. 3M was upgraded to Buy from Hold with a $205 target price at a firm called Melius Research (we don’t know much about that firm either).
Netflix Inc. (NASDAQ: NFLX) continues to rise, with a 2% gain to $386.50 on Thursday. While Netflix has streaming competition out the wazoo now, it probably doesn’t have to worry about many cancellations if the coronavirus spreads and the U.S. decides to close schools and keep their workers at home (that’s happening elsewhere).
Patterson Companies Inc. (NASDAQ: PDCO) rose after earnings, with its shares up 9.4% at $24.80 on Thursday. While this gain was likely from earnings, dentists are unlikely to stop buying replacing dental equipment.
Teladoc Health Inc. (NYSE: TDOC) traded up again with a huge post-earnings gain. Offering telemedicine services via videoconferencing and getting a preliminary doctor appointment without having to wait in a room full of sick people sounds attractive in a pandemic outbreak.
Virtu Financial Inc. (NASDAQ: VIRT) was up 3.6% at $18.95 earlier in the week, but it was up another 0.3% at $19.05 on Thursday and still handily lower than its $25.76 high. The belief here is that these guys make major money in big market moves either way, but maybe not like they used to.
Zoom Video Communications Inc. (NASDAQ: ZM) traded up 4.5% at $106.45 earlier in the week when the benefits of the work-from-home economy were being seen, and its shares were last seen up 8% at $115.40 on Thursday, after hitting a new post-IPO high of $118.00.
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