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Want Safe Stocks? Buy These 3 During the Coronavirus Pandemic

By Daniel B. Kline - Updated Apr 14, 2020 at 6:56AM

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Not all companies are being hit equally hard by shelter-at-home orders.

Where can you invest your money where it won't be at risk? No stock, of course, can ever be completely absolved of risk, but some are safer than others.

During the coronavirus pandemic, it has become clear that a few companies remain essential no matter what's happening in the world. Buying shares of these three strong brands does not guarantee big gains -- there are no guarantees when buying shares of any company -- but all three of these companies are thriving now.

If you're looking for safety in turbulent times, you may want to look to Costco (COST 0.83%), Amazon (AMZN 0.14%), and Walmart (WMT -0.32%). All three brands remain open, and have been helping people make it through these dark days.

A car filled with groceries.

People need groceries as much as they ever have. Image source: Getty Images.

A warehouse winner

Costco added $1.5 billion in sales in March. Sales are not actually the key metric for the company -- membership is a much better gauge of success. It stands to reason, however, that if the warehouse club added that much in sales, then it likely added new members.

It's obvious why people flock to the chain in a pandemic. It sells bulk quantities of essentials at low prices in very large stores that lend themselves to social distancing. But even after the coronavirus passes, Costco's low prices will still be appealing. And when that happens people will also be looking for things to do -- and, in many cases, they will want cheap entertainment.

Pre-pandemic Costco offered entertainment, and post-pandemic Costco will do the same. It's fun to shop not knowing exactly what will be there. You don't have to buy anything -- sometimes just looking is enough -- though it's hard to buy nothing at all.

Costco has strengthened its relationship with its members, and has likely welcomed many new ones in. That should benefit the company for a very long time.

The digital leader

Amazon has had to make some adjustments to deal with this unique period. It had to prioritize some items over others, implement ordering limits, and explain to its customers why some things were simply not available. It also had to prioritize certain in-demand items for hospitals and manage the expectations of a customer base used to getting what it wanted when it wanted it.

In addition, Amazon had to handle unprecedented demand for its same-day grocery delivery service and for delivery from Whole Foods. It has done all of that, on the fly, while making major operating changes to protect its workers.

This has likely driven an increase in sales. More importantly, more customers have almost certainly joined Prime, and even more have likely given Amazon their credit card info.

Amazon has helped millions of Americans stay supplied. It has also delivered home office furniture, computers, snacks, board games, puzzles, and other small comforts to help us all get through this.

The omnichannel giant

Walmart has spent billions building out an omnichannel model -- one where consumers can shop in stores, online, or a combination of the two, for delivery or pickup in a number of ways. This pandemic has put many of the chain's investments to the test.

The demand for grocery delivery and curbside pickup has spiked for obvious reasons, and Walmart has delivered. While many retailers remain closed, Walmart has leaned heavily on its supply chain partners to keep shelves stocked so customers can meet their basic needs.

Coronavirus has shown a lot of people that Walmart isn't just a traditional brick-and-mortar chain. It's also a progressive company invested in back-end technology that has evolved its shopping experience.

A port in the storm

All three of these retail chains will not only survive the coronavirus pandemic, they will emerge from it with more customers. These are safe stocks that also offer upside. They may not be the latest start-ups or candidates for explosive growth, but they should grow and their share prices should increase over the long-term.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel B. Kline has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Wal-Mart Stores, Inc. Stock Quote
Wal-Mart Stores, Inc.
$139.07 (-0.32%) $0.45, Inc. Stock Quote, Inc.
$142.30 (0.14%) $0.20
Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$560.96 (0.83%) $4.64

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