Stock Market: Reviewing the Pandemic Winners
After an unpredictable year for the stock market, financial expert Gordon Pape reviews some of his pandemic picks. Photo: Budrul Chukrut/SOPA Images/LightRocket/Getty Images
The pandemic changed our lifestyles dramatically and that impact was reflected in the stock market. Some companies that had been thriving saw their business models shattered. Others experienced an unexpected surge in business.
The hospitality industry, office property REITs, the travel sector, and brick and mortar retailers were among those that saw revenues and profits plunge. At the same time, e-commerce companies, transportation firms, supermarket chains, and leading-edge telecommunications companies saw a surge in business.
I publish a weekly newsletter, the Internet Wealth Builder. When the pandemic hit, we had to move quickly to help readers navigate the rapidly evolving stock market environment. In March, when the devastating impact of the pandemic became apparent, my contributing editors and I began to look at stocks that we felt were positioned to do well in the face of these new challenges. Not all performed as expected but our track record was quite respectable. Here are some of the pandemic-related picks we introduced. Prices are as of Dec. 24.
Gilead Sciences (NDQ: GILD). In the early days of the pandemic, we started to search for companies that were leaders in the development of a vaccine or treatment for COVID. Gilead qualified on the treatment side, with its anti-viral drug remdesivir. Early trials indicated some success in speeding recovery and remdesivir was used to treat President Trump when he contracted COVID. But the stock never took off. It was recommended at US$69.36 and closed on Dec. 24 at US$57.07.
Canadian Solar (NDQ: CSIQ). Green energy companies turned out to be one of the main beneficiaries of the pandemic year as oil and gas stocks tumbled. We added Canadian Solar to our list in mid-March when it was trading at US$16.80. The stock closed at US$52.71 on Dec. 24 for a gain of 214 per cent.
Teledoc Health (NDQ: TDOC). Virtual visits with a doctor were already gaining wider acceptance but the pandemic changed what had been a convenience into a necessity. We introduced this stock in late March at US$169.50. It closed on Dec. 24 at US$207.95, for a gain of 23 per cent.
J.B. Hunt Transport (NDQ: JBHT). On a harrowing drive in late March from Florida back to Toronto, I was struck by the fact the highways were almost deserted except for transport trucks moving essential supplies. On my return, I recommended this big U.S. trucking company at US$89.76. It closed Dec. 24 at US$137.42 for a gain of 53 per cent.
Pfizer (NYSE: PHE). We continued to look for pharmaceutical companies that we felt would be in the forefront of vaccine development. In April, I recommended Pfizer, which turned out to be the first company to bring a vaccine to market. The price at the time was US$35.38. It is now US$37.27 for a small gain of 5 per cent.
DocuSign (NDQ: DOCU). Working from home meant important documents had to be signed legally but remotely. We introduced DocuSign in May, which provides the software for such transactions. The price at the time was US$116.56. The stock closed on Dec. 24 at US$244.93, up 110 per cent.
Metro Inc. (TSX: MRU). Most retail businesses had to close down or reduce capacity, but grocery stores thrived. In June, we advised buying Metro Inc. at $57.42. The stock hit a high of $66.25 in September but has since pulled back to $57.38, about the same price at the time of the recommendation.
The Clorox Company (NYSE: CLX). The demand for cleansers and sanitizers kept companies like Clorox working overtime. I recommended the stock in June at US$197.57. It flirted with US$240 in July but has since pulled back to US$203.80.
Pinterest (NDQ: PINS). In late June, we added social media platform Pinterest to our list. With people encouraged to remain at home, on-line communications flourished, and this company gained millions of new users. We advised buying the stock at US$23.21; it closed on Dec. 24 at US$71.04 for a profit of 206 per cent. In the same issue, we also recommended Facebook at US$238.79. It is now trading at US$267.40.
Johnson & Johnson (NYSE: JNJ). The hunt for leading vaccine developers brought us to JNJ in June. Its product is behind the vaccine frontrunners by a few months, but some experts believe it could eventually dominate as it requires just one shot. The stock was recommended at US$143.83 and is now at US$152.47.
Roku (NDQ: ROKU). Staying at home meant higher demand for television and streaming services. That boosted revenue for Roku, which provides platforms for most streaming companies. We recommended the stock in August at US$146.85; it has now more than doubled to US$356.99.
We already had many other companies on our list that did well during this pandemic year. They include UPS, FedEx, Amazon, Walmart, Costco, Microsoft, Shopify, TFI International, Brookfield Energy Partners, and Chegg Inc.
Looking ahead to 2021, our focus will now shift to companies that we believe will perform well in the post-pandemic world.
Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to www.buildingwealth.ca/subscribe