Many would have probably come across the term ‘epicenter stocks’, or more commonly known as the ‘reopening stocks’ over the last few months. But if you haven’t come across this term- don’t fret. It’s just a fancy term to categorize a group of stocks that could rebound strongly when the economy picks up pace. Essentially, top epicenter stocks can refer to companies in various economic sectors. These include companies in the airlines, energy, industrials, and consumer discretionaries sectors.
“I would say that the epicenter stocks, which are the companies hit hardest by the crisis, are no different than what internet [stocks] looked like post-bubble in ’02. People wanted to stay away from internet [stocks,]…” Tom Lee, Fundstrat Managing Partner
The way he sees is that many of the epicenter stocks are oversold. Which could be a value buy in the long run considering the huge discounts from where they were before the coronavirus pandemic. Of course, a lot weighs on the future outcome of things like stimulus measures and the availability of safe and effective vaccines to get the economy back up and running. While many are still waiting for Pfizer’s (PFE Stock Report) vaccines, the FDA has just approved Gilead’s (GILD Stock Report) remdesivier as the first coronavirus treatment. That said, will you include some of the top epicenter stocks in your watchlist today?
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Some of these epicenter stocks also include those in travel and leisure, which have in many respects, felt the most immense pain from the coronavirus pandemic. In light of Gilead’s remdesivir approval from the FDA. It’s natural for some investors to start looking for top epicenter stocks to watch. Of course, no one can be sure whether the news on the coronavirus treatment front will have any impact on the stock market today. For me, I am putting more hopes on vaccines for the world to resume normalcy. Prevention is always better than cure, don’t you think? With this in mind, are these the top epicenter stocks to buy or avoid right now?Top Epicenter Stocks To WatchTop Epicenter Stocks To Watch #1: Etsy
First, up the list, vintage and craft platform Etsy Inc. has been an unlikely performer this year. The company expects to release its earnings report after the market closes on Wednesday, October 28th. Etsy is doing well because it’s not just another consumer discretionary company selling handmade items and vintage items. Rather, the company is filling the gap amid the global shortage of face coverings at the onset of the coronavirus crisis.
Etsy doesn’t only sell life-saving masks but also has masks with a fashionable flair. Its financial results were over the roof. The company’s quarterly revenue skyrocketed 137% to $428.7 million in its latest quarter. Certainly, this is not sustainable. We know that the growth will subside once the COVID-19 comes to an end. But that’s not the main highlight, the key is that Etsy’s platform has become more relevant in the process.
Other discretionary items excluding face masks still soared 93% in the second quarter. Could investors expect such growth to repeat itself this quarter when the company reports its earnings next week? Many experts believe the pandemic has acted as a tailwind for the platform to flourish. What about you?Top Epicenter Stocks To Watch #2: Lennar
Next up, Lennar is one epicenter stock worth watching. The homebuilder saw a few catalysts working in its favor. This includes consumer’s flight to the suburbs from more urban areas due in part to the coronavirus pandemic. Not to mention the lower living expenses in the suburbs area. Lennar is one of the quality of lower-cost producers in the housing market. And it’s no surprise the company is seeing increased demand for homes.
With interest rates to remain low for the near to medium term, this creates more incentives for prospective homebuyers. And as the economy slowly recovers, there’s a great chance the housing market is going to rebound strongly. In fact, data from the Commerce Department earlier this week saw single-family homebuilding jumping 8.5% last month. Would that make Lennar an attractive buy?
“The point I want to stress is that this is a very broad-base move across the sector, both big and small stocks, but … to call out one name within this broad list, that would be homebuilder Lennar which is breaking through 15-year resistance dating back to the year 2005. We see more upside there in Lennar,” Ari Wald, Head of Technical Analysis at Oppenheimer.Top Epicenter Stocks To Watch #3: Carnival Corporation
It may seem odd to put Carnival Corporation (CCL Stock Report) on this list when no one can be sure when cruise-line stock will start sailing again. This came as the Centers for Disease Control and Prevention (CDC) extended a No Sail Order for cruise ships through October 31, 2020. Investors maintain a shred of hope that the cruise line would be able to resume their operations in November. CCL stocks closed near 5% higher on Thursday’s trading. It appears that investors can’t wait for the cruises to set sail again.
As the Miami Herald reported last night, Carnival “is still on track to resume cruises in the U.S. on Dec. 1 after a favorable ruling from a federal judge Wednesday.” Carnival has been on probation since 2017 after incidents of the company dumping oil into the ocean. Last week, a District Judge proposed that Carnival should attest to the environmental protection status of its cruise ships 60 days before they enter U.S. waters. If that indeed came into effect, Carnival’s plan to resume sailing in December could be jeopardized. Now, a new court ruling allows Carnival to certify its ships 30 days prior to returning to U.S. waters. Therefore, plans for sailing in December are now back in play.
With that in mind, would you say that Carnival is out of the woods? I wouldn’t be so sure yet. An extension of the CDC’s no-sail order beyond October 31 is still possible, depending on how the pandemic plays out. Besides, it is not clear if holiday goers will jump right back on cruise lines. Of course, many are bored after months of being stuck at home, but if there are signs of a resurgence in cases, some customers may still shy away.