3 Stay-At-Home Stocks Showing Strong Resilience As Coronavirus Spreads
Jesse Cohen | Mar 18, 2020 01:25PM ET
In an effort to contain the spread of coronavirus, the White House announced new guidelines on Monday, urging Americans to avoid gatherings of more than 10 people and calling for closing schools, restaurants, bars and other venues across the country.
However, President Donald Trump refrained from ordering a complete lockdown or sweeping public quarantines, for the time being.
With the virus in all 50 states, it's just a matter of time until a lockdown to implemented to limit transmission of COVID-19. Here are three stocks well-positioned to benefit from such a scenario:
1. DocuSign/h3
DocuSign (NASDAQ:DOCU)—widely considered the leader in the e-signature market—is the largest provider of software that automates the filing of contracts and certifies electronic signatures. The San Francisco, California-based software-as-a-service company has over 475,000 customers and hundreds of millions of users in more than 180 countries.
DocuSign stock has displayed robust relative strength amid the ongoing coronavirus market correction. Shares of the maker of software that digitizes contract paperwork have outperformed the broader market in recent weeks on views that less business travel will lead to more companies signing contracts electronically over the internet.
The stock, which hit an all-time high of $92.55 on Feb. 19, ended at $70.94 on Tuesday, giving it a market cap of $12.73 billion.
We expect that DocuSign will be relatively resilient in this environment as more companies around the world have employees work from home, thus creating new demand for remote-work tools.
DocuSign beat estimates on both the top and bottom lines when it released fourth quarter earnings on March 12. Earnings per share totaled 12 cents, up 100% from the same period a year earlier. Revenue climbed 38% from the year-ago period to $274.9 million, thanks to strong billings growth.
2. Netflix/h2
Netflix (NASDAQ:NFLX) doesn’t need an introduction.
The streaming giant has weathered the ongoing coronavirus-led stock market rout better than the broader market. Shares, which hit a 52-week high of $393.52 on March 3, settled at $319.75 yesterday, giving it a market cap of $140.31 billion.
The widespread measures taken by officials in the U.S. and around the world to contain the virus are likely to result in more people turning to Netflix for entertainment. As an increasing number of countries are implementing lockdowns—Italy, France, Spain to name a few—we expect a bump in both new domestic and international paying subscribers in the weeks and months ahead.
The company, whose total subscriber base grew to 167 million at the end of 2019, has already seen a spike in downloads in regions hit hard by the coronavirus pandemic. Data has shown a surge in first-time app downloads in South Korea, Hong Kong, Italy and Spain.
The Los Gatos, California-based media-services provider next reports earnings on April 20. Consensus calls for earnings per share of $1.61 for the first quarter, up a whopping 111% from EPS of $0.76 in the year-ago period. Revenue is forecast to rise 27% from the same period a year earlier to $5.75 billion.
3. Teladoc Health/h2
Billed as the first and largest telemedicine company in the U.S., Teladoc Health (NYSE:TDOC) uses telephone and videoconferencing software as well as mobile apps to provide on-demand remote medical care. The company served around 27 million members in 130 countries by the end of 2019.
Teladoc Health stock has held strong lately, rallying to new all-time highs even as the broader market plunged in the face of a bear market. Shares closed at $118.24 last night, within sight of a record high of $153.75 reached on March 11, giving it a market cap of $8.6 billion.
The virtual healthcare provider said that its volume of patient visits spiked over 50% in the second week of March from the year-ago period, accelerating to as much as 15,000 requested visits per day. Total medical visits for the week was about 100,000 as more people sought out virtual consultations with doctors amid the COVID-19 outbreak.
"We are seeing more patients, and more of those patients are experiencing upper respiratory issues," said Lew Levy, MD, Teladoc Health's chief medical officer. "As we saw during the flu epidemic of 2018, a community's healthcare system can become overwhelmed and virtual care can help provide needed relief."
The virtual healthcare provider last month reported a narrower-than-expected quarterly loss, while revenue topped expectations thanks to strong growth in both the U.S. and international markets. The next earnings report will be released on May 12.
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