The coronavirus has only being with us for a few months. But it has already had a huge impact on our behaviour. With the probability that the UK could soon be put in lockdown growing by the day, this looks set to continue.
Today, I’m focusing on the types of business that might actually see a rise in demand for their goods and services should this happen. But importantly, they could also benefit from longer-term changing habits.
Wash those hands
Debate rages as to whether Boris Johnson’s approach to dealing with the coronavirus outbreak is the correct one. But the advice to wash our hands more frequently is far less contentious.
It’s for this reason that companies like PZ Cussons — owner of soap brands such as Imperial Leather and Carex — could see increased demand for its products over this difficult period and beyond. That’s especially so if more of us become conscious of the need for hygiene after the pandemic has passed.
Consumer goods giant Reckitt Benckiser is another firm that should benefit. The FTSE 100 member owns brands such as Dettol and Lysol that are likely to be in demand by consumers wishing to cut their chances of getting ill.
Crisis or no crisis, we still need to eat. For this reason, supermarket stocks are likely to be in demand for the foreseeable future. Or at least they shouldn’t be subject to the same selling pressure as less defensive businesses.
My pick of the UK-listed bunch remains Tesco that has huge market share. More risk-tolerant investors might be drawn to tech-focused Ocado. But I remain wary as it’s still to generate consistent profits. It has already said it’s struggling to cope with orders since the crisis, leading it to take its app offline.
Further afield, it may be worth taking a bite of Domino’s Pizza if you think being stuck at home and long-term trends mean more food being delivered to the door. Interestingly, its share price is still far above where it was six months ago.
Last but not least, we’ll need to do something to take our minds off things. That’s especially so if we’re trying to entertain a young family.
Those willing to invest overseas might want to take a closer look at US giants like Netflix and Amazon. In addition to growing its Prime subscription members, the latter could also see a jump in sales of books and music over the period and changing habits could mean rising sales longer term too.
Despite needing to close some of its theme parks, Disney could also gain from more people stuck at home thanks to the forthcoming launch in the UK of its new streaming service, plus there’s the pent-up demand when the crisis has passed.
Closer to home, FTSE 100 broadcaster ITV is bargain-basement cheap, even though it’s already warned that advertising revenue will be dented over the next few months. Assuming no dividend cut, the company is forecast to yield a stonking 9.6% this year.
An alternative to TV-related stocks would be those in gaming. Although new releases may need to be put back, options here include developers such as Codemasters to Frontier Developments. And if buying a publisher of games feels too risky, there’s always services group Keywords Studios to consider.
It’s ugly out there…
The threat posed by the coronavirus outbreak has spooked global markets, sending stock prices reeling.
And with the Covid-19 virus now beginning to spread beyond of China and Italy, it seems very likely that the bull market we’ve enjoyed over the past decade could finally be coming to an end.
Against such a backdrop of market worry, it’s little wonder that many investors are starting to panic. (After all, nobody likes to see the value of their portfolio fall significantly in such a short space of time.)
Fortunately, The Motley Fool is here to help, and you don’t have to face this alone…
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Paul Summers has no position in any of the shares mentioned. The Motley Fool UK owns shares of PZ Cussons. The Motley Fool UK has recommended Domino's Pizza, ITV, Keywords Studios, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.