Coronavirus Scare Pushes Gold Prices Higher: 5 Picks
Zacks Investment Research | Feb 17, 2020 10:13PM ET
Covid-19 has caused nearly 1,868 fatalities and infected more than 72,436 people, as of Feb 17. The spread of the virus has impacted companies having factories in China, as they are constantly facing shortage of workers and crunch in global supply chain. Airlines have temporarily ceased services on major flight routes.
Amid this life-threatening virus scare, investors are rushing to buy safe-havens like gold as companies warn of coronavirus impact on their revenues in the upcoming quarters.
Employee Shortage & Supply Chain Chaos
Per a survey conducted by Shanghai’s American Chamber of Commerce (AmCham), American companies with operations in China are struggling to find workers to operate factories at full potential. Additionally, 48% of the respondents claim that shutdowns have impacted global supply chains, while the rest expect an impact within the next month.
Health restrictions, lockdowns and quarantines make it harder for employees to get back to work after the extended Chinese Lunar New Year holiday. According to the survey, 8 in 10 companies reported lack of adequate staff to run a full production line.
The factories operating at present are facing challenges in supplying employees with protective gears that can prevent the virus from spreading. These include masks, gloves and other health supplies. Another alarming fact is that 30% of the surveyed companies hinted that they may move operations out of China if they are unable to re-open factories soon.
Tech-giant Apple Inc. (NASDAQ:AAPL) , with a substantial exposure to China, has already warned of coronavirus impact on its revenues. The company has lowered its earnings guidance for the quarter ending March 2020, taking into account production and supply chain disruption and weaker demand in China.
Though Apple’s manufacturing units in China that produce iPhone and other electronics have started reopening, operations are much slower than expected.
Rush for Safe Haven – Gold
The Covid-19 scare is making investors search for and invest in safe haven assets like gold. Gold acts as a hedge for investors during times of geo-political and economic crisis. On Feb 18, spot gold was up 0.3% to $1,586.15 per ounce. The rush for gold has helped prices of the metal to hit $1,587.30, the highest since Feb 3.
5 Stocks to Buy Now
As gold prices are poised to grow, we have shortlisted five gold miners that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy).
Sandstorm Gold Ltd. (NYSE:SAND) operates as a gold royalty company. The company focuses on acquiring gold and other metal purchase agreements from companies that have advanced stage development projects or operating mines.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 7.1% upward over the past 60 days.Sandstorm Gold sports a Zacks Rank #1. You can see Original post
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