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Blue Chip Stocks Resisting COVID-19

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Blue Chip Stocks Resisting COVID-19

Blue chips are the mature companies that are the pillars of their industries. In addition to posting strong results quarter after quarter, these are also the companies that continue doing well even in times of economic downturns.

Historically, blue chip stocks include IBM (NYSE: IBM), Exxon Mobil (NYSE: XOM) and General Electric (NYSE: GE). But with COVID-19 pulling the rug out from under the global economy, the list of companies considered blue chips could be changing. These are the industries and companies that I believe are best-positioned to make it through this crisis and springboard to a dominant future.

Streaming

Netflix (NASDAQ: NFLX) earnings may have tipped off something important. Netflix's big trend is obviously streaming adoption globally. With self-quarantines, Netflix blew away estimations, reporting 15.7 million net added subscribers globally, whereas analysts estimated ‘only' 7.2 million. And as for the guidance for the second quarter, it is now 7.5 million global net additions, with analysts' estimates being 4.1 million.

Currency headwinds and falling average revenue per user in international markets did act as headwinds on revenue, overall Netflix is best-positioned to take advantage of growth in streaming due to its massive head start on the competition and growing moat of subscribers. 

Tech

Speaking of self-quarantines, Microsoft Corporation (NASDAQ: MSFT) has seen an incredible surge in demand for its Teams app. Video calls grew an impressive 1,000% in March as people are working from home. But they've got serious competition, specifically from Zoom Video Communications Inc (NASDAQ: ZM) and Facebook Inc (NASDAQ: FB), the latter the launch of its Messenger Rooms.

But there is the negative impact of the pandemic, as PC makers have halted production. This will be reflected in Microsoft's software revenue, which belongs to a segment accounting for 30% of its annual revenue. As for the cloud, Amazon.com Inc (NASDAQ: AMZN) is running out of ways to stop the JEDI deal, and this segment is likely to continue growing at high rates for the foreseeable future.  We will learn more as Microsoft reports earnings on April 29.

All bets were on Amazon when the lockdown started, as the e-commerce giant has seen a surge in demand. It has begun to perfect its same-day delivery capabilities, and according to FactSet Amazon is expected to sustain roughly a 30% earnings growth for more than four years. 

Business Model Perfection?

Despite being bonded (or clashing, to be more precise) in the cloud, Amazon and Microsoft are in completely different industries with entirely different infrastructure. But along with Netflix, they do have something in common: their strength lies in material growth trends that are powerful enough to cut through this recession, and strong balance sheets to help them weather the storm. 

This article is not a press release and is contributed by Ivana Popovic who is a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure . Ivana Popovic does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com Questions about this release can be send to ivana@iamnewswire.com

The post Blue Chips Resisting COVID-19 appeared first on IAM Newswire.

Photo by Kon Karampelas on Unsplash

 

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