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My Top Stocks to Buy Before Businesses Start Reopening

By Daniel B. Kline – Apr 18, 2020 at 9:38AM

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Some companies will bounce back to normal faster than others.

America will reopen. It may not happen right away and it's going to happen in stages but eventually, businesses will open their doors, restaurants will open their dining rooms, and normalcy will come back.

Before this happens, it's possible to buy a number of stocks at a discount. These are companies hurt by the coronavirus pandemic that will someday return to strength.

These companies may not come back quickly, but if you're a long-term investor -- someone who is willing to buy good companies and hold them for years -- then you can still get some bargains. (All of these companies are trading below their 52-week highs).

The exterior of a McDonald's.

McDonald's has remained open for business. Image source: McDonald's.

What stocks should I buy?

McDonald's (MCD 0.25%): The fast-food chain has maintained nearly 80% of its sales using a drive-through, delivery, and pickup model. It offers consumers a strong value and will be well-positioned to recover as customers look to eat out affordably whole continuing to order for delivery.

Starbucks (SBUX 1.82%): The coffee giant will actually make money despite the coronavirus. It has revised its earnings projections down but making any profit in this market is impressive. Once it can fully reopen, the chain will pick up sales as people look for affordable indulgences that mark a return to normal even in tough economic times.

Costco (COST -1.20%): The warehouse club has actually traded pretty close to its 52-week highs. Despite that, it's still a smart purchase as Costco has shown the strength of its business model. It has likely added members and it saw sales increase by $1.5 billion in March. New and existing members will continue shopping with the chain because it offers low prices and (under normal circumstances) a little bit of entertainment.

Target (TGT -0.35%): Another retailer that has done well during the coronavirus pandemic, Target should come out of the situation strong. People will need clothes as they return to work and there should be pent up demands for lots of items -- and many of them will be looking for value. That should help Target get back on track (if it ever fell off track) when normal operations return.

Best Buy (BBY 0.74%): The electronics chain has maintained 70% of its sales using online ordering and curbside pickup. It may take some time to fully recover but there will be pent up demand for some of its services -- things like computer repair, TV mounting, and WiFi network troubleshooting.

Chipotle (CMG -1.07%): The Mexican chain remains open for delivery and pickup. Like Starbucks, it offers an affordable indulgence for people looking to treat themselves once this situation ends.

Be patient, be careful

Nobody really knows what recovery looks like as we have never been through a situation like this. All of these stocks are buys but the economy may be depressed for an extended period and people may not have much, or any, discretionary income even when the world returns to normal.

All of the companies above are built for the long-term. They will likely recover and exceed their past highs, but that may take a long time. Don't invest because you're looking to make a quick score. Buy shares of strong companies and be prepared to hold them for a long time.

Daniel B. Kline owns shares of Starbucks. The Motley Fool owns shares of and recommends Chipotle Mexican Grill and Starbucks. The Motley Fool recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Costco Wholesale Stock Quote
Costco Wholesale
COST
$480.32 (-1.20%) $-5.81
McDonald's Stock Quote
McDonald's
MCD
$239.09 (0.25%) $0.59
Chipotle Mexican Grill Stock Quote
Chipotle Mexican Grill
CMG
$1,519.78 (-1.07%) $-16.37
Target Stock Quote
Target
TGT
$156.41 (-0.35%) $0.55
Best Buy Stock Quote
Best Buy
BBY
$67.90 (0.74%) $0.50
Starbucks Stock Quote
Starbucks
SBUX
$90.12 (1.82%) $1.61

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

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