The director of the Centers for Disease Control and Prevention just told a U.S. Senate subcommittee she's "scared" and has "recurring feeling of impending doom" over rising cases of COVID-19.
That same day President Joe Biden said he "share[s] the sentiment" of the CDC and called on governors to reimpose mask-wearing mandates and stop reopening the economy. The country is only just getting back on its feet from the first shutdown, one that was supposed to last just two weeks to "flatten the curve," but in some cases left companies with more than a year without any business.
The cruise ship industry, for example, faces going almost two years without taking on passengers, and new shutdown orders would have the rest of the country joining the shipwreck.
Yet not every business would suffer, and as we saw last time, some companies prospered spectacularly. If the government gets into the business of choosing winners and losers again, here are some that should come out on top.
Deemed "essential businesses" from the get go, grocery stores were some of the biggest winners last year, particularly those with established "click and collect" online shopping platforms.
While groceries were the biggest reason for their success, they were also permitted to take advantage of many competitors being forced to shut down. While specialty retailers and department stores were closed, Walmart and Target were still able to sell clothes and merchandise. It was a decision that helped send a record number of retailers into bankruptcy.
A second shutdown elevating groceries stores to essential again would have Walmart and Target at the forefront, but pure-play supermarkets like Kroger (KR 0.16%) and Albertsons (ACI -0.86%) would also get a lift. And the scramble for healthier foods would again empower organic grocers like Whole Foods and Sprouts Farmers Market (SFM 3.42%).
Business is still booming for third-party delivery companies like DoorDash (DASH 1.84%), Instacart, and Uber Technologies (UBER 2.23%) because seating at restaurants remains severely limited and supermarkets are utilizing them for last-mile grocery delivery. Yet their survival in a new lockdown might be hit or miss.
Few providers have been able to consistently turn a profit even with massive use of their services. DoorDash, for example, is the largest food delivery provider and posted a profit in the second quarter last year, but then followed it up with two consecutive quarters of losses. Grubhub (GRUB) also used to be profitable, but now generates losses that are growing larger.
Restaurants were particularly in need of delivery at the outset of the coronavirus outbreak, but operating on thin margins and reduced revenues caused them to chafe at the high fees delivery services charged. Large cities began limiting how much delivery companies could charge and the restaurants found creative ways to avoid having customers use the third-party operators.
Yet consumers who were already adopting third-party delivery in ever-larger numbers before the pandemic would demand its availability even more if dining out is limited again.
Investors would need to carefully dissect the entertainment venues that could be winners, mostly coming down to a choice between in-home and outdoor options. Movie theaters and theme parks would surely be losers, but streaming video providers would soar.
Netflix (NFLX -2.54%) enjoyed a massive spike in new subscriptions during the first wave of lockdowns last year and Walt Disney (DIS -0.62%) recently surpassed the 100 million subscriber threshold for its Disney+ service.
Video game stocks such as Activision Blizzard (ATVI) and Electronic Arts (EA 0.04%) would also soar, as would the industries that underpin them, as players would be stuck at home again with nothing else to do.
Graphics card maker NVIDIA (NVDA -2.68%) would likely see swelling demand as as well, and it's even possible video game retailer GameStop (GME 10.98%) would find new relevance. Having made the commitment to turn to an e-commerce-focused business model, lockdowns that closed its physical stores would ramp up the impetus for GameStop to transition to the new format even faster.
Speaking of e-commerce, it's clear online retailers would thrive in the wake of shutting down the economy. Amazon (AMZN -1.49%), of course, would top every list of survivors (and "thrivers"), but not just for its e-commerce operations.
Amazon Web Services underpins the back office and cloud operations for so many retailers, businesses, and even the government, and their forced reliance on e-commerce to survive again would boost the importance of AWS, which accounts for around 30% of the cloud service market.
Similarly, Microsoft's (MSFT -1.43%) Azure cloud business, which accounts for one-fifth of the market, would further cement its second-place status, while Alphabet's (GOOG -2.02%) (GOOGL -1.96%) Google would be able to bolster its current third-place position.
Google, of course, would also benefit from further usage of its search capabilities, and it might just find more takers for its YouTube TV service. T-Mobile (TMUS 0.36%), for example, just announced it was ending its own live TV service and would offer customers YouTube TV instead.
Reason for hope
While a new lockdown mandate is certainly a possibility, it would be better for the economy to be allowed to reopen and all businesses were permitted to thrive on their own merits. There's certainly going to be resistance from states that have already opened up, done away with mask mandates, and are seeing the local economies boom, and nearby states still laboring under a variety of restrictive mandates would probably push back on new attempts at clamping down.
Yet if push did come to shoving the economy over the cliff and sending it into recession, these businesses will likely be winning investments when the economic wreckage is eventually cleared away.