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Coronavirus (COVID-19): Stocks to buy and how to invest

Investment ideas and strategies to navigate in the wake of a market crash.

Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.

The coronavirus pandemic has had an extraordinary impact on global stock markets. Since late February 2020, benchmark stock indices in the US, UK, Australia, Canada and other places have plummeted amid unprecedented volatility—and others have skyrocketed to new heights.

While shareholders have been hit by heavy losses, many will be using the market crash to keep an eye out for new buying opportunities or even profiting from falling prices. Regardless of your approach, it’s a good time to review your portfolio and consider your next steps. We’ve compiled a list of investing guides and stock ideas to help you navigate this turbulent time.

For more, here’s our ever-growing A-Z How to Buy Stock company list.

If you’re looking for other coronavirus-related guides, you can head to our coronavirus hub page or the World Health Organization (WHO) for further advice. If in doubt, speak to a professional.

Which stocks might drop?

Important: No one can say for certain which direction stocks will go — there’s plenty of speculation about where the global economy might be headed. Below are some of the more common ideas among analysts about how stocks could be affected.

When there’s a global event like this, most stocks will react negatively due to panic selling and margin calls. That means many of the major blue chip stocks, such as the major banks, cellular networks and biotech companies, are also likely to fall, offering a potential buying opportunity at discount prices.

Because of the nature of the pandemic, tourism stocks are expected to be among the hardest hit as travel restrictions are put in place to curb the spread of the virus. This includes airlines, hotels and cruise lines.

With major cities in China locked down, Chinese supply chains for high-tech phones and a plethora of other manufactured goods have already been disrupted. This means American companies with large Chinese exposure could see profits down this year, and investors will be pricing in that possibility.

Mining and energy companies have a strong reliance on global demand and the oil price. If the pandemic does spark a global recession, major energy companies are expected to continue to struggle to turn a profit.

No one can say how long these stocks will stay down for; however, a steep drop in prices is a good opportunity for bargain hunters willing to wait out the correction.

Travel and tourism

Blue chip stocks

Chinese supply

Energy companies

  • Exxon Mobil (XOM)
  • Royal Dutch Shell (RDS.A and RDS.B)
  • Chevron (CVX)
  • BP (BP)
  • Schlumberger (SLB)
  • Enterprise Products (EPD)
  • ConocoPhillips (COP)
  • Halliburton (HAL)

Public searches for “blue chip stocks” between January 2020 and June 2021

Google Trends blue chip stocks

Which stocks could benefit?

A global crisis typically results in safe-haven investing, which means bonds and gold. This tends to send the gold price soaring while bond yields drop as demand goes up. Read our full guides on gold and bond investing for more information.

This often (although not always) results in gold company stocks becoming more popular. That being said, gold stocks are influenced by many other factors including global demand and new discoveries, so it’s also possible for stocks to go backwards.

A pandemic also benefits a few specific sectors, such as healthcare, insurance and protective gear manufacturers, such as face-mask suppliers. Meanwhile, companies that support working or studying from home should also react positively as people are forced to isolate themselves.

Many of the biggest beneficiaries might be established US companies such as Zoom (NASDAQ: ZM), Slack (NYSE: WORK) and GSX Techedu (NYSE: GSX).

Canadian companies like Dollarama Inc. (TSE: DOL) as well as gas and utilities giant Fortis (TSE: FTS) are, so far, performing well in the midst of the COVID-19 crisis.

Additionally, grocery stores are thriving in light of increased demand for everyday household items and cleaning supplies, so it’s not all doom-and-gloom for businesses like Loblaw (TSX: L), which owns Shoppers Drug Mart, and Walmart (NYSE: WMT).

Gold companies

Healthcare

  • McKesson Corp. (MCK)
  • UnitedHealth Group (UNH)
  • CVS Health (CVS)
  • AmerisourceBergen (ABC)
  • Cardinal Health (CAH)

Protective wear/wash

  • Top Glove (TGLVY)
  • Kimberly-Clark (KMB)
  • Clorox (CLX)

Working/studying from home

Public searches for “gold stocks” between January 2020 and June 2021

Google Trends blue chip stocks

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Should I invest now?

It depends on your current financial situation, overall investment goals and appetite for risk. Stock market crashes are often followed by periods of additional volatility, sideways price action, and eventually recovery. But it’s next to impossible to predict how long these market cycles will last, and if the global economy continues to suffer, we may be faced with a years-long bear market where share prices continue to decline.

For long-term investors, it may be a good idea to start considering a dollar-cost averaging (DCA) strategy. This means investing your capital in smaller chunks over a longer period of time and can help you avoid the shock of any short-term volatility or drops.

For example, say you had $1,000 to invest. Instead of buying $1,000 immediately, you could invest $100 each week for the next 1o weeks. This has the effect of smoothing out your average trade price and giving you a better chance of investing when stocks are at their lowest. Even professional investors have a hard time calling the bottom of the market, and dollar-cost averaging is a handy tool for amateur investors looking to the long-term.

How to invest when there’s a market crash

When markets crash, it can be tempting to sell your shares in an attempt to avoid further losses. But this is not necessarily the best strategy, especially if you hesitate on pulling the trigger.

Stock market downturns are a reality and must be considered alongside the record gains of recent years. It’s often a better idea to ride out the volatility rather than try to time the market.

Know your strategy

Your best course of action in the event of a crash will depend on your trading strategy and overall investment goals, according to Michael McCarthy, chief market strategist for share-trading platform CMC Markets, who spoke to Finder. “In most cases, investors should be reviewing closely and working out what a 10% drop or a 20% drop would mean to their holdings. Whereas somebody who’s taking a more active approach might start weeding their portfolio.”

It’s important to know what your goals are and whether a crash has impacted your ability to achieve those goals. It is possible that a crash gives you some good reasons to sell.

Be prepared to buy the dip

When markets dip, you can make money. The key thing is to be ready for this to happen and to have the funds to snap up shares when the prices are low.

Timing the market is incredibly hard and you’re very unlikely to get the stock at its absolute lowest, but as with all investments, if your intention is to hold for the long term, it can be a good opportunity to snap it up at a lower cost.

One way to prepare if you’re an active investor is to keep a list of stocks that you would be willing to buy if a crash happens.

Seek financial advice

When stocks are crashing, it is easy to get swept up by your emotions. If 20% of your portfolio value has been knocked off, you might not be in the right frame of mind to be making decisions which could impact your financial future.

Seeking a second opinion, ideally from a financial adviser, can give you some perspective on your thinking and guard against any rash decisions.

What happens after a crash?

Following a market crash, stocks are likely to experience a period of volatility as investors re-evaluate the market. But downturns can also represent investment opportunities, especially if there are certain stocks you think may have switched from overvalued to undervalued.

Cautious investors may often flock to “safe haven” investments like gold, bonds or even bitcoin, so a market downturn may be a good time to think about diversifying your investment portfolio.

If history is any indicator, the markets should eventually rebound, but trying to determine when this will happen is the million-dollar question. Stocks may recover within weeks or months, or we may be faced with a years-long bear market, especially if global recession fears turn out to be on the money.

How to profit from a falling market

It’s possible for traders to profit when prices are falling through a strategy called “shorting the market”. Because this is typically a risky strategy, only experienced traders are advised to do this.

The most common ways that people can profit from falling equity, currency or commodity prices is through inverse ETFs, forex or options trading.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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