3 Stocks to Buy Ahead of a Potential Second Wave of Coronavirus

john rambo

One of the biggest dangers of buying stocks today is that a second wave of coronavirus could lead to more lockdowns and business shutdowns, potentially paving the way for another market crash. It’s a serious risk, and one that’s at the front of my mind given the S&P 500‘s recent […]

One of the biggest dangers of buying stocks today is that a second wave of coronavirus could lead to more lockdowns and business shutdowns, potentially paving the way for another market crash. It’s a serious risk, and one that’s at the front of my mind given the S&P 500‘s recent record highs — a kind reminder of how expensive stocks are today. That’s why it is important to invest in companies that are likely to perform well even amid shutdowns and sharp rises in COVID-19 cases. 

Three companies that are doing well during the pandemic and are good buys for worried investors today are Quidel (NASDAQ:QDEL), Logitech (NASDAQ:LOGI), and PayPal (NASDAQ:PYPL). All three stocks will diversify your portfolio and provide a safe place to invest your money if you’re worried about a second wave hitting in the fall.

1. Quidel

Quidel’s been one of the hotter healthcare stocks in the market this year, more than tripling in value since the beginning of the year. The diagnostics and testing company was put on the map on March 17, when the U.S. Food and Drug Administration (FDA) granted its Lyra SARS-CoV-2 assay rapid test an emergency use authorization (EUA). The FDA also granted Quidel an EUA in May for the Sofia 2 SARS Antigen FIA, a test that can generate results within 15 minutes. And Quidel is not the only investment option for those interested in coronavirus test companies. Abbott LabsThermo Fisher Scientific, and Roche are also selling COVID-19 testing products.

Woman on a bus wearing surgical mask.

Image source: Getty Images.

There are now more than 5.6 million cases of COVID-19 confirmed in the U.S. alone. As that number rises, the need for greater testing capacities will continue to increase. Another surge in cases this fall, if it happens, will further boost demand. The novel coronavirus isn’t likely to go away anytime soon, and that makes Quidel a relatively safe investment during the pandemic.

On July 30, the San Diego-based company released its second-quarter results for the period ending June 30. Revenue of $201.8 million during the quarter rose by 86% from the prior year. The company’s rapid testing segment, which includes Sofia SARS Antigen, generated sales of $80.6 million, up 270% from last year. And the diagnostic segment containing the Lyra SARS-CoV-2 assays rose by 1,210% year over year to $55.2 million. Other segments of Quidel’s business declined between 18% and 20% because other testing services were reduced as a result of the pandemic. However, the declines were not nearly enough to offset the surge in sales from coronavirus-related testing.

2. Logitech

Logitech manufactures a wide array of computer hardware. From mice and keyboards to speakers, headsets, and gaming products, the company provides necessities for anyone who uses a computer. Whether you’re an avid gamer or using your computer to work from home, you are likely to have used one of Logitech’s products at one point or another. And that’s precisely why our work-from-home and stay-at-home culture of the past several months has massively boosted demand for the company’s products. If a second wave of COVID-19 comes, workers, students, and everyone in between could be forced back into their homes and in front of their screens.

The Swiss company released its first-quarter results for fiscal 2021 on July 20,covering the period ending June 30. Sales in Q1 grew by 23% to $792 million. That’s a significant increase given that in fiscal 2020, Logitech’s full-year sales of $2.98 billion were up just 6.7% from the previous year , and for fiscal 2019, annual revenue of $2.79 billion rose by 8.7%.

The results were encouraging enough for management to raise its forecast for the rest of the fiscal year. Previously, they had called for mid-single-digit revenue growth, but that’s been increased to between 10% and 13%. And given that the pandemic still looks to be far from over, these numbers could continue to climb in the months — and possibly years — to come. Schools and businesses are making the most of technology right now because of the pandemic, but the trend could be here to stay beyond that, as a growing number of tech companies are offering their employees the ability to work remotely on a permanent basis.

3. Paypal

Paypal is a digital payments company that makes it easy to send money to people all over the world. It allows consumers to pay bills and make purchases through its platform securely over all of their devices. And since the transactions are digital, Paypal provides an ideal way to pay during a pandemic, when handling cash and pressing buttons on payment screens aren’t the safest and cleanest options.

The San Jose-based business released its second-quarter results on July 29, also for the period ending June 30. Net revenue of $5.26 billion for the quarter grew at a rate of 22% over Q1. That’s a big spike from the 13% sales increase the company generated in the first quarter or the 12% bump it got a year ago during the same period.

PayPal also looks stronger after its $4 billion acquisition of Honey, which helps consumers find deals online, notifies them of price drops, and automatically applies coupons. The transaction, completed in January, gives PayPal a way to take advantage of a possible surge in online shopping if more shutdowns come this fall. In addition to Honey, PayPal also owns Venmo, another mobile payment company. But unlike PayPal, Venmo’s focus is on sending money between friends and family; it’s not designed for business use. 

With all of these businesses, Paypal’s in a great position to benefit from a rise in online shopping and more digital payments, trends that are likely to continue growing even after the pandemic, which could make it an even better buy today.

Which stock is the best buy today?

All three stocks are looking great this year and outperforming the S&P 500:

QDEL Chart

QDEL data by YCharts

All three can diversify a portfolio and provide investors some peace of mind in the event of another wave of COVID-19 this year. However, if you’re looking for just one stock to add, the one I’d go with today is PayPal. The company will benefit from an increase in both online shopping and demand for contactless payments, giving it multiple avenues to grow through its core business and also through Venmo and Honey. And with less competition in its industry than Logitech, which has to worry about big tech, or Quidel, which competes with many healthcare companies looking to offer testing for COVID-19, Paypal’s sitting in a great spot. It can continue to dominate in the digital payments industry for many years to come.

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