One story that perpetually will be linked to the start of the roaring 2020s will be the COVID-19 pandemic. While the response to the pandemic will be argued over for years, the reality is that for some companies, especially those that benefited from the work-from-home edicts, the virus was a windfall. However, for others it was a nightmare and the search for a vaccine is critical to the resumption of normal business operations.
We have screened our 24/7 Wall St. research database looking for companies that have been hurt by the pandemic but could be big winners if a successful and safe vaccine is brought to the public sometime soon. While the president has said millions of doses could be available by the end of the year or sooner, it is likely that it will be 2021 before it is available to the entire population.
While these five companies are rated Buy at some of the top firms on Wall Street, it’s important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This should come as no surprise as the industry has ground to a halt with the COVID-19 pandemic. Carnival Corp. (NYSE: CCL) operates as a leisure travel and cruise company in North America, Europe, Australia and Asia. It offers cruises under the Carnival Cruise Line, Princess Cruises, Holland America Line and Seabourn brands in North America, as well as the Costa, AIDA, P&O Cruises (UK), Cunard and P&O Cruises (Australia) brands in Europe, Australia and Asia.
The company operates 99 cruise ships. It also owns Holland America Princess Alaska Tours, a tour company in Alaska and the Canadian Yukon, which owns and operates 11 hotels or lodges, approximately 300 motor coaches and 20 glass-domed rail cars. In addition, the company is involved in the leasing of cruise ships. It sells its cruises primarily through travel agents and tour operators.
Though the Centers for Disease Control and Prevention extended its no-sail order through September 30, some across Wall Street feel that the agency may be ready to lift the order, though it could come with severe restrictions. However, a vaccine would change everything for the cruise line industry.
Barclays recently upgraded the shares to Overweight with a huge $31 price target. The Wall Street consensus target for Carnival stock is $16.65. It closed at $15.31 a share on Monday. Note that it was trading at $50 back in January, before the pandemic.
With phase two opening procedures in place in some areas, the restaurant industry is close to leaving the horror of being shut down except for carryout and delivery. Darden Restaurants Inc. (NYSE: DRI) owns and operates full-service restaurants in the United States and Canada.
As of November 24, 2019, Darden owned and operated approximately 1,799 restaurants, which included 867 under the Olive Garden, 518 under the LongHorn Steakhouse, 166 under the Cheddar’s Scratch Kitchen, 79 under the Yard House, 59 under The Capital Grille, 45 under the Seasons 52, 42 under the Bahama Breeze and 23 under the Eddie V’s Prime Seafood brands.
The company reinforced its balance sheet by completing a $460 million equity raise earlier this year to strengthen its balance sheet. This highlights Darden’s growing cost of capital advantage to peers, given years of a more conservatively run balance sheet. Despite the 6% dilution, Wall Street thinks Darden’s war chest will help it muscle out peers post-pandemic.
The company has suspended its dividend for now. BofA Securities has a $115 price target, and the consensus target is $107.27. The last Darden Restaurants stock trade on Monday hit the tape at $100.58, up 3.5% on the day.