In the wake of a market shattered by the coronavirus contagion, it's tough to start looking for new investment opportunities. At best, the economic echoes of mothballed businesses will ring for months, and at worst, we have no idea when COVID-19 will be nothing more than a memory. Uncertainty undermines the market's perceived value about as much as poor earnings reports can.
This is, however, the time to be looking for bargains rather than looking for an escape from stocks. As Warren Buffett has repeatedly explained, be fearful when others are greedy, and greedy when others are fearful.
To that end, investors have proverbially thrown the baby out with the bathwater, dumping consumer staples names almost as indiscriminately as they've shed industrial names, even though staples are proven survivors. In fact, they may even benefit from prolonged worries that will keep people holed up in their homes for the foreseeable future. In the meantime, a bunch of these companies have already benefited from hysterical buying of consumables like toilet paper and cleaning supplies.
Here are three such names to scoop up before everyone else realizes their collective mistake.
1. Clean up with Clorox
It's an obvious pick in the midst of coronavirus-mania, almost to the point of being cliched. Nevertheless, Clorox (NYSE:CLX) was a good pick before the COVID-19 outbreak, and it will remain a strong holding after the coronavirus outbreak is curbed. That makes the stumble the stock's suffered just in the past few days a buying opportunity.
Yes, like so many other organizations, Clorox has been disrupted by efforts to stop the spread of COVID-19. Not only does it do business and operate plants in China, but it also sells products to other companies and consumers that rely on trade between many countries. Doing this business has become more difficult in just the past few weeks.
If any one company is the top beneficiary of the disinfecting effort though, it's Clorox. Even before the CDC gave instructions on how to combat COVID-19 using household bleach and the EPA suggested several Clorox brand products would likely be effective sanitizing formulas, consumers were buying its cleaning products in droves. That panic buying will end, but after such a scare, people's cleaning habits may have been forever changed.
2. Tyson Foods makes home cooking easy
Oddly enough, Tyson Foods (NYSE:TSN) has suffered far more than most of its food peers this year.
Already weakening early this year as a result of continued cost challenges most food companies are facing, Tyson was also an early victim of the coronavirus when it was still limited to China. The company announced in mid-February (before concern turned into a panic) that shipments of chicken to China had slowed dramatically over the course of just a few weeks as imports were backed up.
End result? A 43% sell-off from January's peak price for the stock. Investors feared those deliveries would slow even further before resuming their previous pace.
Those pessimistic investors may have greatly overshot their target, though. Not only is China finally curbing the growth of COVID-19 with fewer and fewer new cases being reported, but Tyson is actually one of the few meat names ready and able to meet China's protein needs (once normal consumerism resumes there). China also suffered the brunt of the so-called "pig Ebola" crisis late last year, which boasts a mortality rate of nearly 100% for hogs that contract it. The disease has wiped out about one-fourth of the world's pigs, but Tyson's hogs here remain well-protected.
It doesn't hurt that Tyson Foods supplies pork and chicken in a frozen, packaged form either. Consumers will eventually start to dine out again but could be slow to start doing so. They'll likely prefer to eat at home for awhile longer, cooking frozen foods to make their meals.
3. Walmart caters to coronavirus concerns
Finally, add retailer Walmart (NYSE:WMT) to your list of consumer staples names to step into after the recent marketwide rout. Walmart has fared a bit better, but its stock is still down from the onset of the coronavirus craziness.
It's another all-too-obvious name. Consumers wary of stepping into a restaurant still need food, which Walmart sells. Although self-quarantining from nervous, healthy people will eventually abate, those consumers will need supplies like soap and toilet paper in the meantime. Walmart sells those too. And, like Clorox, the world's biggest retailer was already doing well before the coronavirus became the only thing anybody wanted to talk about. It will also still be the go-to venue to buy batteries, bath towels, beauty supplies, and more once COVID-19 is in the rearview mirror. Capitalists and consumers will always find a way to connect, sooner or later.
The clincher: Walmart was already impressive on the e-commerce front, further boosted by its curbside pickup initiative. Online sales were up 35% year over year last quarter thanks to curbside pickup -- which has been a hit with shoppers -- but it's still only available at about 3,000 of its 4,700 U.S. locations. New interest in avoiding crowds could drive fresh demand for the proven service, which consumers love once they try. That leaves them likely to try it again.