The ongoing COVID-19 pandemic has acted as a catalyst for societal change. Brick-and-mortar retailers are shifting even more to e-commerce, IT companies are scrambling to develop work-at-home solutions for their employees, and biotech giants have entered a race to find a cure for the deadly virus.
Without a doubt, healthcare and tech companies have been the biggest beneficiaries of the economic restructuring so far. Today, let's look at three stocks that are on the verge of flying higher because of the coronavirus's effects and why they are solid picks for investors looking to buy and hold for the long term.
First up, we have Overstock.com (OSTK 4.72%), a top virtual retailer in the $120 billion home furnishings market. The company has more than 8 million products in its catalog and has 36% online penetration in the sector.
The pandemic has led even those retail customers who once preferred brick-and-mortar to switch en masse to shopping online from home, fueling usage of Overstock.com. In the second quarter of 2020, the company recorded 109% year-over-year growth in its revenue, to $767 million, including 149% growth in mobile sales. On top of that, Overstock's customer count tripled over last year.
Meanwhile, expenses did not increase as much as revenue -- evidence of an efficient business model. Overstock's operating expenses increased by just 62%, leading to earnings per share of $0.84.
The site saw more than 49 million monthly unique visits during Q2 2020, and thanks to search engine optimization efforts, organic search volume rose to an all-time high. Meanwhile, Overstock was able to keep shipping costs lower than those of its competitors.
With over $300 million in cash on its balance sheet, Overstock's financial position is sound as well. Year to date, its stock has increased by more than 1,400% and is on a path to further enrich its investors.
Next up on the list is a recently IPO-ed biotech that is working to make a coronavirus vaccine. In early August, CureVac (CVAC 0.51%) managed to raise over $200 million to fund future research and development expenses. Before that, the company also secured a 300-million-euro investment from the German government and support from Microsoft (MSFT 2.78%) founder Bill Gates.
CureVac's experimental messenger RNA vaccine candidate against the coronavirus is currently in phase 1 clinical trials, with results anticipated by September or October. If those are successful, the company expects a pivotal phase 2/3 study to commence in winter.
There are significant hopes for the vaccine candidate even before the clinical data is released. On Aug. 20, the company completed the first round of negotiations with the E.U. to supply the organization with 225 million doses of its experimental vaccine. Currently, the E.U. Emergency Fund has about 2 billion euros available to finance advance purchases of coronavirus vaccines.
Billions of dollars in potential revenue is a big deal for a company that recently became public. Within a week of its IPO, the company had returned 18% to shareholders. Investors interested in coronavirus vaccine stocks may wish to add CureVac to their portfolios. Be on the lookout for signs of neutralizing antibodies and T-cell levels in its vaccine candidate after the experimental vaccine's phase 1 results are published.
3. 1Life Healthcare
Since the pandemic began, there has been a surge in demand for healthcare services such as those provided by 1Life Healthcare (ONEM 0.58%). The company delivers primary care services, offering both in-person visits at its clinics and virtual consultation. 1Life Healthcare also offers 24/7, on-demand online consultation to many of its members.
In Q2 2020, the company's membership reached 475,000, a 25% yearly increase. At the same time, 1Life Healthcare's revenue grew by 18% compared to the first quarter of 2020, to $78 million. During the quarter, 1Life also posted a decent 31% gross margin.
1Life Healthcare's momentum shows no signs of stopping; the company is expanding its capacity to provide outpatient services, including COVID-19 treatments and vaccines when they receive regulatory approval. Right now, management is projecting a particularly strong third quarter, with revenue increasing to $84 million to $89 million and a narrowing operating loss. By the end of the year, the company expects its total membership to grow to 505,000 to 515,000.
As of June 30, the company's financial situation was ripe for expansion, with $664.4 million in cash and investments to offset $316.3 million in convertible note liabilities. Year to date, shares have gained nearly 35%, making it a reliable choice for investors interested in the healthcare sector.