Uptick in Infections Should Lead These 3 COVID-19 Stocks Higher

: ZM | Zoom Video Communications, Inc. - News, Ratings, and Charts

ZM – Current market volatility is here to stay until after the election. But I see one area of the market poised to benefit in the near term. Read more to learn David’s thoughts on the market and which stocks to consider.

As we end the week, stocks were in the green, but volatility and uncertainty are still weighing on investors’ minds. The week started strong before three days of declines. Even in this volatility, I see one area of the market trending higher, at least in the near term. I have selected three stocks I feel should see substantial gains, but let’s see what has been happening in the market before getting to them.

Market Commentary

As I already mentioned, stocks ended Friday slightly higher as retail sales beat expectations. U.S. retail sales rose for a fifth straight month in September as consumers have been spending money in preparation for a continuation of working and studying from home. Investors are more concerned about three lingering issues: the strength of the economy, the continued spread of the coronavirus, and the ongoing negotiations over additional fiscal stimulus.

As the pandemic seemed to slow over the summer and hopes that the economy was recovering, recent news has been a little concerning. In the recent October jobs report, Nonfarm payrolls rose by a lower than expected 661,000 in September, indicating a loss in momentum on the jobs front.

The recent uptick in positive COVID cases is also becoming a concern. More than six states reported record numbers of new coronavirus cases and pushed the U.S. single-day total above 60,000 for the first time in months. This could become a headwind for the remainder of the year and beyond.

The third issue is the continued negotiations in Washington regarding a new stimulus bill. While both Democrats in the House and the President want a larger bill, Republicans in the Senate are balking at the price tag. This fight could drag on until after the election, resulting in increased uncertainty in the markets.


Given the state of increased COVID cases, an economic recovery losing steam, and a stalemate and Congress, I see continued volatility over the near term. Once there is a clear winner in the election and a second stimulus deal gets done, I see the broad markets continuing its rise due to a combination of negative real interest rates and government stimulus.

In the meantime, I see one area of the market trending higher as we head into the election. And that is corona stocks. I have been forecasting a second wave of the virus for quite some time, and I believe it’s just getting started. That means we should allocate our portfolios to stocks that have benefited from the pandemic and should continue to as the epidemic rages on.

While earnings for the third quarter are coming in now, we know technology, utilities, and healthcare were the only sectors to show positive earnings growth last quarter, and that should continue as COVID cases pile up.

Here are three stocks I see benefiting from current market conditions.

Zoom Video Communications (ZM

ZM has been one of the hottest stocks this year. It gained 4.2% today, adding to its already absurd 721.6% year to date gain. It was even up 44.6% during September when the rest of the market was down. As the pandemic worsens, I see this stock going up more. As cases rise, people who have returned to work will need to work from home again, and many organizations have relied on Zoom for their video conferencing needs. As more schools close down in response to the new outbreaks, children will be primarily learning from home.

In addition to the pandemic, the company should also benefit from an expansion of its clientele, including its international presence and the launch of its Zoom from Home solutions. Our POWR Ratings also agree, rating the stock a “Strong Buy.”

Pfizer (PFE

The next stock on this list is the front runner, along with BioNTech (BNTX) of Germany, to have the first COVID vaccine on the market. As of today, the company said it is targeting late November for its COVID vaccine application. But PFE is not a one-trick pony. The company is one of the largest and most profitable pharmaceutical companies in the world. PFE should see strong sales growth in its Ibrance, Inlyta, and Eliquis drugs.

Plus, it has a deep and promising pipeline of new drugs in the fields of oncology, internal medicine, rare diseases, and immunology. For a large established pharmaceutical company, PFE has been showing strong momentum with a “Buy” rating in our POWR Ratings, along with an “A” Trade Grade. Keep an eye over the next couple of weeks as the company reports earnings on October 27th.

Peloton Interactive (PTON

The last stock on the list should benefit from the double whammy of rising cases and colder weather. Aside from bodybuilders, not many people want to venture out in the cold and risk catching the virus for 45 minutes on the local gym’s treadmill. Plus, I see many gyms closing as cases rise. Exercise equipment company PTON is well-positioned to cash in as more people exercise at home. Like ZM, the stock has been popular this year, up 362.4% year to date. It was also up 29.4% in September, while other stocks were dropping.

In its most recent quarter, the company fitness subscriptions grew 113% year-over-year. Earnings are expected to grow an absurd 241.7% next year. This momentum is reflected in our POWR Ratings with a grade of “A” across the board, in its overall rating, and in the four components that make up the POWR Ratings.

Want More Great Investing Ideas?

Top 11 Picks for Today’s Market

7 Best ETFs for the NEXT Bull Market

5 WINNING Stocks Chart Patterns

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

TickerPOWR RatingIndustry RankRank in Industry
ZMGet RatingGet RatingGet Rating
SPYGet RatingGet RatingGet Rating
Get RatingGet RatingGet Rating
PFEGet RatingGet RatingGet Rating
PTONGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com

:  |  News, Ratings, and Charts

2022 Stock Market Outlook

The stock market (SPY) continued on its bullish path in 2021. Will that continue in 2022? And what could happen to awaken the bear market from hibernation? 40 year investment veteran Steve Reitmeister explores this and more in his “2022 Stock Market Outlook” which includes his top 12 stocks for the year ahead. Read on for full details below...

:  |  News, Ratings, and Charts

3 Undervalued Energy Stocks to Buy as Oil Approaches $80

Given strong demand and years of underinvestment in new production, energy stocks are likely to keep outperforming in 2022. Many have very favorable valuations, and value stocks tend to outperform in environments with rising rates and growth. Therefore, investors should consider buying TransGlobe Energy (TGA), Apache (APA), and Ovintiv (OVV).

:  |  News, Ratings, and Charts

100 Best Stocks for 2022

2022 is a key year for investors. The easy money from the start of the current bull market via the S&P 500 (SPY) has already come and gone. Now gains for the average investor will slow down...but who wants to be average? The path to outperformance just became easier with our listing of the 100 best stocks for 2022. Get full details below...

:  |  News, Ratings, and Charts

3 Chip Stocks to Buy Now that Power the Metaverse

The term ‘metaverse’ is the latest tech buzzword on everyone's lips. Investors seem excited about the potential it holds, and tech giants continue to invest heavily to develop metaverse. Given this backdrop, we think it could be wise to add quality semiconductor chip stocks NVIDIA (NVDA), Intel (INTC), and Micron Technology (MU) because they are likely to play a significant role in metaverse infrastructure. Read on.

:  |  News, Ratings, and Charts

100 Best Stocks for 2022

2022 is a key year for investors. The easy money from the start of the current bull market via the S&P 500 (SPY) has already come and gone. Now gains for the average investor will slow down...but who wants to be average? The path to outperformance just became easier with our listing of the 100 best stocks for 2022. Get full details below...

Read More Stories

More Zoom Video Communications, Inc. - (ZM) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All ZM News