Millions of Americans live in areas that now have mandatory lockdowns. The hope is that requiring people to stay at home for all nonessential outings will help slow the spread of the coronavirus and minimize the number of COVID-19 cases.
If you're one of those on lockdown, it's not exactly a boatload of fun. But you could make a boatload of money over the long run while you're stuck at home by investing in stocks with tremendous growth potential that are now trading at a discount. Here are three great stocks you can buy to make your coronavirus lockdown a profitable one.
Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) stock is down more than 30% from its all-time high set earlier this year. But the coronavirus pandemic is both a hindrance and a help for Google's parent company.
Most of Alphabet's money is made from advertising on its various apps and websites. If businesses cut back on their advertising budgets, which could very well happen with many companies effectively out of commission as people stay home, that will hurt Alphabet's revenue. On the other hand, all those people on lockdown or merely practicing social distancing are more likely to use Google search, YouTube, and other Alphabet-owned apps, boosting the company's business.
Alphabet is in a rock-solid position to weather any temporary difficulties. Its cash stockpile stood at nearly $120 billion at the end of 2019. The company's earnings could be cut in half (which almost certainly won't happen), and Alphabet would still make higher profits than it did just five years ago.
More importantly, Alphabet is likely to generate tremendous gains in the future. Its cloud business continues to grow. Google and YouTube remain the hands-down leaders in search and should command higher advertising rates in the future. Waymo recently raised $2.25 billion in outside cash and is set to be a major player in the self-driving car market that's likely to explode within the next few years. Buying Alphabet at a discount right now seems like a no-brainer, in my view.
2. The Trade Desk
Shares of The Trade Desk (NASDAQ:TTD) have been hammered even harder by the coronavirus market crash, plunging more than 40% over the last few weeks. As is the case with Alphabet, though, the COVID-19 outbreak should bring both positives and negatives for the company.
The Trade Desk's software platform enables advertising agencies to buy digital ads programmatically, eliminating the back-and-forth negotiations used in the past. If advertisers reduce their ad buys, it will mean less revenue for The Trade Desk.
However, connected TV (CTV) is the biggest growth driver for The Trade Desk. CEO Jeff Green predicted in the company's Q4 conference call last month that we're "in the middle of a once-in-a-lifetime consumer shift to connected devices and streaming content." That consumer shift is being turbocharged by the coronavirus crisis as people are cooped up in their homes.
I think Green was, literally speaking, wrong about one thing, though. We're not in the middle of this shift to CTV; my view is that we're only in the early stages of it. CTV will become a lot bigger over the next few years. So will programmatic advertising buying and selling. The Trade Desk is poised to benefit from both trends.
3. Vertex Pharmaceuticals
Vertex Pharmaceuticals (NASDAQ:VRTX) stock's drop of 18% makes it one of the better-performing stocks on the market. I'd argue, though, that even that relatively small decline is way overdone.
Like many biotech stocks, Vertex shouldn't be impacted by the coronavirus pandemic one way or the other. The company sells cystic fibrosis (CF) drugs -- the only ones on the market that address the underlying cause of the genetic disease. How many patients with CF are going to quit taking their medication because of the viral outbreak? Not many, if any.
I look for Vertex's revenue to soar this year despite the tumultuous times we're living in. First of all, the company secured key reimbursement deals for its CF drugs in several countries in recent months that will open up more access. Second, Vertex should soon win European approval for its newest CF drug, Trikafta, which will almost certainly become its biggest-selling drug thus far.
Over the longer term, Vertex could very well become a big player in several other therapeutic categories. It's conducting clinical tests for experimental drugs that target rare genetic diseases that "look and smell like CF," including alpha-1 antitrypsin deficiency. The biotech could also have a game-changer in the works with a potential cure for type 1 diabetes thanks to its acquisition last year of Semma Therapeutics. I think the only lockdown when it comes to Vertex should be growing profits.