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These 3 Stocks Have Crushed the Coronavirus

By Dan Caplinger - Mar 18, 2020 at 7:29AM

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Forget big declines -- these three defensive plays have earned investors big gains in the past month.

The COVID-19 pandemic has thrown U.S. stocks into a bear market, ending a decade-long run higher since the end of the financial crisis in 2009. Many favorite stocks among investors have taken hard hits, and the S&P 500 has fallen more than 25% in just the past month.

However, even in a down market, there are usually companies that are able to defy the bearishness and produce positive returns. Below, we'll look more closely at how grocery store chain Kroger (KR 2.02%), chicken-noodle specialist Campbell Soup (CPB -0.25%), and cleaning products giant Clorox (CLX -0.66%) have delivered the goods to investors who were prescient enough to see their value a month ago.

Kroger: Up 15%

Kroger is a natural beneficiary of the coronavirus outbreak, because shoppers are loading up on essentials in preparation for closing schools, potential quarantine orders, and even shelter-in-place restrictions in some urban areas. Kroger in particular has been conscious of its customers' needs, doing its best not to limit its hours and bringing on new employees to deal with high levels of demand while keeping its stores as clean and safe as possible.

Kroger store as seen from outside.

Image source: Kroger.

Yet Kroger sees itself growing even after the pandemic is history. The grocery store chain has invested heavily in its infrastructure, with plans to build fulfillment centers and automated warehouses to help make it better able to handle rising demand for grocery delivery. A vote of confidence from Warren Buffett in the form of a significant share purchase also helped boost investor sentiment around Kroger's stock. Kroger faces strong competition, but it's working hard to shore up its business and make its services more attractive to its customer base.

Campbell Soup: Up 10%

Nothing makes a sick person feel better than a can of soup, and Campbell is in prime position to benefit from an uptick in soup consumption. With coronavirus-fearing grocery shoppers loading up on non-perishable items, soup cans have been flying off the shelves, and that should help boost Campbell's short-term results.

Campbell's share-price gains have also come from smart corporate capital management. The company decided to sell off underperforming business units in order to concentrate on its core operations, but in doing so, it avoided what many of its peers have done lately: buying back shares of stock. Instead, Campbell paid off some of its debt from past acquisitions. That's proven to be huge, as more debt-laden companies now face fears that they won't be able to maintain their bond obligations in a coronavirus-spurred cash crunch. Campbell's discipline is now being rewarded, and the soup giant is in a more flexible position to capitalize on opportunities as they arise.

Clorox: Up 20%

Clorox's value in fighting the COVID-19 pandemic is obvious. Bleach, sanitizer, hand wipes, and other cleaning products have been hard for retailers to keep in stock as shoppers seek to keep their homes and surroundings free of the virus and potential sources of infection.

Clorox isn't just about cleanliness, though. The company produces Hidden Valley salad dressings, the Glad line of trash bags, and Kingsford charcoal. It's also the exclusive licensee of Brita water filtration systems in North America. Some of those businesses stand to do well under tough conditions, but others could struggle. Investors will have to wait to see whether large gains in its cleaning segment are enough to spur overall growth companywide.

Invest in great stocks

Even as the coronavirus crisis goes on, long-term investors should keep their eyes on companies that have great prospects not just now but in the years to come. For businesses that have a lot going for them in the long run, any bump from pandemic-driven sales is just a small part of their full potential.

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Stocks Mentioned

The Kroger Co. Stock Quote
The Kroger Co.
KR
$48.36 (2.02%) $0.96
The Clorox Company Stock Quote
The Clorox Company
CLX
$145.70 (-0.66%) $0.96
Campbell Soup Company Stock Quote
Campbell Soup Company
CPB
$48.24 (-0.25%) $0.12

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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