Owing to the panic caused by the Coronavirus, shares globally have been hammered and are now trading at the lowest level in years. The connected world, fueled by social media, has created a snowball effect on spreading the news, and therefore panic, which has led to a landslide sell-off. Is this a case where Warren Buffet cautioned to be "Fearful when others are greedy, and be greedy when others are fearful?"
That is, after all how, he made most of his wealth after the 2008 stock market crisis when he bought stocks at their absolute lows. Pandemics and crises like these have happened before, and markets always recover once global sentiment changes.
“It’s not about timing the market,
but about time in the market” - Warren Buffet.
The massive drop in share prices has opened up opportunities for investors who are in it for the long-haul, as uncertainty will show continued volatility in the short-term.
As a global recession is virtually unavoidable, we have identified companies with three key traits that we believe will show resurgence. These companies have:
- lower debt levels,
- higher cash levels
- companies not directly negatively impacted by the virus and its consequences and,
- companies with high growth potential, especially in the 4th industrial revolution.
NASDAQ listed companies:Skyworks Solutions
This is our 5G play stock for this decade. 5G is the next generation network and it is deemed to happen. They have a market cap of about 14.5 billion dollars (with much growth opportunity/potential ahead), PE ratio of 17.86 (not too expensive) and a dividend yield of just above 2%.
As previously mentioned, in these volatile times, balance sheets are extremely important. Skyworks Solutions have NO DEBT, with a cash pile of about 928 million dollars. They are therefore able to invest and focus on expansion. They have a lot of big customers including names like Amazon, Tesla, Toyota, Microsoft, Cisco, Apple and the list goes on. All industries will make use of 5G in the near future. Skyworks have a good management team and FinMeUp are buyers.Tesla
Tesla are light-years ahead of their competitors in so many aspects and they are changing the world (find out more via the FinMeUp podcast on the FinMeUp app).Apple
Apple has a very strong balance sheet and market sentiment with a lot of cash on hand. Their 5G iphone is expected to launch in the next few years (sooner rather than later). With their massive cash pile, they are able to make a number of effective investments now and therefore expand into new territories.Visa/Mastercard
These shares barely ever dip as they are such great companies and play such a significant, sometimes hidden, role in peoples' everyday lives. We believe they will see material increase in e-commerce payments, especially with people ordering products online and will continue to add to our portfolio if the market sinks even lower.Amazon
More on this in the FinMeUp podcast where we cover and share our detailed research on Amazon.Facebook
A housebound society will ultimately be driven to our friends - Instagram, Snapchat, Facebook, Twitter and the newbies. Facebook might just benefit from the new “stay-at-home” economy. Advertisements might be lower now, with small companies feeling the pressure,but at these low levels, we are starting to increase our shares in Facebook.Berkshire Hathaway
Managed by investment genius, Warren Buffet. Berkshire has a massive cash stack ready to be invested in companies at these low levels. They accumulated the cash over the years waiting for another great buying opportunity, so they can benefit really well once the panic is over and market sentiment changes.
We believe that the impact of COVID-19 will show prolonged effects. In the meantime, the above shares show promise, according to the measures mentioned above. Stay tuned for the local version, where I highlight JSE-listed stocks with the same criteria.
Higgo van Biljon
Easy user, Founder & CEO FinMeUp
FinMeUp available on:
Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Higgo van Biljon, Founder and Chief Executive Officer of FinMeUp as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. First World Trader (Pty) Ltd t/a EasyEquities (“EasyEquities”) does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information (i) contained within this research and (ii) received from third party data providers. You must rely solely upon your own judgment in all aspects of your investment and/or trading decisions and all investments and/or trades are made at your own risk. EasyEquities (including any of their employees) will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.