JPMorgan: Stay-at-Home Stocks Make a Great Buy Right Now

Thursday, March 19, 2020 | Steve Anderson
JPMorgan: Stay-at-Home Stocks Make a Great Buy Right Now

Once upon a time, when the Internet was just getting started, futurists envisioned a future in which we no longer needed to leave our houses. Our shopping, our jobs, virtually every part of our lives would be, well, virtual. Fast forward about 25 years or so and we're still occasionally leaving the least we were, until recently. With COVID-19 coronavirus doing a number on most every American institution—and most of them overseas as well—people are increasingly embracing the “stay at home” model. That in turn led to recent recommendations from JPMorgan, who had several stocks in mind to embrace this new paradigm.

Staying at Home: The New Market Leader?

JPMorgan put its analyst weight behind several such stocks, calling Amazon (NASDAQ: AMZN) and Facebook (NASDAQ: FB) their best stock picks in this current market. It also raised both share price and revenue estimates for Amazon, and did likewise for Netflix (NASDAQ: NFLX).

That's just for starters: several other stocks got highlighted as part of a recent analyst note from JPMorgan, including pet shop brand Chewy (NYSE: CHWY), education tech brand Chegg (NYSE: CHGG), the world leader in online garage sales eBay (NASDAQ: EBAY), home exercise equipment maker Peloton (NASDAQ: PTON), and online music provider Spotify (NYSE: SPOT).

The JP Morgan note also delivered bad news for companies requiring customers to leave the house. This includes ride-sharing operations Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT), as well as online travel companies Booking Holdings (NASDAQ: BKNG) and Expedia (NASDAQ: EXPE). All four of these, and others, had their estimates cut going forward.

Amazon is clearly leading the way as a stay-at-home giant; recently announcing that its delivery times would likely be increasing under the weight of positively staggering volumes, the company's value has fallen just 16% since its peak back in late February. By way of comparison, the entire S&P 500 is down just over 29%.

While under ordinary circumstances, just being down less than the rest of the market wouldn't be a call to buy, MKM Partners' chief market technician JC O'Hara noted that Amazon has “positive price action” to its credit. Looking at Amazon's charts showed the stock up 9% in just under a week. The company also recovered well once it hit a key support point in $1,550

Not Just Shopping, Either.

Other analysts are getting behind the stay-at-home model. Tocqueville Asset Management portfolio manager John Petrides rattled off a laundry list of potential winners in this space, including the streaming video platforms, the entire e-sports market,  and several others that allow for some semblance of the old lifestyle will gain substantially.

Meanwhile, companies that are more physically connected will need to adapt accordingly. While it's clear that grocery stores are still physical-heavy, they may not need to be much longer. Several alternatives already exist, and can be put to work with a little help from reduced government regulations. Thankfully, “reduced government regulations” have been something of a theme in the last few years.

A Brave New World Where You Don't Leave the House?

Several major alternatives are already in play for the stay-at-home world. There's a dizzying potential for flying drones to deliver packages, if the Federal Aviation Administration (FAA) would get out of its own way and actually let them be used. There have been some advances on that front, especially for restaurants. Imagine a world where your Olive Garden order gets loaded into the insulated pouch of a quad-rotor drone and arrives at your door in 15 minutes. It's been done in some places; 7-Eleven outlets were doing it years ago with short-range trips. Meanwhile, the growing self-driving car concept makes perfect sense as an autonomous delivery platform for groceries, clothiers, and even furniture makers.

However, there's one major impediment to this concept: the so-called “digital divide”. While high-speed internet—even into the gigabit range and beyond—is taken for granted in many places, many others don't have anywhere close to that. While today, those customers can get in their cars and drive to locations that have what they want, a society without universal high-speed internet access falters when no one can leave the house.

This is improving with better wireless access, but even 4G LTE access isn't always unlimited. Just ask anyone who's seen throttling. To make such a connected society happen, we need to connect all of society. To do anything less is to completely abandon a market, and to really make this paradigm happen, we need every market possible in and shopping.

Featured Article: What are the Benefits of Index Funds?

7 Penny Stocks That Don’t Care About Robinhood

By the time you read this Vladimir Tenev, the CEO of the trading app Robinhood, will be testifying in front of Congress. The company’s role in the GameStop (NYSE:GME) short squeeze will be called into question.

However, the real issue at stake is the right of traders to buy and sell the equities of their choice. In the case of Robinhood, some traders are buying a lot of penny stocks. While definitions vary, penny stocks are generally considered stocks that are trading for less than $10 per share. These stocks are largely ignored by the investment community.

One reason is that many of these stocks are cheap for a reason. For example, the company may have a business model that is out of date. In other cases, they operate in a very small, niche market that doesn’t drive a lot of revenue.

And most of these stocks are ignored by the investment community. They simply aren’t considered significant enough to spend time debating.

But some penny stocks do have the attention of Wall Street. And they’re being largely ignored by the day trading community. The focus of this special presentation is to direct you to penny stocks that have a story that the “smart money” thinks will eventually be trading at much higher prices.

And that’s why you should be looking at them now.

View the "7 Penny Stocks That Don’t Care About Robinhood".

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Chewy (CHWY)1.4$84.50+0.5%N/A-196.51Buy$89.00 (AMZN)1.7$3,419.42+1.2%N/A100.13Buy$3,944.57
Facebook (FB)1.8$312.11+0.2%N/A35.55Buy$327.64
Netflix (NFLX)1.7$557.80+0.9%N/A89.97Buy$587.45
Chegg (CHGG)1.9$90.96+2.2%N/A-454.80Buy$105.29
Spotify Technology (SPOT)1.3$285.39+3.1%N/A-66.99Hold$293.19
Peloton Interactive (PTON)2.2$123.43+3.7%N/A1,763.29Buy$149.50
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