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3 Stocks Immune to the Coronavirus

By Lawrence Rothman, CFA – Oct 29, 2020 at 7:38AM

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This collection of companies is likely to continue doing well.

Unfortunately, rather than fading away, COVID-19 cases have surged in the U.S. and other countries. That means the pandemic, in the absence of an effective vaccine, will likely stay with us for some time.

Certainly, staying safe is your highest priority. But you can also take steps to ensure your portfolio stays healthy, too. Here are three stocks that will provide you with the peace of mind that your finances are secure during these turbulent times.

Some masks in the middle of $100 bills spread out.

Image source: Getty Images.

1. Amazon

Amazon (AMZN -1.09%) had been doing phenomenally well before the pandemic struck. Aside from allowing customers to order just about anything online, its popular Prime service lets subscribers receive items without paying an extra shipping charge, and they get a streaming service too. Plus there are its devices like Kindle and Alexa, and its cloud-computing business, Amazon Web Services.

Amazon's sales and operating income grew to $280.5 billion and $14.5 billion last year, respectively.

With many stores closed to the public and lockdown measures in place, people turned to online shopping during the pandemic, to Amazon's great benefit. This will continue to help the company as people who were once averse to shopping online will maintain the practice now that they realize the process is quick, easy, and offers attractive prices.

Recent results attest to the company's growing prowess. Amazon's second-quarter sales grew by 40% compared to a year ago, to $88.9 billion. Its operating income nearly doubled to $5.8 billion.

2. Walmart

Walmart (WMT 0.81%), the world's largest retailer, is in a prime position to continue doing well. Staying open during the pandemic, its fiscal second-quarter (ended July 31) adjusted revenue, which excludes foreign currency translations, rose by 7.5% year over year. This drove its adjusted operating income 18.6% higher.

The better results were partly due to higher demand induced by the pandemic. But with its long-standing focus on keeping costs down and passing these savings on to customers in the form of low prices, Walmart will continue attracting customers even if the pandemic depresses economic activity.

It is also pushing its e-commerce business. This includes the company's recently launched Walmart+, its own subscription service that allows people to get items delivered to their homes, discounts on gas, and a quicker checkout at the store. While Walmart only launched the service a couple of months ago, it is off to a good start.

Low prices across a broad spectrum of merchandise combined with increased technological capabilities portend a good future for Walmart during the pandemic and beyond.

3. Costco Wholesale

Costco (COST -0.04%) is a very different retailer. It charges members to shop at its warehouses, offering attractive prices on a host of high-quality items. It is able to do this by selling many of the items in bulk.

Naturally, this has a lot of appeal for its customers. It is evident in Costco's renewal rate, which was 91% in the U.S. and Canada for the latest fiscal year that ended on Aug. 30. Costco has also been attracting new paid members, growing the total from 53.9 million to 58.1 million in the last year.

The company has fared very well during the pandemic. In its fourth quarter, same-store sales jumped by 14.1% after excluding foreign currency translations and the impact of changing gasoline prices. Its total revenue rose by better than 12%, and operating income jumped by 32%, both based on U.S. GAAP.

With a variety of merchandise, including everyday items like paper towels, Costco retains its appeal during these times.

These three companies are also poised to do well post pandemic. Each of them responds to their customers' needs by offering merchandise at attractive price points, and that makes them compelling opportunities no matter what the future may bring.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Lawrence Rothman, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Costco Wholesale and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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