The coronavirus pandemic has been a mixed bag for investors in the stock market today. Of course, the world has been relaxing lockdown measures and reopening their economies. But before there is a safe and effective vaccine that can defeat the coronavirus, many continue to worry about contracting the virus. Many healthcare experts have warned countless times about the potential waves of coronavirus infections to hit in the fall or winter. Unfortunately, it now appears those warnings were right.
In the United States, COVID-19 numbers are reaching a daily high again, in what many scientists are calling it a third coronavirus wave. With the presidential election just around the corner, there are so many reasons to avoid the stock market at all costs. Many would have acted more passively by adopting the “wait and see” attitude, while others are buying when there’s blood on the street. Looking for top stocks to buy during such uncertain times proves challenging.
Shares of companies involved in the coronavirus fight have been leading the stock market gains over the past few months. The term ‘coronavirus stocks’ could be quite broad. If you recall, the term started to appear when many biotech stocks were in headlines so often and analysts gave them the new name. For instance, Moderna (MRNA Stock Report) would be a typical name for what you would call a coronavirus stock. But that need not be the case today. Investors today also categorize winners from the pandemic as coronavirus stocks. Put simply, companies that thrived during the pandemic could be labeled as coronavirus stocks, such as Zoom (ZM Stock Report).
Warren Buffett has often said that you should invest in businesses that you wouldn’t mind owning if the stock market were closed for an extended period. While it’s highly unlikely that the stock market will completely shut down due to the pandemic, it’s a useful mental construct. Perhaps, looking for companies that could thrive with or without the pandemic could be a great start. And if you are looking to capitalize on the rise in coronavirus cases, will the following coronavirus stocks be a good fit?
“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage.” —Warren Buffett, Fortune, 1999.
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First, on the list, Teladoc (TDOC Stock Report) has all the characteristics to be a top coronavirus stock. Its shares skyrocketed 155% year to date when some of the sectors struggled to fight for a rebound. But when it comes to Teladoc, the first thing that comes to mind is its valuation. Following the strong gains this year, TDOC stock is trading at about 23 times sales. That doesn’t look cheap however you want to look at it.
Granted, as the largest telemedicine company on a U.S. stock exchange, Teladoc certainly has reasons to shine. It appears to have a tendency to surpass sales expectations. Full-year revenue could rise to $1 billion this year. Considering that 2013 revenue was about $20 million, the company has certainly come a long way. Revenue grew at an annualized rate of 75% during this period. The dominance of the telehealth platform became even more pronounced in August when it said it would acquire Livongo Health (LVGO Stock Report) for $18.5 billion in a cash and stock deal. The combined company could offer phenomenal growth potential in the long run, if analysts’ projections materialize a few years down the road.
In fact, telehealth is not something new. The service has been available for the past few years. But it is only gaining strong traction during the coronavirus pandemic. A commanding lead in a rapidly growing niche makes TDOC stock one of the best coronavirus stocks to buy. The long term prospects of telemedicine remain favorable. With more users now discovering the advantages of remote medicine, TDOC stock might be able to continue to thrive even after the pandemic.
Similar to Teladoc, Amwell (AMWL Stock Report) is a primary player in the telemedicine market. Whether you are looking to invest in Amwell and Teladoc, it is really a choice between business philosophies. If you believe partnerships with legacy healthcare companies would be the winning formula, then by all means take a bet at this one. Amwell has a broad network as part of 55 health plans. About 36,000 employers use the platform, covering 80 million individuals. Since the company first started in 2006, its platform has recorded 5.6 million telehealth visits. And it is not stopping there. In the first half of 2020 alone, the platform saw 2.9 million visits. That is no surprise as the pandemic has encouraged those with less critical conditions to access health care remotely.
The company’s highly scalable business model allows patients to access a certified doctor at the comfort of their home, anytime they want. Amwell provides online consultations at all times with its physicians across 50 states. During the first half of 2020, Amwell’s revenue increased by 77% over the previous year to $122.3 million. Simultaneously, its monthly visit volumes increased by more than 400%. With such strong results, Amwell has attracted the attention of Alphabet’s (GOOGL Stock Report) Google, which invested $100 million in Amwell in August. Chances are, a sizable portion of the proceeds will advance the company’s research and development.
Of course, Amwell has got some other tricks up its sleeves. It is integrating into electronic health records systems to provide a further advantage. Its exclusive relationship with Cerner and positive user experience could gain new supporters among both clinicians and patients. After all, this is about making the use of telemedicine as seamless as possible. With all that in mind, would you prefer AMWL stock over TDOC stock?
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Last, on this list, Abbott Laboratories (ABT Stock Report) has been the leading coronavirus testing market, which makes it one of the best coronavirus stocks to watch in the market. While Abbott does develop plenty of therapeutic drugs, its tests are what make it worth watching right now. Abbott has products in every segment of the testing market, including rapid tests, multiplexable diagnostic tests, and antibody tests. The company’s business continues to thrive largely due to the COVID-19 pandemic.
The diagnostic tests company reported its third-quarter revenue of $8.9 billion. This is a 9.6% increase from the revenue of $8.1 billion generated in the same period last year. More importantly, the net income reported was $1.2 billion. In short, the company crushed most, if not all analysts estimates on Wall Street this quarter.
CEO Robert Ford said that Abbott’s “new product pipeline continues to be highly productive, and we’re well-positioned to finish the year with a lot of momentum.” Abbott’s COVID-19 diagnostics tests have certainly set the standards. The BinaxNOW COVID-19 Antigen Card diagnostics test is low cost, fast, and accurate. It is already making big waves in the COVID-19 testing arena. This could drive Abbott’s revenue even higher than its current impressive figures. With all these positives in mind, is ABT stock a worthwhile coronavirus stock to consider?