COVID-19. This is the name of the disease caused by the novel coronavirus that only appeared in the public's consciousness within the last three months but has since wreaked unspeakable havoc. It has sickened hundreds of thousands, killed several thousand people, forced closures of schools and factories (disrupting supply chains), and all but shut down travel in-country and between countries.
The world has been grappling to contain this viral outbreak that seems to be growing stronger by the day. Governments have ordered businesses to shut down and for people to stay home to stop the spread of the pandemic, resulting in untold economic losses for thousands of businesses. Many companies have begun trading at valuations that would qualify them as value stocks, and the decline has been swift and unprecedented.
During any crisis, weak or heavily indebted businesses have a greater chance of going under. On the other hand, there will also be businesses that thrive and prosper despite the tough times. Here are three that actually stand to benefit from this pandemic.
Kimberly-Clark (NYSE:KMB) and its brands provide personal care, consumer tissue, and facial tissue products with a range of brands such as Kleenex, Wypall, and Scott. The company has been in business for 148 years, employs 40,000 people, and sells its products in more than 175 countries.
Due to the pandemic, the company's products should see a spike in demand as more people rush to purchase toilet paper, tissues, wet wipes, and paper towels. As more and more people hunker down in their homes to avoid exposure to the disease, they will start to hoard essentials, providing a boost in demand for Kimberly Clark's products.
The company's share price has held up remarkably well amid the carnage. Reaction to this outbreak might be the catalyst that helps to propel sales growth for the company after it launched its Global Restructuring Plan back in early 2018.
2. Zoom Video Communications
Zoom Video Communications (NASDAQ:ZM) is a remote-conferencing services company. The company provides a cloud-based platform for video and audio conferencing. It is used by businesses to connect colleagues from disparate parts of the world and offers a smooth, seamless connection to allow discussions and meetings to take place without interruption.
As many businesses have now ordered their staff to work from home to avoid being infected and as a response to government orders to self-isolate, Zoom's services should see a significant increase in demand. Before COVID-19, Zoom was already becoming popular with companies that sought a cloud-based solution to connect colleagues and co-workers based in different parts of the world. The virus outbreak has accelerated the migration to audio and video conferencing as many companies implement business continuity plans (BCP) to continue to operate during this unique situation.
Investors should note that COVID-19 might precipitate a structural change in the way companies do business, thereby pushing many of them to sign on with Zoom when they otherwise would have held back. The anticipation of this has already set the company's stock soaring this year. If it does spark structural change, it should continue to boost Zoom's business for many more years to come.
Clorox (NYSE:CLX) is a well-known manufacturer and retailer of consumer products such as bleach and other cleaning supplies. The company has around 8,700 employees worldwide and sells its cleaning products under brands such as Clorox, Pine-Sol, and Liquid Plumr.
With massive cleanups and disinfecting being ordered for premises or areas that have potentially been exposed to COVID-19, Clorox's products should be in high demand right now. Businesses ranging from offices to cruise ships are engaged in a massive cleaning effort to remove all potential trace of the virus from surfaces the general public might come in contact with. These practices will boost demand for Clorox's range of products, and this demand could linger on even after the virus is contained. It is likely for some time to come that people and businesses will adopt new cleaning practices in light of the disruption brought about by the crisis.
Shares of Clorox have risen as much as 28.9% year to date and currently trade at a price-to-earnings multiple of around 27.3 times and provide a dividend yield of 2.4%.
Picking winners among the carnage
The three stocks above show that it's possible to find gems among the carnage in the stock market. Investors should focus on businesses that are not directly impacted by the virus but instead benefit from its effects on people and companies.