The Covid-19 pandemic and nationwide unrest has gripped the U.S. in 2020. Weeks of business closures and shelter-at-home orders have left millions of workers out of jobs, and companies struggling with bleak outlooks and a likely recession. But even during uncertain times like this, some companies are still expected to grow their earnings.
Barron’s screened for S&P 500 companies that are widely expected by Wall Street analysts to see their per-share earnings recover in 2021 and reach 20% higher than 2019 levels. Stocks with expected per-share losses are excluded. This left us with 66 stocks, including streaming leader Netflix (ticker: NFLX) and e-commerce giant Amazon.com (AMZN).
But not surprisingly, most of them suffered smaller losses during the market’s March selloff or have already recovered to pre-coronavirus levels. Netflix stock, for example, is now trading 7.3% higher than its closing price on Feb. 19—the peak of the S&P 500 and the perceived “precrisis” market level. Amazon shares, similarly, are now 13.4% above their Feb. 19 levels. Both have hit new records in mid-May, despite the continuing uncertainties about the economy.
Still, for investors that missed the rally, Barron’s offers 11 growth stocks that are still trading below their precrisis levels—some even have a slight discount in valuation from that time.
Not Too Late
Even during uncertain times like this, some companies are expected to grow earnings still. Barron’s offers 11 of those stocks that are still trading below their pre-crisis levels.
| Ticker | Company | Current price compared to 2/19 | 2019 EPS | 2020 EPS estimates | 2021 EPS estimates |
|---|---|---|---|---|---|
| WDC | Western Digital | 65% | $4.84 | $3.04 | $5.96 |
| LNC | Lincoln National | 67% | $6.71 | $8.38 | $9.47 |
| WY | Weyerhaeuser Company | 73% | $0.39 | $0.09 | $0.56 |
| AIZ | Assurant | 77% | $8.55 | $9.31 | $10.66 |
| MDT | Medtronic | 85% | $4.59 | $3.67 | $5.53 |
| LRCX | Lam Research | 86% | $14.54 | $15.19 | $17.67 |
| AMAT | Applied Materials | 86% | $3.04 | $3.80 | $4.23 |
| FISV | Fiserv | 88% | $4.00 | $4.42 | $5.37 |
| LDOS | Leidos | 89% | $5.17 | $5.26 | $6.27 |
| LHX | L3Harris Technologies | 89% | $8.29 | $11.34 | $12.79 |
| AMD | Advanced Micro Devices | 90% | $0.64 | $1.02 | $1.49 |
A highly uncertain environment like today’s is likely to drive more insurance purchases. Lincoln National (LNC) and Assurant (AIC), both on the list, are expected to see 41% and 25% growth in 2021 earnings, respectively, as compared with 2019 levels.
As people spend more time at home glued to their computers and phones, Western Digital (WDC), manufacturer of data storage devices for both offline and the cloud, is expected to see earnings expand 23% in 2021.
Analysts also have an optimistic outlook for Advanced Micro Devices (AMD) and Applied Materia l (AMAT), which make semiconductors, and Lam Research (LRCT), manufacturer of equipment that fabricate integrated circuits. Wall Street expects them to grow earnings by 133%, 39% and 21%, respectively, in fiscal 2021 from 2019 levels.
Other stocks on the list include L3Harris Technologies (LHX) and Leidos (LDOS) in defense technology, Fiserv (FISV) in financial tech, along with medical device manufacturer Medtronic (MDT) and timberland real-estate investment trust Weyerhaeuser (WY).
Some of these names might experience weaker earnings in fiscal 2020. But for investors who can weather short-term headwinds, these stocks are likely to offer further upside down the road. All are expected to trade at higher prices one year from now, according to analysts polled by FactSet.
It isn’t too late to catch the ride yet.
