September's rocky stock market performance and the ongoing coronavirus pandemic are reasons why investors remain a little nervous these days. But that doesn't mean it's best to say out of the market. Instead, now is the perfect time to evaluate the components of your portfolio to be sure it's diversified and corresponds to your investment style.
If you have $5,000 to spend on a few additions, consider companies that have successfully managed the crisis so far and have solid prospects moving forward. Below, I'll talk about a big healthcare player, a retailer that knows how to leverage online and in-store capabilities, and a fast-food chain that's recovering quickly.
Image source: Getty Images.
Bristol Myers Squibb
The coronavirus outbreak weighed on Bristol Myers Squibb (BMY 0.60%) as patients canceled their medical visits and other treatments were delayed. But here's the good news: Bristol Myers Squibb says it expects "minimal impact" from the pandemic on operations "from the fourth quarter of 2020 onwards."
Over the long term, I like this pharmaceutical company because you can count on it for blockbuster drugs that will keep revenue climbing. Bristol Myers Squibb boasts six blockbusters, including multiple myeloma drug Revlimid, which it gained through the acquisition of Celgene last year. In the first half of this year, Revlimid sales rose 10% year over year to $5.8 billion.
Though generic competition lies ahead for Revlimid, a recent legal settlement removes the immediate threat. The agreement allows sales of a limited quantity of generic product from Dr. Reddy's Laboratories in the U.S. after March 2022 -- if the generic wins regulatory approval. That means Bristol Myers Squibb can minimize the loss of sales due to generic competition in the near term.
As for newer products, Bristol Myers Squibb may soon own a potential game changer through its pending acquisition of MyoKardia. The deal brings Bristol Myers Squibb Mavacamten, an investigational treatment for obstructive hypertrophic cardiomyopathy. Today, treatment options are limited for this chronic heart disease with high morbidity. Mavacamten met all primary and secondary endpoints in a pivotal trial, and Bristol Myers Squibb plans to submit it to the U.S. Food and Drug Administration for consideration in the first quarter of 2021.
Target
Target (TGT 3.31%) was among the strongest retailers during the worst of the coronavirus pandemic. Sure, we can say it's partially due to the fact that Target sells what people were most looking for at the time: essentials. But there's more to it than that. Target used its physical stores, its e-commerce platform, and the work it's done in recent years on fulfillment features such as order pick-up to become a go-to retailer during the crisis.
As a result, it posted comparable sales growth of 24.3% -- its strongest ever -- in the second quarter. Digital sales soared 195% against the prior-year quarter, and in-store order pick up climbed more than 60%. The company also said it gained 10 million new digital customers in the first half of the year. And repeat purchases from digital customers within a 90-day period reached their highest level ever.
But what happens beyond the coronavirus pandemic? Well, during early 2020, digital gains were likely exceptional as people respected stay-at-home orders. And total sales gains -- in-store and digital -- might have been unusually strong as consumers stockpiled essentials.
Still, Target's overall annual sales growth and digital growth were already strong prior to the health crisis. In fact, 2019 marked the sixth straight year of digital sales increases of more than 25%. It's likely that growth won't continue at peak coronavirus crisis levels. But Target's track record and the gains made during the crisis give investors reason to believe in the company's future revenue prospects.
McDonald's
McDonald's (MCD 0.14%) saw sales drop at the height of the coronavirus outbreak. The temporary closures of some restaurants and stay-at-home orders meant fewer customers in the U.S. and internationally. In the second quarter, global comparable sales fell 23.9%. And "comps" in the U.S. market -- where it has most of its restaurants -- slid 8.7%.
But things are looking bright for the fast-food giant. In a recent update prior to the third-quarter earnings report in November, McDonald's relayed that third-quarter comparable sales in the U.S. rose 4.6%. Sales improved internationally during the quarter, resulting in just a 2.2% decline in global comparable sales.
McDonald's' alliance with rapper Travis Scott was a driver of gains in the last part of the quarter. Due to demand from fans, some locations ran out of the ingredients to make the rapper's favorite meal, according to media reports. Its latest such promotion is the favorite meal of Colombian singer J Balvin.
In the long term, these sorts of marketing opportunities are likely to keep customers coming back. And today, McDonald's can combine them with its strength in drive-thru and development of digital ordering to attract customers who are socially distancing. For instance, McDonald's is offering a free McFlurry to those who order the J Balvin meal through the McDonald's app.
Moreover, when you invest in McDonald's you're sure to benefit from dividend growth. The company has lifted its annual dividend for 44 consecutive years -- since the first year it started the payouts to investors. McDonald's just raised its quarterly dividend 3% from the previous quarter to $1.29 a share.
