Companies around the world are changing how they're doing business right now. While many businesses have been negatively impacted by the coronavirus pandemic, there are quite a few companies managing extremely well during these trying times.
In a normal market, it might seem too good to be true for a stock to be both a safe investment and a growth opportunity. However, these times are far from normal, and investors can find plenty of stocks that fit both of these criteria. Even after recovering a little from March's lows, the S&P 500 is still down 11% since the start of the year. Over 30 million unemployment claims have been filed in the U.S. since March, with economists predicting an overall unemployment rate of 16.1% for April. The last time unemployment figures were that bad was during the Great Depression in the 1930s.
If you're looking for some investment ideas right now, here are four companies that have become, or still are, safe investments in this market while having significant growth potential in the near future.
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1. Gilead Sciences
If you're following the news, you have likely heard about Gilead Sciences (GILD 2.65%) by now. The healthcare company has quickly earned a reputation for being a hot coronavirus stock thanks to its former Ebola drug candidate, remdesivir, that's being repurposed as a COVID-19 treatment.
Remdesivir is one of the few antiviral treatments that have shown results in reducing potentially life-threatening respiratory symptoms in COVID-19 patients. Currently, the drug is undergoing four different clinical trials, including one phase 2 trial and two phase 3 trials in the U.S., alongside a separate clinical trial with the French health organization Inserm. Preliminary results from two earlier phase 3 trials from China were announced in April. While those results weren't all that impressive, a Gilead spokesperson said that the studies stopped too soon due to a lack of patients, and as such, aren't statistically meaningful enough to come to a conclusion. On May 1, the U.S. Food and Drug Administration (FDA) gave remdesivir an emergency use authorization so it can be used to treat 'severe' COVID-19 patients.
While it's easy to get caught up in the remdesivir excitement, investors shouldn't forget that Gilead's core business has also been doing very well. Gilead's HIV business, which includes Truvada and Descovy (the only two HIV prevention pills approved by the FDA), has seen product sales come in at $16.4 billion for 2019. To put it into perspective, Gilead's HIV business accounts for over two-thirds of the company's total product revenue, which in 2019 came in at around $22.1 billion. Additionally, HIV sales have grown by a double-digit margin from last year as well, increasing by 12% from 2018 to 2019.
To top it off, Gilead boasts a 3.4% dividend yield. While there are other pharmaceutical companies with higher dividends, Gilead's yield is a nice bonus on top of everything else that's going for it.
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2. Barrick Gold
While owning gold is traditionally seen as a good place to store your wealth in trying economic times, owning shares of gold mining stocks is an excellent alternative.
One of the world's leading gold miners is Barrick Gold (GOLD 3.72%). As with most other gold miners, higher gold prices are boosting Barrick's profit margins. With the precious metal now trading above $1,700 per ounce -- levels not seen since 2013 -- now is the perfect time for gold miners to report record revenues. If anything, prices could continue to soar in the months and years to come as the aftereffects of the pandemic linger.
While gold has some industrial applications, as well as being a major component in jewelry, a significant chunk of gold demand comes from investors looking to buy the metal as a way to protect their wealth during economic downturns. As such, gold prices tend to be inversely correlated to the state of the broader economy. Many Wall Street analysts, including Bank of America's Lukman Otunuga, have predicted that gold prices could soar to as high as $3,000 per ounce in light of this pandemic.
Although analysts have made bullish predictions about gold before that haven't panned out, even if prices stay around this level, gold miners will be quite happy. Barrick's all-in sustaining costs (AISC) -- a crucial metric used in the gold industry that determines the cost of producing an ounce of gold -- was $923 in Q4 2019. This is already a solid improvement from the previous quarter's $984 AISC, although the company still has some room for improvement, especially compared to the $806 AISC average reported for the full-year of 2018. However, in the grand scheme of things, if gold prices remain near $1,700 per ounce, that would leave a very nice profit margin for Barrick considering its AISC.
Barrick has been paying off its debt at an impressive rate. As of Q4 2019, the company's debt is $2.2 billion, a 47% decrease from Q4 2018's debt levels. This debt level is the company's lowest since 2007.
Perhaps the only problem for Barrick is its mediocre dividend yield, coming in at just 1.1%. But gold miners, in general, aren't known for their impressive dividends, so I wouldn't consider it a detriment to a company that otherwise has significant growth prospects.
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3. Teladoc
Before this pandemic, Teladoc Health (TDOC 0.97%) was considered an interesting albeit niche company in the healthcare market. However, with telehealth demand skyrocketing due to COVID-19, Teladoc is in the best position it's ever seen.
As the leading telehealth provider on the market, Teladoc has reported a drastic increase in new visits and customers over the past couple of months. The company recently said its daily appointments doubled to 20,000 per day. Industry analysts predicted that the total number of telehealth appointments conducted around the world could hit a record 1 billion by the end of the year.
The big caveat is that Teladoc is not profitable. While this isn't uncommon for tech-related companies, this new influx of patients could very well be what tips the company over into finally being in the black. Looking at Teladoc's Q1 2020 financial results it reported April 29, the company reported total revenues of $180.1 million, a 41% growth rate from the first quarter of 2019. Net losses for the quarter came in at $29.6 million, which is relatively unchanged from the $30.2 million loss seen in the same quarter last year.
While Teladoc would have been an interesting buy for a high-growth, high-reward investor a year ago, this pandemic has opened the door for further growth possibilities that no one would have guessed last year. As such, it's not surprising that Teladoc has more than doubled since the start of 2020, with more growth still likely to come on the horizon.
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4. Netflix
Now that people are forced to stay at home and find new ways to entertain themselves, it should come to no-one's surprise that Netflix (NFLX +0.79%) has enjoyed a surge in customers.
Just recently, the company reported an impressive 15.8 million increase in users, more than double what it had originally predicted earlier this year. While some growth was expected during the quarantine, this increase was well above what many anticipated.
Other financial metrics, like Netflix's operating income, has more than doubled on a year-over-year basis, coming in at $958 million in Q1 2020 compared to Q1 2019's $459 million. Additionally, revenue growth is still quite strong, with this recent quarter seeing a 27.6% increase in revenue over last year.
Although Netflix said this growth is likely a one-time phenomenon and that shareholders shouldn't expect similar quarterly increases in new subscriptions going forward, it's still good news for the company nonetheless. Management also said this pandemic won't impact 2020's content production, with most of its lineup for the year having already been finished. Other projects, such as Netflix's nearly 200 animation projects in post-production, are still moving ahead as key animators work remotely.
With movie theaters, parks, and other entertainment venues likely to be closed for the rest of this year, people are looking for other ways to spend their time. Whether folks are having to work from home, are unemployed, or are simply bored, demand for Netflix will undoubtedly stay strong as this pandemic rages on.
