COVID-19 widely impacted the global economy in 2020, and a few years later, similar problems remain. While the lockdowns are essentially over, vaccines remain an ongoing topic of debate, Despite certain stocks suffering from heavy losses, some industries benefited from the transition and increased demand for its services. Technology and pharmaceuticals were huge winners as work-from-home laws were established and vaccines played a crucial role in the economy’s recovery. Here's what you need to know about COVID-19 stocks for your investment portfolio.
Quick Look at the Best COVID-19 Stocks:
COVID-19 Stocks to Watch Out for This Year
The future of the world economy remains uncertain. However, the global gross domestic product (GDP) returned to pre-pandemic levels during 2021 (even though it is uneven in some regions) and the outlook for the coming year presents excellent opportunities to invest.
Pfizer Inc. (NYSE: PFE)
Pfizer was one company that saw huge gains after becoming the first company to get its COVID-19 vaccine approved. As a result, the American biotech company’s earnings have benefitted, generating $9.2 billion in vaccine sales in the second quarter of 2021, compared to $1.2 billion during the same period in its previous year. In addition, the company now has a COVID-19 pill that various health regulatory bodies have approved.
As a result of the clamor from nations to acquire its vaccine, Pfizer’s shares have, as expected, performed incredibly well. Furthermore, the company pays an annual dividend and has a track record of 12 years of consistent dividend growth.
Merck $ Co. (NYSE: MRK)
Merck is a pharmaceutical company with an exciting year ahead. The U.S. Food and Drug Administration (FDA) has approved the company’s COVID-19 pill, which is predicted to reduce mortality by around 50%.
Overall, the company is at the forefront of research, hoping to prevent and treat life-threatening diseases, with as much as $13.6 billion invested in research & development in 2020. Its oral COVID-19 medicine will be one to watch in 2022 as it works with global authorities to make it readily available.
Microsoft Corp. (NASDAQ: MSFT)
Microsoft is a well-known technology brand that has increased in price significantly since the pandemic. However, it’s not a company you would directly associate with the pandemic, like Pfizer or Merck above. Regardless, its growth over 2021 was more than 40%, with the company reaching record highs for its share price, as tech stocks were some of the biggest winners during the pandemic.
In 2020 Microsoft’s Teams product added 95 million users, becoming one of the fastest-growing apps of the pandemic. Its daily active users have also shown rapid growth with 145 million users for Q2 2021. These figures have been trending in a similar trajectory as they enter the new year.
Delta Air Lines (NYSE: DAL)
On the flip side, the travel industry was significantly impacted during the pandemic, with demand reaching new lows and revenues falling sharply. However, fast forward to 2022, and travel demand looks set to boom. With pent-up demand and restrictions significantly reduced from last year, Delta could be a stock to really benefit as the pandemic fades.
Delta Air Lines is a driver behind innovation in its industry, from revamped prices to purchasing an oil refinery. It has a strong balance sheet and looks to be a great airline to recover as demand increases.
Johnson & Johnson (NYSE: JNJ)
Johnson & Johnson was thought to be a major player in combating COVID-19, as they were among the earliest firms in creating the vaccine. However, after issues and worries surrounding side effects, JNJ saw demand dip.
JNJ still sees demand for its vaccine, even with its issues. South Africa's Medical Research Council said the JNJ booster is 85% effective in protecting against hospitalization against the omicron variant for 1 to 2 months. However, with the variant milder in nature, whether this will result in significant demand for JNJ’s shot remains to be seen.
Elsewhere, Q2 earnings for JNJ were positive with revenue up to $6.98 billion, up 57.2% versus the same period in 2020. A recent collaboration with Microsoft will also help the company for 2022.
Overview: COVID-19-Related Stocks
Healthcare: Pfizer, Merck and Johnson & Johnson operate in the healthcare market, designed to combat dangerous diseases. The pandemic has dominated attention, which has resulted in profits rising. The companies mentioned could see continued gains with a constant demand for vaccines and new drugs, such as Pfizer and Merck's potential pills. However, as the pandemic continues to fade, expect vaccine makers’ share prices to fade with it. Additionally, many people have become wary of big pharma over the last 2 years.
Technology: This sector has seen a rapid rise as people continuously transition to the online world. Microsoft benefited immensely as work from home measures and lockdowns were in place. In addition, its products such as Teams and Xbox saw increased activity.
Airlines: Being one of the hardest-hit sectors from the pandemic, it's safe to assume the worst has finally passed and demand can slowly move towards its pre-pandemic state. Signs of growth for airlines have been apparent, suggesting the market may make huge strides this year.
How to Buy COVID-19-Related Stocks
Pandemic-related stocks are those that have in some way benefitted or experienced a negative impact from the COVID-19 pandemic. The stocks listed will be available to invest in or trade with the majority of brokers. If you have yet to set up a brokerage account, then you can follow the steps below.
Find a brokerage.
The broker will be the intermediary to connect you for buying and selling shares. When a customer places an order via their broker to buy a stock, the broker will carry out the instructions. If you decide to purchase shares for any of the stocks above, you instruct your broker to buy the number of shares you request at the price you set, and it carries out those instructions.
You will likely be charged for the action by the broker. The fee varies depending on the broker. Therefore, it is vital to research costs and other aspects before setting up an account.
Decide how many shares you want to buy.
Once you have chosen a broker, you fund your account and decide how many shares to buy. Take into account the amount of risk you want to take and the percentage of your account attributed to the stocks.
You may choose to purchase these shares all at one time. Or, a popular choice among investors is to purchase shares over time and keep adding to them.
Choose your order type.
This stage requires you to decide on how your position is executed. Different order types exist, but the primary two you would probably use are market and limit orders.
Market orders mean the price to purchase the shares will be based on the market. Therefore, you are purchasing the shares at its current price. Therefore, using market orders results in a high chance your order will be filled.
Limit orders mean that the price you buy the stock at is decided by you. The choice is yours on the price you want to enter. However, there is a higher chance this order will not be filled.
Buy the shares.
After you have completed all the necessary steps to be able to buy shares, all that is left to do is to buy the shares. Next, open the trade ticket and complete the required fields, and finally, click buy. Once completed, you can monitor the stock and your other positions by navigating to the correct tab on your brokerage platform.
Best Online Brokers
It's essential to find an online broker that suits you and your investment style. If you are looking for a broker, make sure to check out the list of best online brokers below.
Features to Look for in COVID-19 Related Stock
- If COVID-19 were to pick up again and a lockdown was on the horizon, you’d want to look for stay-at-home stocks. These may include gaming, video calling/meeting and streaming stocks.
- On the other hand, if we see cases falling and restrictions finally removed in all parts of the world, look for social- and travel-related stocks. An uptake in travel, retail, events and dining will become apparent and could benefit related companies.
Pros and Cons
Pfizer: The pharmaceutical company has seen considerable growth in its earnings over the last 12 months. In addition, with demand for its vaccine continuing, the stock looks strong. Some may question if the company can replicate its impressive run as the pandemic recedes.
Merck: A considerable advantage to Merck, as with Pfizer, is its COVID-19 pill. The disadvantage of this is also rival Pfizer. The efficacy rate for Merck’s pill is predicted to be considerably lower than Pfizer, posing a problem for the company. Meanwhile, countries still seem to be pushing vaccines first.
Microsoft: The advantage of purchasing a stock with a market cap as large as Microsoft is its consistent dominance of innovative markets. Along with a few other dominant tech firms, the company has created high entry barriers and made its operating systems the ideal choice with minimal alternatives. However, the question of whether a trillion-dollar company can be expected to show similar signs of growth, as it did during its early years, is difficult to justify.
Delta Air Lines: The positives for Delta and the airline industry are exciting this year. If variants have less impact, as we have seen so far with omicron, and restrictions continue to ease, the benefits for airlines will be significant. However, uncertainty is still a factor to consider.
Johnson & Johnson: The advantages are similar to other pharmaceutical stocks; demand for vaccines cannot be understated, despite JNJ’s troubles. The company’s financials are solid. Despite the increased demand, its share price was less than convincing in 2021.
Are COVID-19 Stocks a Good Investment Right Now?
Your current opinion will significantly impact your judgment of COVID-19-related stocks on the economy because of the uncertainty that surrounds the global economy right now. For many countries, lockdowns have ended and, therefore, the future looks bright for industries that struggled during the pandemic’s peak. Currently, industries such as airlines and retail look like they could be excellent investments in the long term.
Biggest COVID-19 Related Stock Movers of the Day
As we move further away from the pandemic, COVID-19 will likely have less of an impact on the economy. Therefore, keep an eye on the most prominent moving stocks premarket and during each trading day, so you don’t miss out on a potential trading opportunity.
The Two Sides to COVID-19
It is essential to be unbiased for the future of the global economy. The pandemic could be coming to an end, or other variants may drag it out longer. However, it is understandable to feel confident that the future outlook is bright in the battle against COVID-19. More vaccines and treatment alternatives are being developed and two years on, the information we have on the virus is much stronger than previously. As a result, investors have been fairly bullish on the stock market for 2022, and it’s clear to see why.
Frequently Asked Questions
What are COVID-19 stocks?
COVID-19 stocks are shares in companies that help with the pandemic-related needs.
Are COVID-19 stocks still a good investment?
COVID-19 stocks can still be a good investment because the pandemic is ongoing.
What are the best COVID-19 stocks?
Benzinga offers a list of the best COVID-19 stocks in the above article.