When you think of stocks that should benefit most from a COVID-19 vaccine, what comes to mind? Healthcare? Airlines? Cruise lines?
While these all stand to be winners as a vaccine becomes widely available, there's another group that could win big. In this Fool Live video clip from our Nov. 9 "Industry Focus" show, host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss a sector that could do extremely well as the economy returns to normal.
Jason Moser: But let's go ahead and jump into this discussion because clearly the big news of the day, the drugmakers Pfizer and BioNTech have indicated that their COVID-19 vaccine is more than 90% effective. Now, we don't want to get ahead of ourselves here and this could mean a lot of different things, but it really does seem at the very core, it marks a major step in the right direction in this battle against COVID-19 and clearly, Wall Street is loving the news. Stocks across the board or are feeling pretty good today, with the exception of the stay at home stocks, of course we will get to those. But Matt, one area of the market where we are seeing a big reaction, it's something we talk a lot about here on the show, it's in Real Estate investment Trust. Those REITs that we talk a lot about. Talk to us a little bit about why you think the REIT segment of the market is receiving this news so positively.
Matt Frankel: You got to remember there are many different subsectors of REITs that have kind of different dynamics here. There are some stay at home REITs like think of the data center REIT and things like that. They are not doing that great today. But most REITs on commercial properties that depend on people being able and willing to go places.
Jason Moser: Yeah.
Matt Frankel: When you look at some of these numbers and these were at 12:30, so they might have changed by the time you are hearing this. Just some of the favorite ones we talked about on here, empire state, the company that owns the empire state building is up 30% today. Tanger Outlets (NYSE:SKT) that we talked about they're up 23% today. Simon Property Group (NYSE:SPG), the biggest mall REIT is up 26%. EPR Properties (NYSE:EPR), which owns about half of its portfolios movie theaters, is up 41% today alone.
Jason Moser: That is the one I wanted to talk with you a little bit more about. I'll let you finish with the EPR, that was the one that struck me standing out.
Matt Frankel: Yeah, and Welltower (NYSE:WELL), which is a healthcare REIT that owns a lot of senior housing, which for obvious reasons that hasn't been doing well, is up 17% today. Last one, a lot of people were worried that people are going to leave cities if this pandemic keeps going. AvalonBay Communities (NYSE:AVB), the big apartment REIT that owns a lot of urban apartment buildings is up 12% today. Across-the-board with all the reopening REITs are doing phenomenally well today.
Jason Moser: Yeah. You're talking about people leaving the cities. You're talking about the bigger picture idea that we're going more toward a remote workforce or at least companies adopting the mindset that their employees can work offsite, perhaps permanently in many cases, I mean, that's going to maybe reduce the demand for living in these big cities. You talk about moving out toward the suburbs and it sounds like apartment complex REITs like the one you mentioned. That's got to be reason for the optimism I assume.
Matt Frankel: Well, for sure. I mean, also take it with a grain of salt because these are some of the most beaten down stocks during the pandemic.
Jason Moser: Yeah.
Matt Frankel: I mean, when I mentioned EPR. They're still roughly less than half of what they were trading for before the pandemic, even after today. A lot of these are really beaten down in AvalonBay, the apartment one. I'm not saying there's going to be no remote work trend that forces people or that forces but they prompts people to leave cities. But the stock is down 40% year-to-date and the vacancy rate increased by 3%. That just seems like it's not balanced correctly.
Jason Moser: Yeah. It doesn't. You're right. I mean, it's always worth remembering too. We see headlines like this, this is a headline we woke up to this morning all across the country. You could tell there was plenty of excitement out there. Because this is this is the news that you want to hear. This is not the magic bullet so to speak, but this is definitely the news that you want to hear. It always strikes me too. I'm not trying to take the glass half empty perspective here, but when you see this type of reaction, it's always worth remembering this isn't over. I mean, this marks a big step forward, but we're not through this yet. We still have a full winter here really to go through. It feels like let's try to temper everybody's expectations. I get questions throughout the morning on should I be buying these stocks or selling these stocks and it's like what? Often times for investors, it's better to maybe take news like this, digest it through the course of the day, give yourself some time to think about things, the implications here because it really feels like this is great news. But there's certainly not going to be another bad headline at some point here in the next week, two weeks, one-month, whatever it may be. It's always worth remembering listen, this doesn't just mean everything is back to normal and everything is hunky dory. I mean, this is good news. But we're not through this yet.
Matt Frankel: Yeah. I mean, don't throw off your mask and run out into the streets to play just yet. But having said that, this was definitely good news. I'm sure Brian and Keith in the previous segment explain this better than I ever could. But this is going to take some time to really roll out.
Jason Moser: Yeah.
Matt Frankel: At a minimum, Pfizer said they "will be ready to submit for emergency approval by the end of this month if everything goes well.'' That's two weeks after the participants have gone through the trial for two months rather. After that, they're only going to make 50 million doses or so this year. Assuming they get all 50 million of those into people's arms by the end of this year. That's still roughly 80% of the U.S. population that is not going to be vaccinated.
Jason Moser: Right.
Matt Frankel: Then you have another few months, figure sometime in mid-2021. Anyone who really needs a COVID vaccine will have one and that's if things go well from here on. But this is definitely a step in the right direction and these companies desperately needed some light at the end of the tunnel.