Pros pick two stocks to buy in the wake of the delta variant
- Cliff Hodge says Visa is a top pick in the wake of the delta variant.
- Potomac's Mark Avallone sees more potential in Netflix Inc instead.
- On a year-to-date basis, Visa stock is up 15%; Netflix is almost flat.
The new delta variant continues to be a hot debate, with investors wondering if it has the potential to result in an economic slowdown again, despite the increased rate of vaccination? And if it does, what could be some of the stocks that could show resilience and offer sustainable returns on investments?
Cliff Hodge says Visa is a name to consider
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“Visa is a name to consider. The return on capital here is phenomenal. We’re talking 30%+ of return on equity, 20% return on invested capital, with up to 70% of EBITDA or cash flow margin. Growth is expected at about 20% next year. It’s lagged the S&P by 11% over the past year. So, in the buyable dips that we may see over the coming weeks, Visa is a name to consider.”
On a year-to-date basis, Visa is currently about 15% up in the stock market.
Mark Avallone picks Netflix as his favourite
Potomac Wealth Advisor’s Mark Avallone, on the other hand, is more interested in Netflix Inc (NASDAQ: NFLX) in the wake of the delta variant, which is down more than 10% from its year-to-date high in late January. During the same interview with CNBC, he said:
“Netflix was severely impacted by the shutdown. It seemed at first that it was going to benefit because there was subscribers’ growth. But the reality is that in the long run, the pipeline dried up. But that’s going to change in the winter, which will coincide with the cold and flu season. Even if we don’t have a spread of this variant, people are going to be concerned about being in the movie theatres with people coughing on them, and when there’s a buzz with new Netflix releases, I think investors will go to that stock.”