April 4, 2021 | 5:00 am
Editor’s Note: This article is for informational purposes only and does not represent an investment recommendation by THE CEO.
By Jesse Cohen
Concerns around COVID-19 appear to be back in the limelight for many investors. After weeks of decline, cases in the United States have increased in recent days, while in Europe, several countries, such as Germany, France and the Netherlands, have reimposed or extended containment measures and other social restrictions.
This week, Dr. Rochelle Walensky, director of the Centers for Disease Control and Prevention in the United States (CDC), excitedly asked public officials and others to spread the gravity of the situation, in an attempt to prevent a new wave.
“I’m going to skip the script to reflect on the recurring feeling I have of impending doom,” Walensky told a media appearance on Monday. “Right now I am afraid.”
This worrisome course of events could disrupt “reactivation operations,” in which investors have turned in the technology stocks they bought during the pandemic, and rotated into value stocks that are likely to benefit from the recovery of the economy.
With all of this in mind, the next two names are well positioned to benefit from such a scenario.
1. Netflix (NASDAQ 🙂
Generally considered one of the big winners of the COVID-19 crisis, Netflix (NASDAQ 🙂 benefited during the pandemic from social distancing measures that forced the population to confine themselves to home, resulting in more and more people will turn to the streaming service for entertainment.
Coronavirus concerns have resurfaced on a global scale, so that habit is likely to pick up again in the coming months.
Another promising sign is that the production company and content platform recently announced that it will begin to combat password sharing, a practice that costs the streaming giant billions of dollars.
According to the latest estimates, about a third of customers who sign up for Netflix share their passwords with family and friends who live outside their homes. We expect that to result in an increase in new national and international paid subscribers in the coming weeks and months.
Shares of the Los Gatos, California-based streaming giant are down 3.5% so far in 2021, compared to a 5.7% rise in the same period. Investors have sold technology stocks that have rebounded throughout the pandemic to buy valuable stocks that are likely to benefit from the revival of the economy.
Netflix closed the first quarter at $ 521.66, roughly 12% below its January 20 record highs at $ 593.29, bringing the company’s market capitalization to $ 231 billion. We believe the recent sale offers a good entry point, given the resurgence of coronavirus cases and new lockdown measures from Europe.
2. Zoom Video (NASDAQ 🙂
Other notable beneficiaries of the COVID-19 outbreak are the actions of Zoom Video Communications Inc (NASDAQ :), which have fallen out of favor in recent months as progress on the vaccination front has prompted states and countries to relax restrictions and reverse confinement measures in homes.
After skyrocketing to all-time highs of $ 588.84 on October 19, Zoom shares, despite their recent pace of gains, have lost momentum, falling 45% to close March at $ 321.29.
At current valuations, the San Jose, California-based video conferencing specialist’s market capitalization stands at $ 94.4 billion.
With fears of another wave of coronavirus coming – and the ensuing lockdown measures – it makes sense for investors to rush back to the cloud-based video conferencing service provider, amid expectations that companies will keep their offices closed. worldwide.
In addition, confidence in the company has recently improved following news that Zoom plans to start licensing its video conferencing technology to other companies to embed it in their own applications and websites.
Under the new model, Zoom would continue to facilitate video calls, but not with the brand as such, making its participation invisible to users. It aims to charge for video calls by the minute, offering the first 10,000 minutes of each month free, according to CTO Brendan Ittelson.
With this move, Zoom Video Communications – considered the leader in modern business video communications – will compete against Amazon (NASDAQ 🙂 and Ringcentral (NYSE :), which already offer unbranded tools that can be embedded in other companies’ products.
This text first appeared on Investing.com