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Trading with Cody: Revolutionary Stocks at a Discount
03/13/2020 5:00 am EST
Certainly there will be negative economic and earnings ramifications from this coronavirus crisis; the question now is whether or not we've already priced in those ramifications, questions Cody Willard, editor of Trading with Cody.
Has the market already overshot to the downside? Or, if the economic and earnings pain is going to get much worse than it already has, maybe the market has much more downside to go.
As always, it's best to remember that the stock market is a collection of individual stocks and that each of them will overtime trade according to its own long-term earnings potential.
Meanwhile, the US remains the cleanest shirt in this dirty global economic clothes hamper. With negative interest rates everywhere but the US and with the US remaining the only developed economy with any stability right now, there's a lot of money still trying to flow to the US.
Look, I know this isn't fun right now. Investing and trading is not supposed to be fun though. This is hard work. I know that we will not catch the exact bottom just like we didn't catch the exact top.
But I know that I'd rather buy when the markets are in panic mode and I see a lot of stocks that I think are now trading at attractive valuations/entry points.
With all these universities and businesses and government offices shifting to online remote meetings and work, we need to own some of the companies that facilitate this. It's most likely that even after the coronavirus crisis passes that this trend will sustain.
And all companies will develop contingence plans for the future that includes letting employees having a lot more flexibility about working remotely.
Zoom Video Communications (ZM) appears to be the de facto standard platform for this remote work movement. So I am starting a position. As usual, I'll start with about one-third of a full position and look to add more in coming days and weeks.
Slack (WORK) will also be a big beneficiary from this remote work environment. I'm adding to that position here too.
The companies that enable remote work will also benefit from this remote work trend. That means Amazon Web Services, Google Cloud and Microsoft Azure. As such, I am nibbling on Amazon (AMZN) and Google (GOOG) and opening a new position in Microsoft (MSFT).
People are going to change their behavior and how they go about existing in public physical spaces, but they will not stop spending time on social networks.
In fact, I would expect people to spend even more time than ever on social networks out of boredom if nothing else. I'm nibbling on Facebook (FB), Twitter (TWTR) and opening a new position in Pinterest (PINS).
People staying at home and not going to concerts and sporting events is going to drive people to play more video games. The video game platform industry is a global duopoly — Sony Playstation and Microsoft XBox. I'm adding to Sony (SNE) and as mentioned above, I'm buying MSFT too.
I also nibbled on some more Advanced Micro Devices (AMD), a server chips will be in big demand to make these remote workers work. And of course, people will be spending more time at home streaming TV and movies instead of going to the movie theaters. I'm nibbling on more Roku (ROKU) and Netflix (NFLX).
I'm not saying that these themes will magically keep these stocks from tanking with the broader market if the broader markets continue to crash here. So give yourself some room to add more, as usual.
But these are some revolutionary companies that I'd like to own anyway and that are actually likely to benefit from some of the coronavirus crisis and their stocks are being sold 30% or more off from their recent levels.
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