Major stock indices around the world saw at least a quarter of their values wiped away by the global pandemic. The S&P 500 tanked 35% this spring, which is the fastest-ever fall from its record levels. However, with positive developments in the past few months, U.S. stocks have rebounded sharply, regaining most of their value. The threat of a second wave of coronavirus looms making it important for investors to invest accordingly. They must invest in the stay-at-home stocks, which are likely to perform well amid another shutdown.
With the economy opening up again, health care experts are concerned about public attitudes towards the virus. Most experts believe that people have become complacent and less vigilant which could lead to another wave of infections.
Hence, investors need to diversify their portfolios and invest in companies that thrived during the first wave. Let’s look at three of these stay-at-home stocks with the most potential.
- Shopify (NYSE:SHOP)
- PaypPal (NASDAQ:PYPL)
- Quidel (NASDAQ:QDEL)
Stay-at-Home Stocks to Buy: Shopify (SHOP)
Shopify is essentially a cloud-based e-commerce platform that allows merchants to conduct their businesses through various online sales channels. The company has benefited from the e-commerce boom as SHOP stock grew 91% in the first six months of the year.
Its blowout second-quarter results are a testament to its growing popularity during the pandemic. Revenues surged to $714.3 million, which comfortably beat analyst forecasts of $511 million. New stores created on the platform shot up 71% compared to the first quarter, and gross merchandise volumes rose 119% year-over-year.
Moreover, the second quarter’s net income was at $36 million compared to a net loss of $28.7 million in the prior-year period. Additionally, its cash balance improved 62% to $4 billion.
The future looks bright for Shopify, with plenty of upside remaining. According to recent reports, the pandemic has accelerated the growth of e-commerce by approximately five years. Hence, with a potential second wave, I expect Shopify to capitalize on it spectacularly, making it one of the best stay-at-home stocks to buy.
PayPal is a digital payment platform that enables its users to send and receive money in more than 200 markets. As the transactions are digital, the secure platform provides an ideal way for people to handle their financials. Hence, PYPL stock has grown a healthy 43% in the past six months.
Its second-quarter results indicate a substantial increase in its activity. Revenues rose 25% to $5.26 billion year-over-year, with a 29% increase in total volume. Additionally, earnings per share also increased by a significant 49% year-over-year to $1.07. Analysts were expecting EPS to be 88 cents on revenues of $4.99 billion.
PayPal will gain greater exposure to the e-commerce boom with its recent acquisition of Honey Science Corporation. Honey is a browser extension and a mobile application that helps its users find deals online applies coupons and notifies price drops. Hence, in the event of a second shutdown, PayPal is in a great position to take advantage of the additional surge in online activity.
Quidel is one of the best-performing health care stocks this year, with QDEL stock growing more than 130%. The company produces diagnostic testing solutions, including a test for Covid-19 called Lyra SARS-CoV-2, which received emergency use authorization (EUA) in March.
Additionally, it was granted a EUA a couple of months later for a rapid Sofia 2 SARS Antigen FIA test. Apart from that, it has several diagnostic tests unrelated to Covid-19 as well.
The second-quarter results for the company were top-notch. Revenues rose 86% to $201.8 million in the quarter. Revenues of its Sofia SARS Antigen and Lyra SARS-CoV-2 tests rose 270% and 1,210% from the prior-year period. Moreover, GAAP EPS was at $1.55 compared to just 30 cents in the same period last year.
Other segments struggled because sales for other testing services slowed down during the pandemic. With a potential second wave, there would be a need for greater testing. However, even if it doesn’t, its product base has enough depth to continue its upward trajectory.