3 Stock Picks to Buy in 2020
The economy is constantly trying to readjust to the ongoing waves of Coronavirus. While the Dow has recovered from the record lows of in late March 2020, it recently fell 3.3% as premature reopening caused Coronavirus cases continued to spike in all but two states. The result of the spikes has been a widespread halt on “business as usual” plans, with companies like Apple stating they would begin to close stores for employee and customer safety, ICU beds running out in hoards of hospitals, and many states considering making face masks mandatory.
But the extremely thin silver lining is that when the market is down, it’s the time to invest. To that end, I’ve researched promising stocks across sectors that I believe will have more and more value in the post-Coronavirus landscape.
Micron Technology, Inc. (NASDAQ:MU)
The American based Micron Technology produces computer memory and computer data storage devices, like memory-chips. Though the tech sector has been less effected by the Coronavirus pandemic, some of the products that normally use Micron’s technology, like cars and smartphones, are in short demand as people desperately try to curb spending, lowering the stock price. Still, Micron’s products are key for growing sectors, like the need for home office equipment and the ever-popular cloud computing. With these two sectors well positioned to grow and the pandemic sure to end, Micron stock is likely to soar in value.1
Takeda Pharmaceutical (NASDAQ:TAK)
With all the focus on healthcare, it’s no surprise that like stocks have been less effected by the current market than other sectors. In fact, healthcare stocks have outperformed other sectors with a return of 6.8% versus 5.5% over the past year.2
As of July 2020, the Covid-19 pandemic is not slowing down, despite the public and politicians attempt to wish it into non-being. The upside is that with a public clamoring for everything from new ways of telehealth to vaccines is driving earnings within the healthcare sector.
One of the more intriguing pharmaceutical stocks is the Japan’s largest pharmaceutical company, Takeda Pharmaceuticals. Remarkably founded in 1781 (I know, I know, I also thought that was a typo!), Takeda shares have sharply dropped in the last few years. Part of the reason for the drop in stock price was skepticism from the market after Takeda acquired biotech company Shire in 2018 for an eye-watering $62 billion. For many investors, the reason behind the acquisition and the subsequent growth plan wasn’t clear, damaging the view of the stock in the markets eye. But Takeda might well be playing the long game, planning to swallow the short-term operating loss and debt from the acquisition, to expand its core businesses, which include gastrointestinal medicines, oncology, and immunoglobulin products.
With year-over-year revenue having risen 83% last quarter of 2020, it looks like the stock is on its way to recovering. As of July 2020, stock prices are trading at $17 USD, about 58% less than the 2018 value of $29 USD, so if the stock is on the road to recovery, there is significant upside for investors. After all, if the integration of Shire’s business goes as hoped, it’s likely Takeda will return to its original value and then some, making it a promising stock for long term investment.3
Castlight Health (NASDAQ:CSLT)
Though the pandemic will eventually end, its impact will long outlive the virus. With companies like Twitter resolving to stay remote for the foreseeable future, the impacts of Covid-19 have showed that things we once thought impossible-telemedicine, fully remote work forces, completely online schooling-are only stepping stones towards the digitization of the future.
One of the sectors most affected by the pandemic was, unsurprisingly, healthcare. The sudden surge for telemedicine made a supernova out of Teladoc Health, skyrocketing its demand in mid-March 2020.
But with Teladoc’s stock price being an astronomical $200 USD, investors would be wise to look at comparable and well positioned but undervalued stocks to get sizable returns. One potentially valuable stock is Castlight Health which initially went public in 2014, when its stock price rose by 149%4. Castlight’s promise of using cloud-based technology to allow the easy comparison of prices of services provided by various healthcare providers initially drew the interest of investors.
But following a promising start, Castlight repeatedly missed revenue and earning expectations, with stock prices falling to a shockingly low $1.60 per share by 2019. However, amid the Covid-19 pandemic, Castlight is positioning itself for a comeback. With new CEO Maeve O’Meara at head, Castlight has come out with multiple solutions designed at reducing risk for campuses and businesses intent on reopening.5 And with 45% Americans openly admitting the negative effect the past couple of months have had on their mental health, the new offering Castlight Behavioral Health also has a great deal of potential in generating a user base. It remains to be seen if Castlight can turn its around and regain the support of the market. But with its rapid focus on generating products to meet the current demands of the climate and with the possibility of second and third waves of the virus necessitating its products, it’s likely that this stock will grow in coming quarters.