What Vaccines will do to stocks

Photo @schluditsch via Unsplash CC
Over the past year, the COVID-19 pandemic has made a multitude of stocks tank. However, it also allowed us to see certain stay-at-home stocks soar greatly as employees were required to stay home and various other social distancing guidelines were practiced. Over the past month, Pfizer and Moderna, two massive pharmaceutical companies, have announced vaccines for COVID-19 with more than 90% efficacy rate.

With the distribution of these vaccines taking place over the next few months, we can expect to see a lot of movement in the market.

Be cautious of these three stocks as pandemic nears end
  1. Peloton

On June 30th, Peloton’s fiscal 2020 ended with tremendous results despite being in the height of the COVID-19 pandemic. The number of people subscribed to their services grew 113% to 1.09 million, their revenue doubled to roughly $1.83 billion, and it’s net loss decreased $124 million down to $72 million.

As gyms reopen, people go back to work, and life returns to normal, it’s going to be difficult to expect Peloton to maintain these types of results. 

  1. Blue Apron

In the first nine months of 2020, Blue Apron’s revenue dipped 4% year over year to $345 million and their net loss decreased from $39 million down to $34 million. 

If Blue Apron couldn’t see revenue growth while millions of employees nationwide were staying at home more than ever, it’s unlikely that we’ll see something change after the crisis ends.

  1. Zoom

Zoom’s revenue soared 270% year over year to $992 million in the first half of fiscal 2021 and they expect to end the fiscal year with about 281%-284% growth. These dangerously fast growth rates resulted in their stock to rocket up 550% this year.

With multiple vaccines on the horizon, people returning to work or school, and life returning to normal, we may see this growth begin to stagnate, resulting in a lot of investors cashing out.  

Stocks with a positive outlook as we return to normal

With potential vaccines coming from Pfizer, Moderna, AstraZeneca, and Novovax, we are beginning to see the light at the end of the tunnel for the COVID-19 pandemic.

CNBC’s Jim Cramer of Mad Money said, “I think you have to buy a couple of these vaccine winners on any weakness, although when it comes to retail, I just say buy some, period, because there’s no time to wait for a dip.”

A few of the stocks that Cramer mentioned were:

  1. Boeing
  2. United Airlines
  3. Macy’s
  4. Target
  5. Walt Disney
  6. General Motors
  7. Visa
  8. Mastercard

“No matter what, I’d pick two or three of these names, then wait for the next piece of bad news that freaks people out so you can buy them into weakness,” Cramer stated.

Our Take:

A lot of the stocks that had massive traction due to COVID-19 lockdowns, quarantines, and employees working from home may lose traction as the pandemic nears its end.