Coronavirus Stocks

The market contagion stemming from the spread of coronavirus has prompted companies to pre-emptively cut top and bottom-line forecasts citing supply chain disruptions and demand uncertainties. The S&P 500 (NYSEARCA: SPY) has descended into correction territory stoking fears of an impending bear market. The Federal Reserve implemented an emergency 50-basis point rate cut on March 2, 2020, to stave off coronavirus impact on the economy. Further rate cuts of at least another 50-basis points are anticipated in their meeting later this month. The yield on 10-year Treasuries sank to all-time lows below 0.7% bolstering fears of a global recession. Investors seeking portfolio protection during this tumultuous period of stock market uncertainty should take a closer look at these three stocks.

CoreLogic Inc. (NYSE: CLGX)

The dominant real estate, mortgage, and underwriting data analytics platform provider CoreLogic, Inc. (NYSE: CLGX)is a direct beneficiary of the spike in mortgage refi activity. Revenues grew six-percent YoY in their Q4 2019 earnings report beating consensus analyst EPS estimates by 0.07-per share coming in at 0.77-per share. Core mortgage and real estate solutions were the primary growth driver. This was prior to the coronavirus epidemic. Falling yields have materialized as a consequence of the economic turmoil unleashed by the spread of COVID-19. With the anticipation of more rate cuts to follow, mortgage lenders are experiencing a surge in mortgage refinancing activity. For example, a 15-year fixed rate of 3.12-percent just five years ago can be refinanced as a 10-year loan at 2.5-percent resulting in hundreds of dollars in monthly savings. While money center banks are seeing upticks on the mortgage side, that’s being offset by narrowing margins. For this reason, investors can sidestep the financials and consider the platform provider.

Utilizing the rifle charts, CLGX is one of the rare stocks with a double bullish monthly pup formation composed of a moving average (MA) pup breakout and a stochastic mini pup breakout. This is made possible by the resilient support on the rising 5-period MA at 45.48. The trajectory targets the upper monthly Bollinger Bands (BBs) at the 55.55 Fibonacci (fib) level.

Catasys (CATS)

In an era of healthcare cost-cutting initiatives, behavioral and mental health analytics, network and treatment platform provider Catasys, Inc. (NASDAQ: CATS) has a unique business model that optimizes efficiencies for insurers, providers and patients. Utilizing big data predictive analytics, CATS identifies health plan members that meet criteria for their proprietary OnTrak solution. CATS contracts with most of the nation’s largest health insurers to transition the most at risk and costliest patients who also suffer from behavioral, mental and/or substance abuse. Discreetly enrolling them in the 52-week OnTrak solution, patients utilize telemedicine and behavioral therapy to improve health as insurers see a 50-percent drop in healthcare costs, which CATS takes a percentage of. The model is designed to trim healthcare costs while improving patient care with the outcome and evidence-based treatment versus the traditional treatment center model which relies on higher healthcare costs from rising headcounts and longer “heads on beds” model. Revenues are improving but the company has yet to turn a profit. CATS is riding the healthcare cost efficiency and evidence-based treatment narrative which will continue to gain momentum, especially in an election year. CATS monthly chart has a potential monthly pup breakout which would target the 22.00 upper monthly BBs if the stochastic can cross back up.

Realty Income (O)  

Real estate investment trusts (REITs) tend to outperform benchmark indices during recessionary periods with stable dividends that can offset share depreciation. Realty Income (NYSE: O) is one of the most stable REITs with over 6,400 commercial properties throughout the U.S, U.K. and Puerto Rico. With a 98.6-percent occupancy rate, tenants include well-known household brands like Walgreens (NYSE: WBA) , Walmart (NYSE: WMT) , FedEx (NYSE: FDX) , 7-Eleven, Dollar Tree (NYSE: DLTR) and Dollar General (NYSE: DG). The company has distributed 595 consecutive months of dividends with 105 dividend increases since its NYSE listing in 1994. The company prides itself as a monthly dividend paying REIT currently yielding 3.70-percent on trailing 12-month basis. They also have a dividend reinvestment program (DRIP) for compounding gains and better dollar-cost averaging to take advantage of market downturns. Since O is a component of the SPY, there is a positive correlation with the trajectory of the benchmark S&P 500 index. Therefore, shares will still fall with the SPY. This one makes sense for investors with a long-term bullish outlook seeking steady monthly income at better than 10-year Treasury yields.