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Another Deadly Virus Could Be on the Way. Should You Change How You're Investing?

By Keith Speights – Jul 5, 2020 at 6:41AM

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The good news: Nothing to worry about yet. The bad news: The good news includes the word "yet".

Murphy's law just might be striking again. "Anything that can go wrong will go wrong" seems to be 100% true in 2020.

COVID-19 cases continue to rise in many U.S. states. Concerns are rising that the coronavirus outbreak could intensify in the fall at the same time the seasonal flu rears its ugly head. And now U.S. health officials are closely monitoring another virus that scientists fear could become another pandemic.

Investors saw the stock market plunge as the COVID-19 pandemic first hit only to bounce back nicely. With the potential for another deadly virus on the way, should you change how you're investing sooner rather than later?

Man looking at computer images of viruses with a city in the background

Image source: Getty Images.

Why experts are nervous

Last week, a team of scientists published their findings about a newly discovered influenza strain in a major scientific journal, Proceedings of the National Academy of Sciences. Their report stated that the new strain is a variation of the H1N1 swine flu that caused a global pandemic in 2009. That outbreak infected nearly 61 million Americans and over 700 million worldwide.

The H1N1 flu also caused one of the worst pandemics in modern history in 1918. Around 500 million people across the world were infected by the virus, with at least 50 million deaths. The 1918 pandemic was so severe that it caused the average life expectancy in the U.S. to fall by close to 12 years for men and women.

Like the novel coronavirus that causes COVID-19, the new H1N1 flu strain appears to have originated in China. Researchers state that is has "all the essential hallmarks of a candidate pandemic virus." 

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told a U.S. Senate committee last Tuesday that the new virus strain isn't "an immediate threat" but added that "it's something we need to keep our eye on, just the way we did in 2009 with the emergence of the swine flu."

So far, the virus doesn't appear to have infected humans. However, scientists have observed that the rate of exposure to the new virus strain has increased among younger workers in the Chinese swine industry, raising concerns that it could spread from pigs to humans.

What investors shouldn't do

There are two things that investors absolutely shouldn't do with respect to the news about a new virus with the potential to become another pandemic.

First, you shouldn't panic. In this case, the new H1N1 flu strain apparently hasn't infected humans so far. Hopefully, it won't infect humans at all. You can bet that scientists in the U.S., China, and other countries are watching the virus very closely. If there's even a hint of another outbreak, the experience with COVID-19 should lead to a swift response.

Second, you shouldn't ignore the potential threat. A real possibility exists that a second pandemic could follow on the heels of the current COVID-19 pandemic. Like it or not, the risk of bacterial or viral outbreaks won't go away -- even if the new H1N1 flu strain doesn't become a problem.

What you should do

So are there any proactive steps that investors can take? I think so.

Perhaps the best thing to do is to adjust your investment portfolio to reflect the heightened attention to biological threats. There are several ways that you can do this.

One is to buy stocks of companies on the front line of developing antiviral therapies. Eli Lilly (LLY -0.19%) is a good example. The drugmaker established key partnerships with smaller biotechs to develop antibody therapies to fight COVID-19. It kicked off clinical studies of drugs in its product lineup and pipeline that showed promise in treating the disease.

Granted, the new H1N1 flu strain is very different from the novel coronavirus. However, I think that Lilly's rapid response to the COVID-19 outbreak highlights the company's nimbleness. If a new viral threat emerges, the big pharma stock could jump if Lilly reacts as quickly as it did with COVID-19. And if not, Lilly's strength in diabetes, immunology, and oncology should make it a long-term winner regardless.

Hand holding marker with checks in three checkboxes

Image source: Getty Images.

Another potential step is to invest in companies that experienced strong sales growth during the COVID-19 pandemic. I'd put Dollar General (DG -0.18%) near the top of the list. The discount retailer even outperformed industry giant Walmart on several key fronts in the first quarter of 2020. 

Dollar General stocks the kinds of products that consumers need in the face of a pandemic. Its stores are conveniently located for many Americans. The stock also is poised to perform well during both good and bad economies.

Even a hint of a second pandemic would likely add fuel to the fire for the fast-growing adoption of telehealth. That would almost certainly benefit Teladoc Health (TDOC 2.55%), the leader in providing telehealth services. Teladoc stock has skyrocketed nearly 150% so far this year and would likely gain even more momentum if worries increased about another viral outbreak.

I think the horse is out of the barn with telehealth even if healthcare concerns subside, though. Teladoc has only scratched the surface of its overall market opportunity no matter what happens next.

Maybe anything that can go wrong will go wrong. But my view is that investors can't go wrong buying Lilly, Dollar General, and Teladoc Health.

Keith Speights owns shares of Dollar General and Teladoc Health. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.

Stocks Mentioned

Eli Lilly And Stock Quote
Eli Lilly And
$371.25 (-0.19%) $0.72
Dollar General Stock Quote
Dollar General
$248.53 (-0.18%) $0.44
Teladoc Health Stock Quote
Teladoc Health
$26.56 (2.55%) $0.66
Walmart Stock Quote
$148.32 (-0.15%) $0.23

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

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