The news isn't getting any kinder on the coronavirus front. With more than 40,000 confirmed cases and over 1,000 fatalities, there is no timeline on when the respiratory ailment will be vanquished. The World Health Organization is concerned, especially now that cases are starting to spring up worldwide that aren't tied to a recent visit to China.
Most industries are feeling the pinch. Cruise lines are canceling sailings. Theme parks are closing down. Even consumer tech giants are warning of possible disruptions in their supply chain. There will be plenty of investing opportunities in the companies working to cure and contain the coronavirus outbreak, but let's pick out three plays that will benefit from the homebody theme.
Roku (ROKU -9.11%), Sonos (SONO 1.31%), and Amazon.com (AMZN 3.60%) are growth stocks that will cash in as folks spend more time at home to avoid contracting the contagious malady. Let's size up why these three companies are worth adding to your portfolio.
Amazon is working on delivery drones, which would be handy if an epidemic causes labor shortages. Image source: Amazon.com.
Roku
Streaming video has been booming even at a time when it's still exciting to venture outside. Folks are choosing to stay home instead of going to the multiplex for theatrical entertainment, and when it comes to shows, a growing number of us are choosing streaming services over pricier cable and satellite packages. Just imagine what will happen to the niche if and when there are also health reasons keeping us closer to home.
Roku is the leading hub for streaming services. We will be getting some updated financials out of the company later this week, but for now we can rest on a platform that has seen its user base grow to 32.3 million active accounts -- 30% ahead of where it was a year earlier. Average revenue per user is up 30%, and this is money that is being generated by Roku as a free hub, since it generates revenue from ads and referral fees. We're spending an average of 3.4 hours a day streaming content through Roku. All of these metrics are only going to move higher the more time we spend at home.
Sonos
A logical kissing cousin to streaming video would be streaming music, but I didn't just want to choose between the top premium services. Sonos is a leading maker of wireless audio systems, and it should benefit from folks trying to ramp up the sonic quality of their in-home consumption of music and other audio entertainment.
Sonos is rolling these days, hitting new 52-week highs last week after posting blowout quarterly results. Revenue rose 13% for the holiday-containing report, and that translates to a 15% ascent on a constant currency basis. Net income also rose at a 15% clip, a pretty big deal since analysts were settling for a dip in profitability.
Tech giants have been flooding the market with cheaper smart speakers and virtual assistants, but Sonos keeps finding ways to grow in this climate after 14 consecutive fiscal years of positive top-line growth. Despite some recent customer-angering setbacks, Sonos sounds like a winner in the home escapism theme.
Amazon.com
The headlines related to Amazon and the coronavirus these days aren't flattering. The company warned sellers late last week that those sourcing products out of China could face inventory shortages, and to respond accordingly with their customers. Amazon itself recently pulled out of a mobile convention in Europe as a result of the coronavirus, and it's reportedly stocking up on its own inventory levels.
Every retailer is going to have to tackle many of these concerns, but Amazon is better situated than most because it's the world's leading online retailer. People order from home because it's convenient, and in most cases cheaper than brick-and-mortar purchases. If coronavirus fears intensify, it will be one more reason to order goods and even groceries through Amazon.
Amazon Prime memberships also come with a treasure trove of digital goodies including access to streaming entertainment. There's also something to be said about its investments in warehouse automation and being in the early stages of developing order fulfillment drones if matters intensify from here in terms of workforce disruption.
One can argue that the road map for investors in these topsy-turvy times is to follow the same path of companies that would thrive in a recession, and that fits the bill at least with Roku and Amazon. Sonos prefers to play the high end of its niche.
All three companies are posting healthy double-digit growth now, and while there will be economic hits if the coronavirus narrative gets worse, all three are better positioned than most of the other publicly traded investing options.
