Many top stocks to watch in the stock market have taken at least a short-term hit during the onset of the coronavirus pandemic. The efforts to curb its spread have also wreaked havoc on the economy, but hey, if you’ve been paying enough attention, you will know that not all businesses are faring badly. And arguably the biggest winners in the stock market today have been the stay-at-home stocks.
As Jim Cramer puts it: “The stay-at-home story, it’s not quitting,” Cramer said. “Every time we get hit with another wave of Covid infections — this is wave three, when wave four happens and wave five happens — these stocks will keep roaring. I bet they’re going to keep roaring until we all have been vaccinated.”
Some technology stocks offering video conferencing and cloud computing services have had the unique opportunity to help businesses weather the coronavirus pandemic. As such, you could easily see their shares outperforming the stock market this year. The monstrous rally we saw in these top stay-at-home stocks have led investors to think if these stocks are fully valued. After all, it is becoming increasingly expensive to own a piece of these companies.
Work-From-Home Stocks Are Not At Their Peak Just Yet
Many now believe that working from home is a trend that could persist longer. What began as a temporary way to keep the employees safe has become a permanent movement for large companies like Facebook (FB Stock Report), Alphabet (GOOGL Stock Report), or Dell (DELL Stock Report), just to name a few. 75% of companies may let more employees work remotely, according to a survey by Gartner Group. Many employees welcome the move as well, as it offers better flexibility.
As we try to find a “new normal” amid a crisis, technology plays a key role in helping people to stay connected during this unprecedented time. While critics say this demand may be short-lived and will fade once things go back to normal, others believe that the work-from-home trend is likely to be sticky. Investors who are looking for a couple of investments that are tapping into the stay-at-home theme might want to consider taking a closer look at these stocks.
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Top Stay-At-Home Stocks To Watch In October: Zoom Video Communications
Zoom Video Communications (ZM Stock Report) needs no introduction. Even if you haven’t actually used the platform, I’m sure you have received a few invitations for friends’ and family’s virtual gatherings. When we had to stay home, Zoom was the platform to go for us to keep life as normal as possible. To be honest, I was skeptical about ZM stock when it started grabbing headlines months ago. But I was wrong. Zoom currently boasts more than 200 million daily users and controls 43% of the U.S. video conferencing market. The stock quickly became a favorite during the pandemic.
The stock got a further boost after Zoom launched Zapps on Wednesday. Zapps allows other productivity apps, such as Dropbox and Slack, to be opened directly in Zoom. According to CEO Eric Yuan, this move is part of a broader push to become an operating system of sorts. “This is not a meeting platform anymore. It becomes an infrastructure service… Zoom is not a meeting anymore, it’s more like a people-centric infrastructure service. We can play online games, we can do so many things not like it used to be, where we talk or [use it] for business communications.”
Zoom has gone a long way. It previously faced backlash over security concerns. Some bears cast doubt on its ability to defend itself from bigger rivals. Those doubts were put to rest since the company reported better than expected earnings. Zoom’s stock has zoomed more than 680% year-to-date as of Thursday’s closing. With the video conferencing platform likely to be sticky, is ZM stock the best stay-at-home stock to buy today?
Top Stay-At-Home Stocks To Watch In October: Teladoc Inc.
Shares of Teladoc (TDOC Stock Report) surged more than 15% for the past month. The company is slated to release its third-quarter results on October 28, after the market closes. The successful debut of Amwell (AMWL Stock Report), which started trading last month appears to be the reason for creating another wave of investors’ interest in the telehealth sector.
However, earlier this week it came to light that Teladoc is formally suing Amwell for patent infringement. Teladoc obtained a number of patents when it acquired healthcare tech specialist InTouch Technologies earlier this year. And Teladoc now believes two Amwell products, the Horus HD Digital Scope System and the Thinklabs One Digital Stethoscope, have infringed upon its patents. News like that undoubtedly caused some discomfort in telehealth stocks investors. Now that these stocks are experiencing a pull-back, would it be a good time to buy?
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 stay-at-home 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.
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Top Stay-At-Home Stocks To Watch In October: Zynga
Video game stocks like Zynga (ZNGA Stock Report) are also benefiting from the social distancing order. Some of Zynga’s successes you may have heard of are FarmVille, Words With Friends, and CSR Racing. The company has reported solid second-quarter results with revenue of $452 million, up 47% year over year. On top of that, management also provided guidance that the revenue is expected to be about 40% higher than 2019 at $2.2 billion. If that number plays out, the stock’s current valuation would just be 4.3 times 2020 sales, quite a steal if you ask me.
Before the coronavirus pandemic, ZNGA stock was trading at around $7 a share on average. Since then, ZNGA stock price has been on the rise. As of October 15, ZNGA stock was at $9.18 per share. This means that the ZNGA stock price has gained 56% since the lows in March.
As of Thursday’s closing, Zynga is a $9.8 billion company. You may say it is a “small-cap” stock in comparison with the top video game stocks we have on the market today. With a string of recent acquisitions including Peak Games, which makes the popular Toon Blast game, you would expect Zynga’s revenue to only go up, at least in the near future. If mobile gaming does explode over the next decade, to the extent that it becomes an equally large market as console gaming, then chances are Zynga could join the top dogs one day. Zynga’s best days are yet to come.