According to The Wall Street Journal¸ more than a quarter of the U.S. economy has been sidelined by measures to fight the spread of the new coronavirus. With the virus and its economic impacts as the overarching news of the day, it's easy to overlook the parts of the economy that are still operating in one way or another.
Indeed, even with much of the country living under some form of stay-at-home rule, parts of the economy are still showing signs of life. After all, we all still have to eat, use the bathroom, and otherwise take care of the necessities of life. With that in mind, here are three stocks you probably don't know are part of your everyday life.
Somebody has to get toilet paper to the store
Well known for the iconic orange color scheme of its trucks, Schneider National (NYSE:SNDR) is one of the largest trucking companies in America. The company generated over $4.7 billion in revenue in 2019 hauling raw materials and products around. Although the slowdown is affecting the economy, demand for some bulky products like toilet paper is soaring. That means trucks keep moving to deliver the necessities to the retailers still operating.
Schneider National may be uniquely suited to prosper on that front, as it's headquartered in Green Bay, Wisconsin, a town sometimes known as the toilet paper capital of the world. Although trucks can quickly be almost anywhere they're needed, being headquartered near all the action probably keeps Schneider well in tune with the industry.
Despite the current strength in the paper industry, trucking is well known as a low margin business, which makes it a risk in an overall economic slowdown. That's where Schneider's strong balance sheet benefits it. The company has more cash than debt on its balance sheet and sports a current ratio of around 3.0. That gives it plenty of flexibility to adjust if the overall economy goes from bad to worse and even its shipments of household essentials slows down.
Whom to thank if your power is still on
If you have natural gas heat, or if your electric utility uses natural gas to provide power, chances are the gas at some point flowed through pipelines owned by Enbridge (NYSE:ENB). The same story holds if you take a diesel or natural gas-powered bus or train to work, or if your public transit is powered by electric served by a utility that uses natural gas. Similarly, if you use anything plastic or otherwise petroleum derived, it probably traveled through Enbridge's pipes.
Enbridge is North America's largest energy infrastructure company. It has a network of pipelines that crisscross the North American continent, bringing oil and natural gas from where they're produced to where they're consumed or transformed into everyday products. Unless you live near some of its infrastructure, you might never know it exists, but it's highly likely that you depend on it for substantial parts of your everyday life.
Although Enbridge certainly ranks up there as critical infrastructure, its business is likely to have been affected by the general slowdown in energy demand, as people and businesses cope with the coronavirus shutdown. Even then, it has improved its debt coverage ratios in the past few years and has sufficient liquidity to cover its expected operations, expansion, debt service, and dividends throughout 2020. In addition, its pipelines tend to be a cheaper way to transport energy than alternatives like trains.
That combination of balance sheet strength and cost advantage gives it the strength and resiliency to see its way through the economic slowdown resulting from the coronavirus shutdowns.
This is who carry your cell phone signal
No matter which provider you use for your cellular telephone service, the reason you get service at all is those towers that dot the landscape. American Tower (NYSE:AMT) hosts a great many of those towers, with around 180,000 sites around the globe. Especially these days when people aren't in their offices and may have multiple people working or attending school from the same home, having reliable wireless communication is vital to their success.
Perhaps even better for American Tower, as the faster 5G cellular service rolls out, even more towers will be required. That's because 5G signals don't travel as far as 4G signals do, which means it takes more equipment to reach the same area with those faster signals. That gives it plenty of growth opportunities over the next few years as carriers roll out and boost their 5G network capacities.
Because American Tower is actively investing right now -- putting nearly $1 billion a year toward its infrastructure -- its reported earnings look a lot softer than the strong cash flow its operations generate. That gives reason to believe that once the 5G buildout is complete and the company can truly start to leverage all that installed capacity, its earnings have room to grow even further.
In addition, as a real estate investment trust, American Tower must pay out at least 90% of its earnings in the form of a dividend to its shareholders. That means its shareholders have the opportunity to be directly rewarded by the company's success with cold, hard cash, while still being able to remain owners.
Solid businesses even during a pandemic
In ordinary economic conditions, most people probably wouldn't think twice about the companies that provide the infrastructure they use every day. In the middle of a pandemic with much of ordinary life turned upside down, however, it's comforting to know that these three are still operating and providing those necessary goods and services.
From an investment perspective, it's also proving a reasonable asset allocation move to own companies that are still operating even as much of the world's population is staying locked inside. Investing always involves the trade-off of cash today for the potential of receiving more tomorrow along with a risk that things may not work out as you'd hope. When the uncertainty is high, sometimes "boring" businesses that keep plugging away are just what it takes to stay invested until better times come around.