Are These The Best Epicenter Stocks To Watch Right Now?
Epicenter stocks had a good start in the stock market after the Christmas holiday weekend. Of course, the decision of the White House to sign the latest coronavirus stimulus package was a relief to many investors. As a result, that helped send the benchmarks higher as 2020 draws to a close. But even as the overall stock market rose, there were plenty of stocks that lost ground. For instance, most, if not all of the top stay-at-home stocks this year such as Zoom Video Communications (ZM Stock Report) and Fastly (FSLY Stock Report) started off the week lower. So, why is there such a “rebalancing” taking place this week?
Should Investors Buy Epicenter Stocks This Week?
Apart from the COVID-19 stimulus package, the ongoing vaccine roll-out in major markets is also lifting the hopes of economic reopening. While this is news worth celebrating for many, the same cannot be said for stay-at-home stock investors. In fact, the latter may worry that the demand for stay-at-home products and services could well reverse once vaccinations progress and the coronavirus pandemic is brought well under control. According to Fundstrat’s Tom Lee, history signals that another rally for top epicenter stocks may be on the way.
“From a market’s perspective, a rolling over of COVID-19 should be a “risk-on” signal for epicenter stocks,” said Lee. “The reason, naturally, is that epicenter stocks are more sensitive to lockdowns and benefit from economic re-opening. Hence, we should expect the epicenter stocks to rally.”
As the world moves forward with renewed vigor and hope, investors could also be making moves by pulling out a list of best epicenter stocks to buy. The reason is that they have lost much of their market value during the March lows. Also, it appears that the latest wave of COVID-19 cases may be peaking in the U.S. This thinning out of cases could be a good sign for reopening stocks. With all these in mind, are these the best epicenter stocks to watch in this holiday-shortened week?
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Best Epicenter Stocks To Watch Before 2021: American Airlines
First up, American Airlines (AAL Stock Report) is on investors’ radar after reports stating that it is among the U.S. airlines that will receive $15 billion in aid to help bring back furloughed workers. That sent AAL stock price 2.6% higher on Monday’s intraday trading. But the truth is, American Airlines isn’t exactly a popular pick among investors. And why might that be the case? After all, not many investors would consider this struggling airline with sky-high debt levels. Not to mention that the company is also currently burning up to $30 million a day as air travel remains weak due to travel restrictions globally. As bad as the outlook may seem, there are still two tailwinds that are working in its favor in 2021.
With such positive developments from vaccine makers, we could expect at least four or five vaccines in circulation before the first half of 2021. For instance, Novavax (NVAX Stock Report) just became the fifth to begin phase 3 trials in the US. With scientists and researchers globally working to build a portfolio of safe and effective vaccines to protect the world’s population, the demand for air travel could pick up sharply around summertime. And that bodes well for AAL stock.
Of course, no country will want to see its national carrier go bankrupt. While American Airline isn’t a national airline, it’s highly unlikely that Congress and the Biden administration would allow the flagship airline to become insolvent for both economic and political reasons. Sure, it will take some time before AAL stock could fly to the altitude of pre-pandemic levels. American Airline is no doubt the riskiest bet among its rivals. But the question here is, would greater risk translate to greater reward with AAL stock? Only time will tell.
Best Epicenter Stocks To Watch Before 2021: Carnival Corporation
Next up, another epicenter stock to watch is Carnival Corporation (CCL Stock Report). The company is the world’s largest travel leisure company. It has a combined fleet of over 100 vessels across 10 cruise line brands. It is based in Florida with operations in the UK and in Panama. Since the beginning of November, Carnival has seen a remarkable 50% rise in its share prices. This shouldn’t come as a surprise with the positive vaccine news.
In addition, according to Cruise Industry News, a review of available reservations on Norwegian’s (NCLH Stock Report) website reveals that cruising could resume under the CDC’s “Framework for Resuming Cruise Ship Operations” sooner than some investors had expected. While there’s no similar news from Carnival, it seems to me that investors are expecting the CDC framework likely to be applicable to major cruise-line companies, and that includes Carnival. News of possible vaccines could provide the Carnival with a key opportunity to further enhance future liquidity as well. The company also reported that its cruise lines Costa and AIDA would be resuming. Likewise, its cumulative advanced bookings for the second half of 2021 have increased despite minimal advertising or marketing.
Of course, nobody knows for sure when cruise lines will be resuming their services. But the indication from Norwegian Cruise appears to give hopes that things will be getting back on track in the not too distant future. With all in mind, would it be wise for investors to buy CCL stock before 2021?
Best Epicenter Stocks To Watch Before 2021: Starbucks Corporation
Starbucks (SBUX Stock Report) has weathered the coronavirus pandemic reasonably well. And that could make it an even better epicenter stock to buy now. While many brick-and-mortar companies are still trying to regain their footing, Starbucks is brewing up big plans to prepare for the post-pandemic world. During an Investors Day event earlier this month, the company said it expects to grow to 55,000 locations by 2030. That implies a nearly 70% increase from the roughly 33,000 stores currently operating.
“Though we are growing off a large base, there is ample room to expand in regions where the Starbucks brand is less penetrated,” said Roz Brewer, the company’s Chief Operating Officer. She noted that Starbucks has a “particular focus on high volume, high margin, suburban drive-thrus.”
While the company’s press release didn’t give country-specific targets, you could speculate that China will be playing a big role in its expansion plans. Currently, the U.S. has over 15,000 Starbucks stores, while China has over 4,700. Beginning late next year, however, the number of outlets in China expects to increase at a double-digit pace. In comparison, the growth in the U.S. would be around 3%. With international expansion continuing to be on the cards, will you add SBUX stock to your watchlist?