Most companies and investors prefer periods of economic expansion rather than recessions. Unlike the Great Recession, the instant COVID-19 recession caught almost every industry and company by surprise. Even if they saw it coming, it was still overwhelming to even the best management teams. The panic selling from February through March of 2020 simply killed the 11-year bull market in stocks, and the Dow Jones industrial average is still down 20% and the S&P 500 is down 15% from the all-time highs in February.
Even in bear markets and recessions, some nimble companies either have incredibly resilient management teams or just happen to be in the right place at the right time. 24/7 Wall St. has identified nearly 40 companies that have thrived during the COVID-19 pandemic, and the list is over 40 companies including some of their runner-up peers.
These so-called recession winning businesses are proving to succeed in a very difficult economy. There have been over 30 million layoffs, unemployment has skyrocketed, and gross domestic product could be down more than 20% in the second quarter of 2020. It also remains to be seen how the gradual reopening of the economy will influence the number of COVID-19 cases and deaths in the United States.
What has been unique about the COVID-19 recession is that the economic activity came to a sudden halt and had an impact on so many households that many classic defensive stocks did not act defensively at all. Imagine investing in utilities, cell phone carriers, personal products, consumer staples and telecom thinking they would hold up like they have in prior recessions and market panics.
Most of the traditional go-to defensive companies and sectors saw their stock prices fall like a space capsule reentering the earth’s atmosphere. Those classic defensive stocks will be defensive again during market selloffs, but it’s hard to imagine a forced stay-home order where millions lose their jobs overnight and are suddenly not buying what was normal before February.
It is important to filter out some winners from others. For instance, we eliminated all the drug and biotech companies, as well as companies coming out with diagnostics for the coronavirus. Many of those developments remain quite fluid, and some of them certainly will not be successful in the grand endeavor of a vaccine or a meaningful treatment.
We have also included what was working before the coronavirus and how they have done after. Less than a fifth of the S&P 500 is actually showing positive stock performance so far in 2020. Many of these companies are not just up, but they are up big!
> YTD Gain: 20%
Activision Blizzard Inc. (NASDAQ: ATVI) is the largest video game publisher and is worth more than $50 billion. With various Call of Duty titles, Overwatch and Candy Crush, the stay-at-home economy is creating a boom in playtime. It even raised its full-year outlook while other companies are cutting or suspending guidance, and it has new video game console refreshes to look forward to at the end of 2020. It claimed after the March-2020 quarter to have 102 million monthly active users for Activision and 32 million monthly active users for Blizzard.
> YTD Gain: 27%
Amazon.com Inc. (NASDAQ: AMZN) is winning all around, with data center growth from AWS and with brick-and-mortar stores it competes against either still closed or gradually reopening. Amazon may have had bad public relations issues from warehouse workers, but its business is booming, with over 100,000 job additions to help deal with the boom. Investors haven’t even bothered to care that its expenses are way up and that it is sacrificing profits to build up within the company where it can.
> YTD Gain: 7%
Apple Inc. (NASDAQ: AAPL) has proven that it can survive a period in which its supply chain disruption in China and Asia runs into subsequent Apple store closures in Asia and the rest of the world. The drop was larger than it has seen in sales in the modern era, but it showed how resilient Apple’s core customer loyalty is. Its strong earnings gave analysts all the firepower they needed to begin raising estimates and targets all over again, and Apple appears to be heading back to all-time highs around the excitement of its 5G iPhone late this year or early into next year. Apple even announced a dividend hike and continued on with a larger stock buyback program, even when most companies are criticized for spending too much on buybacks. It’s still a top Warren Buffett stock too.
> YTD Gain: 6%
Campbell Soup Co. (NYSE: CPB) is back as customers have again become big buyers of prepackaged and canned foods. It remains to be seen if these sales will have a lull as the economies and as restaurants reopen, but the reality is that its all-time high from 2016 is almost 30% higher than the current share price. On top of its trademark Campbell’s brand name, other brands include Goldfish, Lance, Pace, Pacific Foods, Pepperidge Farm, Prego, Swanson and V8.
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