4 Top-Notch Stocks That Defied Coronavirus Fears In January

Major U.S. bourses witnessed increased volatility last month as investors grappled with the coronavirus scare. The broader S&P 500 ended slightly lower in January, snapping a four-month winning streak. The Dow also posted its first monthly loss since August. Meanwhile, the Cboe Volatility Index (VIX) — markets’ best fear gauge index — jumped to almost 19 in January from 13.78 in December, highlighting a gain of more than 37%.

Investors are concerned about the potential economic impact of the fast-spreading deadly virus in China. The disease has now claimed more than 360 lives and infected 9,692. Chinese National Health Commission added that 30,453 people in China are now under medical observation for the virus. And almost 30 municipalities have reported confirmed cases of coronavirus to the Chinese government.

The virus affects the respiratory organs and is quite similar to SARS (severe acute respiratory syndrome). Lest we forget, SARS, which erupted in 2002, resulted in the death of 800 and triggered a severe economic slump that fettered global stocks.

The United States has declared the coronavirus to be a public health emergency while the WHO recognized the impact of the virus to be wide spread, affecting countries with weaker health systems. No doubt, the outbreak is a near-term headwind for stocks. After all, with so many people affected, travel-related stocks were hit hard. In fact, Delta, American and United suspended flights between the United States and China. Needless to say, market pundits fear possible contagion, as hundreds of millions of passengers traveled during the holiday season. By the way, manufacturers of luxury items also felt the heat. After all, such companies rely heavily on outlays by Chinese tourists.

But even though the U.S. stock market went through a choppy phase in January, there are certain stocks that defied the downward trend and ended in the green. And it’s mostly because such stocks have established business models, and are fundamentally strong enough to provide hedge against any downfall. Let us, thus, look at a few compelling choices —

Apple

Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. It also sells various related services. The stock gained last month on increased sales of smartwatches, AirPods wireless earbuds and services like mobile payments and streaming-music subscriptions. Growth in such segments helped Apple offset last year’s almost 14% decline in iPhone business, which accounts for the bulk of its sales.

Apple’s Wearables segment, which includes products such as Apple Watch, Air Pods, and Beats earphones, have done pretty well in recent times. At the same time, we can’t ignore the Services segment. Services has become Apple’s second most important division. After all, more than 450 million customers are buying Apple’s streaming contents, news and warranties. Apple earned a staggering $46 billion from the segment last year, which accounted for 18% of overall sales.

Apple currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its current-year earnings has moved up 5.1% over the past 60 days. The company’s shares gained 3.1% in the month of January. Moreover, its expected earnings growth rate for the current year is 15.6% compared with the Original post

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Written By: Zacks Investment Research