Top Epicenter Stocks To Buy [Or Sell] In September 2020?
The epicenter stocks have underperformed the broader market over the past months amid fears of virus resurgences. Not familiar with this term? The “epicenter stocks” are also more commonly known as the “reopening stocks”. These are stocks that benefit when there are indications of the reopening of the economy. And of course, they fall when virus cases increase. While most of the investors chose to “stay safe” with other sectors by investing in tech stocks or biotech stocks, Tom Lee, Founder and Head Of Research at Fundstrat Global Advisors believes investors should expect these epicenter stocks to be bullish in the near term.
So, What Exactly Is An Epicenter Stock?
According to Lee, epicenter stocks are things like consumer discretionary stocks, industrials, technology stocks, health care stocks, and energy stocks, which were hit earlier this year. From his interview with Yahoo Finance, Lee explained, “If we were to freeze all progress here, then epicenter industries are in huge trouble because no one is going to get on a plane, confidently go to a hotel, casino, theater. But if you think 12 months from now that technology and health care and re-engineering are going to make things safer, then the stocks that benefit from this really are the epicenter stocks.”
It’s no easy feat to look for a company that can truly reopen and doesn’t face the risk of scaling their operations down when there’s resurgence in coronavirus cases. Airline and cruise-line companies have also confused new traders by signaling false momentum in light of short term gains ending in ultimate losses for many. With this in mind, let’s take a look at a few epicenter stocks to watch that may potentially fall into this “monstrous rally” category as described by Tom Lee.
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Top Epicenter Stocks To Watch In September 2020: AMC Entertainment Holdings
Things are progressing nicely with AMC (AMC Stock Report), even on its stock price front. The movie theater operator announced two weeks ago that it will reopen more than 100 theaters on August 20. Yesterday, it stated that this reopening is well underway. And another 170 theaters will open today. Right after this announcement, shares of AMC jumped more than 16% on Thursday’s intraday trading. But the question here is, can the rally we saw on Thursday be sustainable?
Even though the cinemas have reopened, people might not go to the theater just because they can. Patrons will also need to feel safe before stepping in. From the company’s own announcement, the company described its first weekend of reopening as “successful”. But there were no specifics on the numbers of moviegoers who’ve come back to the cinema. For sure, having any revenue is probably better than zero revenue. But let’s not forget the costs of reopening today. The company could incur more costs considering a significant portion will be spent on sanitization and disinfection to put customer’s safety as a priority.
Top Epicenter Stocks To Watch In September 2020: United Airlines Holdings
Shares of United Airlines (UAL Stock Report) soared more than 5% on Thursday’s intraday trading. There isn’t any specific news that could trigger the rally in airlines yesterday. That’s apart from the general sentiment of epicenter stocks rallying. The airline announced last week that it is adding flights to Florida this November. The numbers are definitely improving, but not enough to push airlines back into profitability yet. Truth be told, if there’s a rally in the airline industry, UAL stock is going higher. In fact, UAL stock may be the best airline stocks to watch when there’s a rally.
Any developments that could speed up the introduction of vaccines would drive the restart of airline businesses. New treatments for the virus could also boost demand for flights. However, investors shouldn’t get overly excited about any headlines concerning progress toward a vaccine or treatment for COVID-19. After all, promising developments don’t always lead to cures. Another thing to note among top airline stocks, including American Airlines (AAL Stock Report) is their debt problems. That could limit their growth in the future. That would be an important consideration for potential investors.
[Read More] Top Tech Stocks To Watch As Nasdaq Keeps Hitting New Highs
Top Epicenter Stocks To Watch In September 2020: MGM Resorts International
Shares of casino operator MGM (MGM Stock Report) have climbed more than 200% since the market crash in March. Although the stock has been climbing steadily over the past few months, MGM stock is still 32% lower for the year 2020. The same goes for its competitor Wynn Resort (WYNN Stock Report), which is nearly 40% lower for the year 2020. It’s a relief to see MGM stock jumping 4% on Thursday. This came after MGM Resorts’ Mirage casino in Las Vegas looks set to reopen. While things aren’t going back to pre-COVID-19 levels yet, getting this key property operational again is crucial. Investors were likely happy with the news.
MGM also announced the opening of its BetMGM operations in West Virginia. This online gambling program allows MGM to serve gambling aficionados in the comfort of their own homes. It is essentially another revenue source to help offset the decrease in revenue from physical casino outlets. MGM is still doing a respectable job despite the situation the industry is in. Although it will take a while before things go back to normal, MGM is taking things one step at a time. Investors appear to find comfort in that.