- Not every company is suffering
- Zoom has become the go-to site- We had a cocktail party!
- Teladoc is the future of lots of diagnostic medicine
Coronavirus is the most significant global pandemic to hit the world since the 1918 Spanish flu that claimed between fifty and one-hundred million lives. After an outbreak of an untreatable illness in Wuhan, China, in December 2019 and January 2020, it began to spread beyond the borders of the world’s most populous nation. The epicenter of the disease is now in Europe and the United States. Central banks and political leaders are scrambling to save economies as the business activity has ground to a halt while scientists are working around the clock on effective treatments and a vaccine. Unprecedented amounts of liquidity and emergency relief in the form of bailouts for individuals and companies are buying time until science provides a cure. Sadly, markets and economies move a lot quicker than scientists. The virus has infected hundreds of thousands of people, and at tens of thousands have already died. The bull market in stocks that lasted from 2009 through February 2020 was a victim of the pandemic.
Coronavirus will leave economic rubble in its wake. Profound changes are likely on the horizon. Two companies have bucked the trend in the stock market in the past weeks. Their businesses stand to flourish in an environment of germaphobia. Zoom (ZM) and Teladoc (TDOC) shares have outperformed the stock market, and that is likely to continue.
Not every company is suffering
Even though the US stock market posted the most substantial gain since the 1930s last week, the leading indices have suffered massive losses since February 20.
As the daily chart highlights, the E-Mini S&P 500 fell from a record high of 3,397.50 on February 20 to close last week at around the 2,520 level, a decline of 25.8%. While most stocks have dropped, two companies that provide necessary services during the current period of lockdowns and social distancing have taken off on the upside. Shares of Zoom Video Communications (ZM) and Teladoc Health Inc (TDOC) staged significant rallies. Both companies have built market share, brands, and are in a position to thrive in the post-Coronavirus environment.
Zoom has become the go-to site- We had a cocktail party!
My wife and I have been staying at home, taking care of her eighty-six-year-old mom. Social distancing has ended our weekend date night to a local restaurant or watering hole to have some rest and relaxation away from the homestead.
Last weekend a friend had a novel idea, a cocktail party, and a double date on Zoom. At first, the idea was odd, but it turned out to be lots of fun. The four of us had a drink, talked, and spent an hour together. There was no driving, and it was a cheap date. The bottom line is that the new reality from business to pleasure will include lots of time on the type of site offered by Zoom Video Communications Inc (ZM). I’m quite sure that the company that is the leader of the pack will come up with ways to enhance social as well as business experiences over the coming years.
In an environment where the S&P 500 was down over 28%, ZM shares moved from a high of $110.75 on February 20 to close at $151.70 on March 27. The stock appreciated by 37.5% over the period.
Teladoc is the future of lots of diagnostic medicine
In the aftermath of Coronavirus, the fear of germs will be a lasting phobia for many. A trip to the doctor’s office or hospital emergency room will not only be unpleasant but filled with the dread of picking up a bug from another sick patient. Moreover, the time spent waiting for the doctor to see a patient can be significant.
In most cases, a healthcare professional does not spend much time when they finally come into the examining room as they can diagnose a condition by just looking at and talking to a patient. Teladoc Health Inc (TDOC) is a virtual healthcare business where patients can access medical care using a smartphone, telephone, or web-based video chat.
With healthcare professionals at considerable risk of catching the Coronavirus, Teladoc (TDOC) shares have exploded to the upside.
The chart illustrates that TDOC shares rose from a high of $117.15 on February 20 to $164.16 on March 27 or over 40%.
While both Zoom (ZM) and Teladoc (TDOC) shares may correct over the coming weeks and months, the companies will be beneficiaries of the legacy of the global pandemic.
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TDOC shares were trading at $167.73 per share on Monday morning, up $3.57 (+2.17%). Year-to-date, TDOC has gained 100.35%, versus a -19.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Andrew Hecht
Andy spent nearly 35 years on Wall Street and is a sought-after commodity and futures trader, an options expert and analyst. In addition to working with StockNews, he is a top ranked author on Seeking Alpha. Learn more about Andy’s background, along with links to his most recent articles. More...
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