As we end the first week in December, stocks picked up right where they left off in November. Investors continued the rotation into more cyclical stocks, pushing the S&P up 1.7% for the week. The market seems to be shrugging off soaring COVID cases and negative employment numbers in anticipation of vaccines and a potential stimulus deal.

This cyclical trend looks here to stay, but just in case, I have three stocks that should perform well whether this rotation continues, or if investors get nervous and switch back to pandemic winners. This includes financial stocks Visa Inc. (V), Mastercard Incorporated (MA), and MarketAxess Holdings, Inc. (MKTX).

But first, let’s take a step back to see how the broader market has performed, and I will follow that up with more insights on the stocks I mentioned.

Market Commentary

On Thursday, the market saw pressure after learning that Pfizer (PFE) was dealing with supply-chain issues that would impact vaccine deliveries this year. PFE and BioNTech (BNTX) now plan on shipping 50 million vaccines by year-end, instead of the 100 million they had previously expected. Even so, investors are still hopeful that the vaccines will prop up the economy, evident from the rotation in cyclical stocks such as energy and financials.

Stocks hit record levels during Friday’s trading session, even as the market received disappointing job creation results for November. The Dow Jones Industrial Average was up for the fourth day in a row, mainly driven by House Speaker Nancy Pelosi’s announcement that she sees momentum in ongoing stimulus talks with Senate Majority Leader Mitch McConnell.

The U.S. Labor Department’s November jobs report reflected the slowest growth rate since April’s pandemic-induced drop in employment. Non-farm payrolls grew by just 245,000, which missed the estimate of 460,000. This was due to soaring COVID cases and business restrictions.

Market Outlook

While most investors are optimistic about the COVID-19 vaccine, I am still concerned with soaring cases and the recent jobs report. Job growth has slowed considerably, and while the unemployment rate was slightly lower at 6.7%, the labor force has shrunk.

The percentage of workers that have been unemployed for more than six months is inching towards its historical peak. This is especially concerning against a backdrop of surging COVID cases. The U.S. reported the most new infections, hospitalizations, and single-day deaths ever yesterday. This is likely to get worse over the holidays.

This trend will lead to more restrictions and further hamper economic activity as jobless benefits for many are poised to expire at the end of the year. Many investors don’t agree with my concerns, as evident by the market’s gains, which is why I am hedging my bets and selecting stocks that should perform well in anticipation of a return to normalcy, or if investors start sharing my concerns and return to the stay-at-home trade.

Visa Inc. (V)

V is a company that benefited from the increase in e-commerce sales and should continue to do well when people return to brick and mortar stores. Financial transactions are going to occur whether they happen online or in person.  

The company has benefited from acquisitions and alliances that have paved the way for long-term revenue growth. These acquisitions have also helped the company maintain a leading position in the payment space. Further growth will also come from the company’s investment in technology, which will minimize fraud and protect consumer and merchant information.

The stock is rated a “Strong Buy” in our POWR Ratings system. It holds a grade of A for Trade Grade, Buy & Hold Grade, Industry Rank, and a “B” for Peer Grade. It is also the #1 ranked stock in the Consumer Financial Services industry.

Mastercard Incorporated (MA)

The next stock on my list is MA, another company poised to benefit from continued e-commerce purchases and pent-up demand for consumer spending at physical retail locations. Not all retail companies had the infrastructure in place to handle online orders, and many consumers still prefer to shop inside stores.

Similar to V, MA has been able to grow through acquisitions. These were made in areas such as data analytics, cyber, and intelligence to help expand the company’s addressable markets and drive new revenue streams. MA should also benefit from growth in mobile and electronic payments, which will continue to grow even after the pandemic.

The stock is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade and Industry Rank, and a “B” in Buy & Hold Grade and Peer Grade. It is currently ranked #14 in the Consumer Financial Services industry.

MarketAxess Holdings, Inc. (MKTX)

The third stock on my list is not a payments provider but a trading platform that offers institutional investors access to global liquidity in fixed income products. The platform enables fixed-income market participants to trade corporate bonds and other fixed-income instruments using patented trading technology.

I consider MKTX a stay-at-home stock because it is an electronic trading platform that investment professionals could access while they were at home. This company was performing well before the pandemic, it continues to perform strongly in the pandemic, and should continue to do so after. The stock is up 43% year to date, not too bad for a financial company.

Aside from 2008, revenues have been growing consistently. MKTX undertakes buyouts and alliances to enter new markets and facilitate growth. The stock is rated a “Buy” in our POWR Ratings system. It holds a grade of “A” for Trade Grade and a “B” for Buy & Hold Grade, Peer Grade, and Industry Rank.

Want More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

Are Stocks Off to the Races in December?

7 Best ETFs for the NEXT Bull Market

V shares fell $0.38 (-0.18%) in after-hours trading Friday. Year-to-date, V has gained 13.88%, versus a 16.56% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...

More Resources for the Stocks in this Article