These are very interesting times we’re living in. As global economies try to get their legs back under them from COVID-19 outbreaks, the effects are still lingering.
Some were to be expected, probably. No one has been getting on Carnival (CCL) cruise ships, for example. World Wrestling Entertainment (WWE) and other live sports leagues have also struggled, of course.
But we’ve also seen sports gamblers get into other mischief, now that sports seasons have been widely canceled or postponed. Take the Barstool Sports founder, Dave Portnoy, for example. He recently told CNBC that he has no “great knowledge” of stocks, but that hasn’t stopped him from betting on penny stocks and making “hype videos” about them (his words, not mine).
This new trend is quite dangerous for the speculators involved (as we’ll discuss in Saturday’s Market360). But it’s also a tale as old as time: Don’t touch an investment that suddenly got that red-hot, or you’re likely to get burned.
Smart investors like us are far too busy snapping up the very real opportunities that are out there. I’d like to make the case for the three best investment themes I see today.
Right now, the crème de la crème is rising in a few corners of the market:
Sector #1: Biotechnology
With the coronavirus pandemic ravaging the world, biotech has stepped back into the spotlight. Shares of Big Pharma stocks, in particular, are on fire as more than 115 treatments and more than 55 vaccines are now being developed for COVID-19 and the coronavirus.
However, many of these companies are living and dying on positive clinical results right now. That makes many of their shares volatile and a bit too hot to handle. Personally, I don’t recommend blindly scooping up any old biotech shares. Our attention is better focused on companies with established treatments and pipelines that are consistently adding to their top and bottom lines.
One lesser-known biotech is a particularly Strong Buy now, with strong fundamentals and a Quantitative Grade of “A” in my Portfolio Grader. I’m working on a buy recommendation for it now, as its second-quarter growth prospects are truly stunning. Wall Street analysts expect this biotech to post 618% sales growth and 2,615% earnings growth! I’ll have all the details for you in tomorrow’s July issue of Growth Investor.
Sector #2: Diagnostic Healthcare
Normally, diagnostic tests are just part of the fabric of modern society. But the coronavirus is shining a brighter spotlight on the industry now. If you’re running a fever, coughing and having trouble breathing, a diagnostic test will be run to determine if you have the coronavirus. How accurate these tests are is still being determined – but that hasn’t stopped investors from pouring into many diagnostic healthcare stocks.
Believe it or not, that includes animal diagnostics companies, too. I’ve had one of these stocks on my Growth Investor Buy List since 2016, then added another in 2017. So, we’ve benefitted as these stocks rallied 45% and 75%, respectively, from the March lows!
But I’ll be adding a more conventional diagnostics stock tomorrow, too. Another “Strong Buy” in my Portfolio Grader, this stock not only has great sales and earnings growth prospects, but Wall Street analysts have raised their forecasts more than 150%. In my book, that means it’s headed for an earnings beat. Go here for more on Growth Investor ahead of the new buys in tomorrow’s issue.
Sector #3: Video Communications
No analysis of COVID-19’s impact is complete without discussing work-from-home. Even with stay-at-home orders lifting in some regions, many companies are now considering the long-term benefits of a remote workforce. For example, Facebook (FB) plans to allow nearly half of its employees to work remotely in the next 10 years.
One company that’s already reaping the rewards is Microsoft (MSFT). The company’s Microsoft Teams platform has enabled businesses to work remotely together, with group chats, video meetings, calls and collaborative workspaces. And thanks to the dramatic increase in demand for its online communication platform, revenue grew 15% and earnings jumped 23% in the first quarter.
In tomorrow’s Growth Investor July Issue, I’ll be adding a more direct play. Not only is it a “Strong Buy,” the company more than doubled earnings in the first quarter – and is expected to post 462% earnings growth next time!
On the other hand, I’ve been cutting other stocks loose at Growth Investor, too. I only want stocks that are poised to continue leading the market, despite investor anxiety about the upcoming second-quarter announcement season.
As I mentioned, my newest buys have eye-popping earnings prospects. When we invest, we must invest in tangible companies that are thoroughly vetted.
That also includes tech mega-trends like cloud computing and artificial intelligence. I’ve made no secret of the fact that I also like 5G stocks. That’s why I devoted Tuesday’s Market360 to the topic!