Stocks are sure to sink again; it’s only a matter of time. Whether or not this happens in the next few months, you’ll want to be prepared. There are currently many stocks that are worth buying, no matter where the market follows. Some of them would probably make even bigger profits if we had a second wave of COVID-19 blockades.
In this note, let’s look at why you should buy Activision Blizzard 09.30 NASDAQ: ATVI and Netflix 09.30 NASDAQ: NFLX right now, whether we are heading for a new market crash in 2020.
Video game developer and publisher Activision Blizzard has always looked like a winner during the lockout era, and the company will benefit from second-hand help from deeply bored users.
Activision’s results for the second quarter proved this, showing 38% revenue growth for the year and record profits of the company outside the holiday period for each year.
“We deliver entertainment that inspires and unites, helping to overcome barriers and enabling players to create and maintain friendships and community through gameplay,” said CEO Bobby Kotik in the call for revenue. “In the second quarter, our player base grew by 30% during the year, adding over 100 million active players per month. The time spent in our games increased by 70% over the same period, and the commitment and investment of players for the second quarter was at a historic high. “
The sudden jump also accelerated Activision’s long-term growth plans. Honestly, I would not be interested in this company or its shares in any other case. The Call of Duty the franchise has never seen players on this scale, and mobile games are an important driver of growth these days.
“Although we already have over 400 million players, there are billions of users and gamers around the world,” said Daniel Alegre, chief operating officer, during the same call for revenue. “We want to keep looking for ways for them to test our franchises in whatever way they prefer. We have the pipeline to do that.”
The shares have gained 36% of the year so far and are trading at a fairly high 24 times forward profit. This is good because you are buying a market leader with clear growth plans and solid financial results. Paying a premium for this high quality company today will bring you a return to the market for years to come.
The leading video streaming service provider is taking great advantage of the COVID-19 opportunity this spring, boosting subscriptions for new subscribers long after management, and raising revenue to a 28% jump in the first quarter. Star growth slowed somewhat in the second quarter, and management pointed to even softer additions from subscribers in the back half of the year, who threw a wet blanket on Netflix’s share price gains. Shares have already jumped 53% year-on-year, but 13% below the July record.
Another wave of blockages will reverse this tide again, creating Netflix for record growth over the holidays this year. If we move to 2020 without a new stop, this jump would increase Netflix’s results in the first half of 2021. And you know what? I would still buy Netflix at today’s prices if I didn’t expect any home stay orders in the near future.
Netflix is a winner in almost every market environment. High-speed Internet access is becoming widely available in developing countries, along with reliable banking systems that allow companies like Netflix to charge subscription fees. Here we look at a truly global growth story, with many years of high octane growth left in the reservoirs.
With or without the inevitable stock market crash, Netflix and Activision Blizzard are poised to beat the market in the long run. They are simply equipped to take advantage of any new coronavirus blockage. In any case, these two stocks are not very useful at the moment.