These 5 Stay-At-Home Stocks Are Soaring

While there are many uncertainties surrounding the stock market today, one thing is certain: the stay-at-home economy is the next big trend, at least in the short-term. Thousands and thousands of global companies have already ordered their staff to work from home to avoid crowded offices amid the coronavirus outbreak.

“Social distancing”, preached by the health authorities, will significantly reduce commuting to the office and face-to-face meetings. On the other hand, companies that produce teleworking software and solutions are already prospering as investors shift their money around to capitalize on the next big trend.

The new trend has also forced many retailers to accelerate their plans to launch their online shopping websites. Besides online shops, home delivery services are also likely to prosper as many companies from this industry are already struggling to cope with the surge in demand.

Analysts believe that the recovery from an economic shock of this magnitude may be slow as many consumers may prefer staying at home and saving money instead of travelling, going out, or shopping. For this reason, investors are loading up on home entertainment companies, such as TV video games, movies and cartoons, karaoke, comic books etc.

“Consumers reduce the spending outside of their home, and expect better quality entertainment at home. Instead of getting TV, speakers or PC components that are merely cheap, they care more about product looks and functions,” said Ryan Lin, Ipsos Research Associate Director.

The list of stocks that are likely to benefit from the ongoing crisis gets longer when you include social networks. Activity time per user is expected to skyrocket in March and April, which will translate to a much higher revenue from online ads.

“Eventually, there will be lots of other winners, but, for now, you should focus on these companies that can thrive even during the pandemic, because, sadly, both this trend and the pandemic may just be getting started,” says CNBC’s Jim Cramer.

While the trend may still change given the overall uncertainty of where the stock market is heading, here is a list of 5 stocks that saw its stock price surge in the stay-at-home economy.

Peloton Interactive

Following a sharp move lower in February, shares of Peloton (NASDAQ:PTON) have started gaining more attention from the investors as countries in the world are racing to close gyms and workout spaces.

“With over 80 million gym members in Peloton’s addressable markets (the U.S., U.K., Canada, and Germany), we think the at-home fitness trends will benefit near term from increasingly aggressive virus-containment measures,” says Bank of America analyst Justin Post.

Peloton stock price closed the week 30% higher, while at one point on Wednesday it was trading more than 50% higher. The company manufactures connected stationary bikes which make a home-based workout much easier.

Activision Blizzard

Activision Blizzard (NASDAQ:ATVI), a major video game company, is seen as an obvious beneficiary of the stay-at-home economy. While its shares haven’t rallied higher, the fact that the stock price lost “only” 20% during the ongoing market selloff is very positive.

“ATVI screens the most favorably to benefit from increased stay-at-home activity. We see mobile as a prime beneficiary given it’s free-to-play nature,” Jefferies analyst Alex Giaimo said.

The latest version of Activision’s flagship game Call of Duty, titled “Warzone”, made its debut last week and it managed to attract 15 million players in four days. CNBC’s Jim Cramer believes Activision is one of the “winners in the video game space”.

Chewy

Chewy (NYSE:CHWY), an online pet retailer, has seen its stock price hit a 7-month high in the midst of the coronavirus market selloff. Overall, Chewy stock price gained 22% last week, while closing around 60% higher compared to the last week’s low.

Morgan Stanley’s lead analyst Brian Nowak says that “consumers need to feed their pets even during pandemics and recessions,” which explains the performance of Chewy stock price last week.

Moreover, Nowak believes that the online pet retailer has a limited supply chain exposure to China and operates in a “less competitive ad market that could help profit margins”.

Amazon

The absolute master of online shopping and e-commerce, Amazon (NASDAQ:AMZN) is probably the first name on the list as far as the “stay-at-home” economy is concerned.

Similar to Activision, shares of Amazon are trading “only” 15% lower as investors refuse to get rid of the stock that may prosper immensely in the coming weeks. Amazon opened the week lower before gaining 15% to hit a 2-week high on Friday.

Last week, the e-commerce giant said it plans to hire 100,000 staff to cope with a surge in online orders, in addition to investing more than $350 million worldwide to increase hourly pay by $2.

Nintendo

Shares of the video gaming giant Nintendo (T:7974) gained more than 12% in the week that is behind us. It was reported this week that services of many gaming companies, including Microsoft’s XBOX, Sony’s Playstation and Nintendo Online, have crashed as servers struggle to cope with an increased demand.

‘Unfortunately, we’re having some issues with our network services. We’re looking to rectify the situation as soon as possible. Thank you for your patience,’ the company said after Nintendo online was off for 8 hours.

We’ll see how Nintendo will cope with the surge in demand, but its stock is holding up relatively well, taking into account the global selloff in equities.

Summary

It is now obvious that the “stay-at-home” economy is the next big thing. Quarantine and social distancing are going to hurt the vast majority of businesses worldwide, while some companies are likely to benefit from the new trend.

Well-performing companies in the gaming, online shopping, teleworking, at-home workout, and video streaming industries are some of the most likely beneficiaries from the increased “stay-at-home” activity.