3 Top Epicenter Stocks To Watch Right Now
Pfizer’s (PFE Stock Report) COVID-19 vaccine reached a key milestone on Thursday. This came after a panel of experts formally recommended that the FDA authorize the vaccine. Fresh off the news, epicenter stocks are making moves on stronger prospects of a faster reopening. With this panel’s blessing, the U.S. may finally begin to slow the spread of the virus and reduce the alarming death rate, which tops 3,000 daily.
With Pfizer is pressing ahead with the emergency use authorization, global economies could be set for recovery in 2021. That’s good news for the economy, and of course…the stock market. And in anticipation of an economic recovery, investors have been looking for the best epicenter stocks to watch. These stocks were hit badly at the onset of the pandemic. They are well known to underperform during a recession and will stand to benefit from a recovering economy. Put another way, you could say that these epicenter stocks are cyclical stocks. So, in the context of the coronavirus pandemic, these epicenter stocks could refer to airline stocks like Southwest Airlines (LUV Stock Report) and industrial companies like Boeing (BA Stock Report).
It is interesting to note that in the last few months, many of these top epicenter stocks to watch were on the brink of bankruptcy. Lockdowns and work from home restrictions meant fewer people were traveling. Cruises and cinemas had become hotspots for the coronavirus to spread, so they had to be closed. However, epicenter stocks could also be the fastest to recover. This came as vaccines are on the verge of getting to the masses globally. With that in mind, will you take advantage of the opportunity by looking for the best epicenter stocks to buy? If yes, would the following fit your appetite?
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Best Epicenter Stocks To Buy [Or Sell] Now: Walt Disney
Walt Disney (DIS Stock Report) is an epicenter stock worth a closer look. Sure, with social distancing restrictions in place, the company lost several sources of revenue. Two notable ones would be its box office revenue from movie releases and Disneyland theme park/resort revenue. But that’s not the main point. Recall that Disney restructured its media and entertainment divisions, with streaming becoming the most important facet of the company’s media business. And just yesterday, Disney unveiled Star, a huge cache of content, signaling that it intends to dominate both streaming and theaters. Star is a free tier within Disney+ for subscribers in Europe, Canada, and New Zealand that will be fully integrated into the streaming platform.
The company has seen steady growth in the months since the COVID-19 pandemic hit. The knockout success with its Disney+ is what’s behind this. Disney CEO Bob Chapek first talked about Star earlier in August, announcing plans to launch an international streaming service that is similar to Hulu. “In terms of the general entertainment offering internationally, we want to mirror our successful Disney Plus strategy by using our Disney Plus technical platform, bringing in the content we already own and distributing it under a successful international brand that we also already own, which is, of course, Star,” Chapek told analysts at the time.
Of course, now that a vaccine is in sight, Disney’s theme parks could see a return in traffic. Similarly, its cruise lines could be ready to sail again. In the previous quarter, Disney still reported a loss. The share price has now broken even year to date. With a growing streaming business and recovery in other segments, could this be a great opportunity to buy DIS stock?
Best Epicenter Stocks To Buy [Or Sell] Now: Starbucks
Starbucks (SBUX Stock Report) has weathered the coronavirus pandemic reasonably well. And that could make it an even better epicenter stock to buy now. While many brick-and-mortar companies are still trying to regain their footing, Starbucks is brewing up big plans to prepare for the post-pandemic world. During an Investors Day event on Wednesday, the company said it expects to grow to 55,000 locations by 2030. That implies a nearly 70% increase from the roughly 33,000 stores currently operating.
“Though we are growing off a large base, there is ample room to expand in regions where the Starbucks brand is less penetrated,” said Roz Brewer, the company’s Chief Operating Officer, on Wednesday. She noted that Starbucks has a “particular focus on high volume, high margin, suburban drive-thrus.”
While the company’s press release didn’t give country-specific targets, you could speculate that China will be playing a big role in its expansion plans. Currently, the U.S. has over 15,000 Starbucks stores, while China has over 4,700. Beginning late next year, however, the number of outlets in China expects to increase at a double-digit pace. In comparison, the growth in the U.S. would be around 3%. With international expansion continuing to be on the cards, will you add SBUX stock to your watchlist?
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Best Epicenter Stocks To Buy [Or Sell] Now: American Airlines
American Airlines (AAL Stock Report) is another epicenter stock that is on many investors’ radar. Since climbing more than 50% in November alone, the airline flew to a higher altitude this week in apparent response to a change of stake from investment manager BlackRock (BLK Stock Report). But here’s a catch. If we dig deeper at the history of the company’s stake this year, we know that the investment firm is not taking a new position. Rather, it has been shedding its holdings from 5.5% in April to 4.8% now. Investors who jumped straight to the headline and proceed with their purchase might want to think twice now. Of course, these investment management companies could be wrong too.
Recall that even Warren Buffett made a mistake earlier this year by dumping his positions in airline stocks. This experience shows that investors should take a deep breath and do their research carefully before jumping to conclusions. Taking a step back, American Airlines reported its third-quarter earnings in October where the losses were narrower than analysts estimated. The company reported revenues of $3.2 billion, a 73% drop year-over-year. American Airlines also reported a 59% decrease in total available seat miles. Besides, it saw a net loss of $2.4 billion for the third quarter.
If you have missed the flight when AAL stock was trading in the single digits, bear in mind that AAL stock is still a long way from its pre-pandemic level. While it could be one of the best epicenter stocks to buy right now, its debt levels are what concerns investors the most. Which makes it a more risky play compared to other epicenter stocks. But the question is, do greater risks translate to greater reward in this case? You tell me.
