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4 Domestic Stocks to Shield Your Portfolio From Coronavirus

Manaswita Ghosh Dutta

The outbreak of Coronavirus, a fast-spreading flu-like illness that shook both corporates and investors alike since its emergence in China last month, continues to hamper investor sentiment. While investors turned their attention to safe-haven assets, such as gold and defensive stocks, one may note that domestic stocks could be an ideal pool to invest in at present.

This is because these stocks have less exposure to the Chinese or global economy and mostly benefit from their operations within the country.

The Epidemic Threatens to Drag Global Economy

As the worldwide sentiment grows bearish because of the virus, investors brood over the impact of the infection on the Chinese and global economy. After all, the Chinese economy today is responsible for 17% of the global GDP and the virus outbreak could take a toll on this Asian country’s growth in the first quarter of 2020.

This is because China is currently  a principal component of global trade and services than it was about 20 years ago when the country witnessed the SARS outbreak. Beijing is now the largest trader of merchandise globally and is at the center of key global supply chains, which might get restricted as fears over the Coronavirus outbreak heighten.

According to Evercore ISI Chairman Ed Hyman, China’s GDP growth could be zero in first-quarter 2020 because of the epidemic, a CNBC report cited. Estimates for the country’s GDP growth now range from 0% to 5.5%, a significant decline from the current annual growth projection rate of 5.9%.

Speaking of the virus’ effect on global growth, both Moody’s Analytics and Barclays estimate it to dip 0.3% this year.

U.S. Economy on Solid Footing

However, the U.S. economy is expected to remain strong, little perturbed by the virus. This view was not only backed by Hyman but also the White House economists, who anticipate a 0.2% slip in first-quarter economic growth, per The Washington Post.

After all, the U.S. economy is going strong with the longest bull market in history, which started on Mar 9, 2009. Most of this bull run has been fueled by the dovish stance adopted by the Federal Reserve after raising rates nine times from 2015 to 2018. The central bank lowered interest rates thrice last year to ease the country’s economic scenario amid a raging trade war with China.

First, the low-rate environment was welcomed by businesses across the country (current rates are in the range of 1.5-1.75%), which also benefited from President Donald Trump’s ease in corporate taxes and regulations since he took office in 2016.

Second, this year started with an impressive number of job additions across a broad spectrum of sectors. Nonfarm payrolls in January rose by 225,000, per the Bureau of Labor Statistics. Manufacturing activity in the country also rebounded last month with the Institute for Supply Management’s index of national factory activity rising to 50.9, the highest level since July 2019.

This indicates a healthy state of affairs for the U.S. economy. This is why it makes sense to invest in U.S.-focused stocks at present.

4 Domestic Stocks to Buy Right Away

We therefore hand-picked four stocks that are well-positioned to gain ahead on the back of their own domestic operations. All these stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).

Darling Ingredients Inc. DAR is a producer and marketer of natural ingredients from edible and inedible bio-nutrients.Shares of this Zacks #1 Ranked company have risen 34.4%, outperforming the broader S&P 500 Index’s gain of 21% over a year. In addition, the Zacks Consensus Estimate for Darling Ingredients’ current-year earnings has moved 89.7% north in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Malibu Boats, Inc. MBUU is a manufacturer and marketer of recreational powerboats. Shares of this company with a Zacks Rank of 1 have soared more than 100%, outperforming the broader S&P 500 Index’s rise of 19.2% over the past six months. In addition, the Zacks Consensus Estimate for Malibu Boats’ current-year earnings has moved 4.3% north in the past 60 days.

Helen of Troy Limited HELE is a designer, developer and marketer of a wide range of consumer products. Shares of this Zacks Rank #2 company have surged 67.4%, outperforming the broader S&P 500 Index’s rise of 20.9% over a year. In addition, the Zacks Consensus Estimate for Helen of Troy’s current-year earnings has moved 5.2% north in the past 60 days.

Gray Television, Inc. GTN is a television broadcast company. Shares of this company with a Zacks Rank of 2 have rallied 25.2%, outperforming the broader S&P 500 Index’s rise of 20.9% over a year. In addition, the Zacks Consensus Estimate for Gray Television’s current-year earnings has moved 11.1% north in the past 60 days.

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Helen of Troy Limited (HELE) : Free Stock Analysis Report
 
Darling Ingredients Inc. (DAR) : Free Stock Analysis Report
 
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