20 Best Stocks to Buy Now for the Next Bull Market
Slide Show

20 Best Stocks to Buy for the Next Bull Market

Getty Images

Advertisement
Advertisement

The coronavirus crisis has effectively reset the board. While both the economy and stock market will someday return to their earlier-year strength, neither will look the same. That means some of the best stocks to buy right now might look much different from top picks just a few quick months ago.

The market might very well have another leg down. It's far too early to say we're out of the woods given that most of America is under quarantine and we have yet to see what first-quarter earnings and second-quarter guidance looks like. But we're getting late in the game for a truly defensive posture. That's closing the barn door after the horse has already bolted. While a few protective picks might be in order, now is the time to start planning for the next bull market.

Even professional bears are seeing the light at the end of the tunnel.

"I'm selectively buying in my personal accounts," says John Del Vecchio, co-manager of the AdvisorShares Ranger Equity Bear ETF (HDGE). "There were plenty of companies that went into this crisis on life support, kept alive by cheap debt. You're going to see a lot of these companies fail. But at the same time, a lot of high-quality blue chips are on sale right now at prices we may never see again in our lifetimes."

Many companies will be gutted. It might take years for airlines to return to pre-crisis passenger numbers, and they might go through bankruptcy or a government conservatorship in the meantime. Likewise, retailers and restaurants might be dealing with the fallout from lockdowns for months or years, as will their banks and landlords.

However, some of Wall Street's best stocks could come out of this with relatively minor scratches. Many have massive stores of cash that will help them weather short-term profit drops. Some might actually benefit from a coming recession by picking up market share when its competitors fold.  Many of these beneficiaries are tech stocks, but certainly not all. Plenty are in the gritty, old-fashioned real economy.

Today, we'll look at 20 of the best stocks to buy now as investors shift their focus to the recovery. These companies boast a blend of well-positioned businesses, strong balance sheets and/or leading positions within their industries.

SEE ALSO: 25 Dividend Stocks the Analysts Love the Most

Data is as of April 6. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 2 of 21

Amazon.com

Getty Images

Advertisement
Advertisement

Market value: $994.4 billion

Dividend yield: N/A

Amazon.com (AMZN, $1,997.59) entered the coronavirus crisis uniquely positioned to do well.

With many of its competitors forced to shut their doors, Amazon's traditional retail business continued to deliver packages virtually uninterrupted. In fact, at a time when most retailers were panicking about lost revenues, Amazon's biggest problem was finding the manpower to deal with a surge of new orders.

But that's not all. With much of the world's population under lockdown, Amazon's Prime video streaming service has been keeping people entertained. And its Amazon Web Services (AWS) unit has helped companies of all sizes keep their operations running while their workforce is working from home.

Toilet paper manufacturers will enjoy a spike in sales in the first half of this year, but sales will fall off a cliff in the second half, as the people who hoarded won't need to replace their supplies for a while. You can't make the same argument for Amazon, however. AMZN has been stealing market share from traditional brick-and-mortar rivals for more than two decades now, and the coronavirus lockdowns have only accelerated that trend.

Amazon has long graced many "best stocks to buy" lists, and it continues to look attractive to this day. A recession is bound to hit any company, especially retailers. And even after the lockdowns end and the economy begins to recover, you might expect Amazon sales to drop off a little as Americans flock to the malls for the sheer joy of getting out of the house. But this much has been true for more than a decade: Once people experience the convenience of Amazon.com, they often latch on.

SEE ALSO: Where Is the Stock Market Headed? 14 Wall Street Pros Sound Off

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 3 of 21

Walmart

Getty Images

Advertisement
Advertisement

Market value: $357.1 billion

Dividend yield: 1.7%

Like Amazon, Walmart (WMT, $126.07) has been knocking the cover off the ball throughout this crisis. While most retailers have been forced to close their doors, Walmart reportedly saw its sales jump 20% year-over-year for most of March.

Americans on lockdown are eating more at home, which helps Walmart's grocery business. But electronics, toys, cleaning supplies and just about everything else Walmart sells is also in high demand these days – and fortunately, Walmart spent the years prior to the crisis building out its e-commerce arm.

Much of this is a one-off windfall that won't be repeated. You can only stockpile so much bleach and toilet paper. But Walmart stands to benefit for years or even decades after the lockdowns are lifted.

It comes down to the "retail apocalypse" we've been hearing about for years. It's well established that America has vastly more store square footage per capita than any other country in the world – roughly five times the amount of store square footage per capita as the United Kingdom and six times that of France. And a lot of that square footage is occupied by weaker retailers that have been limping along for years, kept alive by cheap credit.

Some of these retailers won't survive this recession. Others, at the very least, will need to consolidate and reduce store count. Some of their losses will be Walmart's gain.

WMT is perhaps one of the best stocks to buy if a recession is nigh. It's during a recession when, in true Darwinian natural selection, the fittest survive. And other than perhaps Amazon, no retailer has proven to be fitter than Walmart.

SEE ALSO: 19 Dividend Aristocrats That Have Gone on Deep Discount

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 4 of 21

Clorox

Getty Images

Advertisement
Advertisement

Market value: $22.7 billion

Dividend yield: 2.3%

Clorox (CLX, $181.38) was identified early as one the best stocks to benefit from a virus pandemic. Clorox sells bleach, disinfectant wipes and other assorted cleaning products. And as frequent cleaning is the first line of defense against coronavirus, the company will probably report record sales when it announces its quarterly results.

But here's the thing. While there is no doubt some amount of hoarding going on, Clorox is likely to fare a lot better than, say, toilet paper makers once life more or less returns to normal. We're not using more toilet paper during this crisis. For reasons that still defy all logic, we appear to be simply squirrelling it away somewhere.

But throughout this crisis, we really are cleaning more. The bleach, wipes and other cleaning products are getting used up as we go.

Get The Closing Bell: Sign up for Kiplinger's free Closing Bell e-newsletter for daily wealth-building insight, advice, and analysis

Furthermore, that's likely to continue for months and possibly years once this crisis passes. What business owner will want a new virus outbreak traced back to their establishment? Every plane, restaurant, movie theater, doctor's office and virtually every other place will be thoroughly scrubbed multiple times per day for the foreseeable future.

Clorox is not a growth play by any stretch of the imagination. It sells bleach, for crying out loud. But CLX is a quality blue-chip stock that is likely to see above-average sales and earnings for at least the next several quarters.

SEE ALSO: The 25 Best Low-Fee Mutual Funds to Buy in 2020

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 5 of 21

Walt Disney

Getty Images

Advertisement
Advertisement

Market value: $179.8 billion

Dividend yield: 1.8%

The coronavirus outbreak is attacking Walt Disney (DIS, $99.58) on multiple fronts. The first and most obvious are the travel bans and stay-at-home orders that have shut down Disney's theme parks and cruises.

Alas, it gets so much worse than that. Disney's media empire is also under attack. With live sports shut down indefinitely, its ESPN unit is suffering. And two of Disney's would-be blockbuster movies, Mulan and Black Widow, have already been delayed. And Onward raked in a much lower-than-usual haul for an animated Disney movie due to theater closures.

And if all of that wasn't bad enough, it's all but certain that advertising revenues will fall at the ABC television network, which Disney also owns. Companies generally scale back ad spending during recessions.

But it's safe to say that these setbacks are temporary. It might end up being a slow summer for Disney if its parks remained closed or if it takes visitors a several months to get over coronavirus fears. And movie ticket sales also might be slow to recover depending on how long the lockdowns last and what sort of restrictions follow.

Disney, however, has some of the most iconic entertainment brands in existence in its Disney characters, as well as its Star Wars and Marvel franchises. These are the unassailable competitive moats that Warren Buffett likes to rave about, and they're the reason why people will once again flock to Disney resorts and crowd to see Disney movies once they're able.

But the biggest growth story for the company is its online video streaming service Disney+, which competes directly with Netflix.

Let's play with the numbers. Netflix has a market cap of $166 billion at current prices. By that specific measure, Disney's streaming service alone could eventually be worth as much as Netflix given that virtually every parent around the world will consider it a necessity. (And given that Disney already owns the content, its profit margins should also be a lot higher.) Yet Disney's market cap is only $180 billion, suggesting that the rest of Disney's sprawling empire is only worth $14 billion.

Obviously, this is just a quick-and-dirty analysis for example's sake. But the broader point holds: If Disney's streaming service is even remotely successful, then DIS stock – which is off 30% year-to-date – is undervalued by a country mile.

SEE ALSO: 15 Super-Safe Dividend Stocks to Buy Now

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 6 of 21

Microsoft

Getty Images

Advertisement
Advertisement

Market value: $1.3 trillion

Dividend yield: 1.2%

It's telling that during one of the most volatile bear markets in history, Microsoft's (MSFT, $165.27) share price has barely budged, down a modest 12% at time of writing compared to 21% for the market.

If we're potentially looking at a major recession, you might think that a supplier of business software would be a risky bet. Traditionally, software sales have been cyclical, with companies deferring major upgrades when the shekels get tight.

And in another era, Microsoft might truly have been at risk. But over the past decade, Microsoft has shifted to a subscription-based model for many of its software offerings, including its cash-cow Office suite (soon to become Microsoft 365), which includes Word, Excel and PowerPoint, among others. If we see mass layoffs in white-collar professions, the total number of subscribers might dip a little. But given that this crisis is hitting service and hospitality workers a lot harder than office staff, any dip in MSFT should be relatively muted.

The bigger story, of course, is Microsoft's dominance in cloud computing. Amazon Web Services remains the market leader, with a 32.4% market share. But Microsoft is in second place with a 14.9% market share, and the next biggest competitor is a distant third at just 4.9%. The cloud really is a two-horse race between Amazon and Microsoft.

With companies looking to cut costs in what promises to be a nasty recession, more of their workload will get shifted to the cloud, accelerating a trend that was already well established.

SEE ALSO: 64 Dividend Stocks You Can Count On in 2020

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 7 of 21

Berkshire Hathaway

Getty Images

Advertisement
Advertisement

Market value: $450.3 billion

Dividend yield: N/A

Warren Buffett has a lot of egg on his face at the moment. While the Oracle's decades-long track record is without equal, Berkshire Hathaway's (BRK.B, $185.24) stock portfolio has gotten absolutely hammered of late. One holding, Occidental Petroleum (OXY), has cut its dividend. Berkshire Hathaway has more than a third of its portfolio in banking stocks, which have gotten beaten up badly. And Buffett has pared back on two of his airline stocks (that we know of) as the industry has been obliterated this year.

Early estimates show the Berkshire portfolio down about 26% in the first quarter, though we won't know the final numbers until its quarterly results are released.

All of that said, Buffett thrives in times of crisis. In the 2008 meltdown, Buffett made a fortune by effectively bailing out Goldman Sachs (GS) and General Electric (GE). He was able to make extremely profitable deals because, when crisis struck, he had the cash and the financial firepower to do it.

Well, we're in the midst of another crisis, and Buffett has more cash to deploy than ever, at $128 billion. It remains to be seen what the Oracle will do with it. But that optionality is precisely what gives Berkshire Hathaway the potential to be one of the best stocks to buy as we potentially pivot out of the bear market.

SEE ALSO: Every Warren Buffett Stock Ranked: The Berkshire Hathaway Portfolio

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 8 of 21

Enterprise Products Partners LP

Getty Images

Advertisement
Advertisement

Market value: $33.4 billion

Distribution yield: 12.0%*

Energy has a reputation for being a volatile sector. But 2020 has been volatile even by the standards of oil and gas. The sector went into the year in a state of oversupply due in part to lower demand from China. The coronavirus outbreak in Wuhan disrupted China's factories late last year, and lockdowns further sapped demand.

As the coronavirus infections spread westward to Europe, demand fell even further. And then Saudi Arabia did the unthinkable, opening its taps and flooding the market with new supply even as demand was falling off a cliff. The result has been the biggest collapse in oil prices in history.

Energy stocks are bombed out right now, and there's no immediate reason to believe that will change. Cheap stocks can stay cheap for a long time in the absence of a catalyst to send them higher. And even if Saudi Arabia, Russia and the United States make a deal to curtail production, it will take months to work off the oversupply, particularly given that the economy is now likely in recession.

All the same, a few energy stocks are cheap enough today to warrant buying, even in the absence of a major catalyst.

For example, consider Enterprise Products Partners LP (EPD, $14.90), long considered to be the bluest blue chip in the midstream pipeline space. Enterprise has virtually no exposure to crude oil prices as its business consists primarily of transporting and storing natural gas and natural gas liquids.

Nonetheless, EPD shares are now roughly 50% below their 52-week highs and trade at prices first seen in 2006. They also yield a whopping 12%!

We can't know for sure when conditions will improve in the energy sector. But EPD – with a monstrous payout that's still well-supported by current cash flows – might be one of the best high-yield stocks to buy on the dip.

* Distribution yields are calculated by annualizing the most recent distribution and dividing by the share price. Distributions are similar to dividends but are treated as tax-deferred returns of capital and require different paperwork come tax time.

SEE ALSO: The 20 Best ETFs to Buy for a Prosperous 2020

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 9 of 21

McDonald's

Getty Images

Advertisement
Advertisement

Market value: $132.0 billion

Dividend yield: 2.8%

Like most restaurants, McDonald's (MCD, $177.04) has had to adapt during the coronavirus scare by closing most of its dining rooms. But the company has managed to keep its drive-through windows open in most locations, and offer delivery through apps such as DoorDash and Uber Eats. We won't know how sales have fared until the company reports its quarterly earnings later in April, but early indications are that they should be relatively strong.

A recent viral video showed virtually every square inch of a Toronto McDonald's completely covered in to-go bags, suggesting sales have been brisk.

But regardless of how McDonald's performance looks during the pandemic itself, MCD stock should get a boost from two major tailwinds once things settle down:

  • To start, fast food tends to do well in a recession. It’s often as cheap as making a hot meal at home, and McDonald's greasy French fries are the ultimate comfort food.
  • Secondly, another one of McDonald’s recent problems should be partially alleviated by the post-coronavirus recession. The booming economy of recent years had made labor a scarce commodity, and restaurants have long been complaining about rising labor costs. With so many Americans unemployed now, the labor market will likely remain slack for a while.

McDonald's is a survivor, having adapted itself over the decades. And you can bet the company will adapt and come out of the coronavirus crisis stronger than ever.

SEE ALSO: 11 Best Stocks to Ride Out the Coronavirus Outbreak

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 10 of 21

Starbucks

Getty Images

Advertisement
Advertisement

Market value: $79.6 billion

Dividend yield: 2.4%

Coffee chain Starbucks (SBUX, $67.79) is taking more abuse during the virus lockdowns than most fast-food joints. Part of the appeal of fancy coffee is getting out of your house and lingering for a while, and that is a nonstarter at the moment. All in-store cafes are closed until further notice. But many drive-through and grocery locations are still operating, and again, delivery is in play.

It's hard to imagine a scenario in which Starbucks' next two quarterly earnings reports aren't awful. While the to-go orders help to stem the bleeding, Starbucks is seeing a large percentage of its sales evaporate during the lockdowns, even while it has promised to continue paying its employees.

But this too will pass, and it's doubtful that the crowds will stay away for long. We might see baristas wearing masks for a while, and the company will likely see higher expenses for cleaning and sanitation for the next several months. But it's hard to imagine a scenario in which coffee drinkers give up their drug of choice.

Consumers cut back on large expenses during recessions, but they tend to indulge in frivolous little pleasures like a premium cup of coffee. You need a little joy in your life, after all. And labor costs should moderate for a while given the number of service workers who might have no job to return to once this crisis ends.

A self-inflicted wound to Chinese rival Luckin Coffee (LK), which found that roughly $310 million of its transactions last year might have been fabricated, could also help Starbucks' stance in China, where it has been rapidly expanding.

SEE ALSO: 8 Best Consumer Stocks to Buy for Income & Growth

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 11 of 21

Apple

Getty Images

Advertisement
Advertisement

Market value: $1.1 trillion

Dividend yield: 1.2%

Apple (AAPL, $262.47) was the world's premier consumer electronics company and one of the market's best blue-chip stocks before the coronavirus outbreak. It should hold on to both titles after the coronavirus outbreak is a distant memory. It's difficult to see a scenario in which that changes.

Like most retail-oriented companies, Apple likely will announce lower sales and profits in its next couple earnings reports. Upgrading your iPhone isn't a priority when you're on lockdown and not supposed to leave your house. Furthermore, many of the retail outlets selling Apple products are closed until further notice. And finally, even if demand were to immediately snap back to pre-crisis levels (which it won't, of course), supply chain issues likely would plague Apple for months. The company said as much in late January.

But it's important to note that these setbacks are temporary. A phone upgrade or iPad purchase postponed for a month or two is not a sale lost. It's simply a sale delayed. Some sales will be permanently lost as users stretch out the lives of their existing equipment to avoid the expense of a new purchase. But phones are designed to be replaced every few years, and that hasn't changed. Nor has the difficulty in switching operating systems.

What is really helping Apple right now is that it has been spending years expanding its Services business (the App Store, Apple TV+ and more), which makes its earnings less susceptible to the booms and busts of the hardware upgrade cycle. Services made up about 19% of revenues last quarter, and those revenues tend to be regular and recurring. It's hard to see coronavirus slowing them down, and they help make up for lost hardware sales.

SEE ALSO: The 10 Dividend ETFs to Buy for a Diversified Portfolio

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 12 of 21

Alibaba Group

Getty Images

Advertisement
Advertisement

Market value: $527.0 billion

Dividend yield: N/A

The coronavirus crisis is believed to have started in a live animal market in China's Wuhan region, or at least that's where the virus is believed to have made the jump from animals to humans. We might never know. But China's experience with the virus and the performance of some of China's largest stocks is instructive of what we might see stateside.

Consider Alibaba Group (BABA, $196.45), one of China's largest and most dominant tech companies. It's one of the few Chinese internet firms that can credibly compete with the American giants globally. Consider it something of a hybrid between Amazon.com and eBay (EBAY), though it also has elements of Google and even PayPal (PYPL).

China's economy will probably enter technical recession this year for the first time in decades. Yet Alibaba's stock price is down less than 15% from its all-time highs.

The Chinese export juggernaut might never fully recover from the coronavirus recession, particularly if companies react to the supply chain disruptions by bringing production closer to home. But China was already busily transitioning to a more domestically oriented consumer economy, and Alibaba is a big part of that story.

Alibaba also is well-equipped to survive any downturn, with three times as much cash as debt.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 13 of 21

Tencent Holdings

Getty Images

Advertisement
Advertisement

Market value: $477.1 billion

Dividend yield: 0.5%

Another Chinese stock worth owning for the next leg higher is Tencent Holdings (TCEHY, $49.94).

Like Alibaba, Tencent is a little hard to define. It's a social media company and has elements of Facebook (FB). But it's also a streaming video and videogame company with elements of Netflix (NFLX) and Activision Blizzard (ATVI).

Its most important product, of course, is "everything" app WeChat. WeChat is similar to Facebook's WhatsApp in that it can be used for texting and voice and video calls. But it's also a leader in mobile payments via WeChat Pay and serves as an e-commerce platform. Tens of millions of people in China effectively run their lives on WeChat.

Interestingly, WeChat is medium of choice for many Chinese citizens to track their "health codes." Movement in much of China is still restricted based on a green-yellow-red health code. Your movement is not completely free unless you're given a virus-free "green" rating, and this can be tracked via WeChat.

Tencent has already recovered nearly all of its March losses and is actually up for the year. Come what may in China, Tencent would seem like one of the best stocks to buy now for the next move higher.

SEE ALSO: The 11 Best (And 11 Worst) Stocks From the 11-Year Bull Market

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 14 of 21

Crown Castle International

Getty Images

Advertisement
Advertisement

Market value: $62.0 billion

Dividend yield: 3.2%

Outside of travel and hospitality stocks, real estate investment trusts (REITs) have been one of the hardest hit sectors. There is widespread – and not unjustified – fear that many tenants will be unable or unable to pay their rent for the next several months. At a bare minimum, there is concern that REITs might have to cut or eliminate their dividends for a period of time, and some already have.

But all REITs are not created equal.

Cell-tower REIT Crown Castle International (CCI, $148.75) is very well positioned to both ride out the current storm and continue to perform admirably in whatever economic conditions follow. Crown Castle owns, operates and leases more than 40,000 cell towers and 80,000 miles of fiber cable spread across the United States.

Life has been able to carry on more or less uninterrupted for many office workers throughout the virus lockdowns because of our nation's telecom infrastructure. Coronavirus might be a distant memory six months from now. Or, virus lockdowns might turn into a more recurring phenomenon. We really have no idea how this will evolve with time. But it's safe to assume that, no matter what happens, we'll be using more mobile data than ever. And that means continued growth for Crown Castle, who leases out its infrastructure to the likes of AT&T (T) and Verizon (VZ).

In an era in which many REIT dividends are getting slashed, Crown Castle yields a safe 3%-plus.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 15 of 21

Alphabet

Getty Images

Advertisement
Advertisement

Market value: $813.2 billion

Dividend yield: N/A

There is a perception that internet-based companies are totally immune from the coronavirus lockdowns and might actually benefit from them. After all, consumers have little else to do but surf the net.

That's a half-truth at best. Many internet companies derive the bulk of their revenues from ad spending. And with the travel, sports and movie industries completely shut down, a lot of the biggest ad spenders are out of commission … indefinitely.

It's important to remember that this is temporary. The carnage in travel and leisure is real and could result in a wave of bankruptcies before all is said and done. But once quarantines are lifted, and they will be, the survivors will be need to spend on advertising to convince consumers things are safe again and to prod them back through the doors.

Alphabet (GOOGL, $1,183.19), Google's parent company, gobbles up about a third of all digital advertising spending, and it has maintained that market share for years. The company also has a bulletproof balance sheet with roughly 16% of its market cap in cold, hard cash.

Alphabet has the financial strength to easily withstand any drop-off in revenues and actually use the crisis as an opportunity to acquire rivals or complementary companies, or strengthen its competitive position.

SEE ALSO: 5 Dividend Mutual Funds Yielding 3% or More

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 16 of 21

Digital Realty Trust

Getty Images

Advertisement
Advertisement

Market value: $36.2 billion

Dividend yield: 3.2%

Many landlords are really struggling right now and face a lot of uncertainty from their commercial tenants.

Digital Realty Trust (DLR, $139.50), which is up 17% this year, is distinctly not one of them.

Digital Realty is one of the world's largest datacenter REITs, with 267 data centers spread across 20 countries and 44 metro areas. The concept of a "tenant" here is very different compared to other REITs, however. Digital Realty's customers are renting space for their servers and nothing more.

The rise of cloud computing and software as a service are two of the biggest trends of the past decade, and they show no signs of slowing down. That was true pre-coronavirus and should continue to be true in the months ahead.

Digital Realty counts among its largest tenants a virtual who's who list of major tech and media companies: International Business Machines (IBM), Oracle (ORCL), JPMorgan Chase (JPM), Facebook, Uber and Verizon, to name a few. Many of them are extremely well-situated, financially.

But what makes DLR one of the best stocks to buy now is this: Even if some of Digital Realty's clients get into financial trouble during this crisis – and some likely will – the datacenter rent will be one of the last expenses they cut. If the server is important enough to put in an outside datacenter, it's too important to let slide.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 17 of 21

Visa

Getty Images

Advertisement
Advertisement

Market value: $375.5 billion

Dividend yield: 0.7%

Consumer spending is down during the coronavirus lockdowns for obvious reasons. Non-essential spending on most goods and services has been effectively shut down in most cities.

This will mean a lousy quarter or two for Visa (V, $169.44) and other credit card processors, as they make money based on the volume and size of purchases made by swiping their cards. In fact, most credit card stocks fared worse than the index through the bear market's nadir.

But there are several reasons to believe that these companies won't face the disaster many fear.

To start, to the extent that purchases are being made in this environment, they are more likely to be made on a credit or debit card than via cash or check. Online purchases are almost exclusively made by credit card, and the lockdowns may accelerate the trend of online bill payments via credit card.

Furthermore, while some spending lost during the lockdowns is lost forever – restaurant meals, haircuts, dry cleaning, etc. – some of the spending is simply postponed and will be caught up in future quarters.

And most importantly, the trend that has most supported Visa's success in recent years – the rise of e-commerce – has only been accelerated by the virus.

Better still, Visa and rival Mastercard (MA) take no credit risk, unlike American Express (AXP) and Discover Financial Services (DFS). Visa is simply a payments provider, not a bank. Thus, the effects on Visa aren't nearly so severe, and the company might emerge from this crisis stronger than ever.

SEE ALSO: 7 Cheap Stocks Under $7 With Massive Upside Potential

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 18 of 21

Coca-Cola

Getty Images

Advertisement
Advertisement

Market value: $200.4 billion

Dividend yield: 3.5%

The travails of the restaurant industry are well known. Former Starbucks CEO Howard Schultz predicts that 30% of small, family-owned restaurants might fail due to the forced lockdowns in most major cities.

The loss of restaurant orders, even if temporary, will take a bite out of Coca-Cola's (KO, $46.67) revenues. But early indications are that increased home purchases of soft drinks, bottled water, and sports and energy drinks should be largely offsetting restaurant losses.

We'll find out soon enough when Coca-Cola issues its quarterly results in May. But it should be safe to assume that a consumer staples stock like Coca-Cola will get through this crisis with relatively minor scratches.

It's difficult to think of Coca-Cola being one of the best stocks to buy right now given that it left robust growth behind long ago. Soft drink sales have been declining for years as consumers look for healthier alternatives, and state and local governments target fattening foods in their war on the obesity epidemic.

But KO shares are trading today at levels seen five years ago and sport a dividend yield of 3.5%. The recent declines would seem like a good opportunity to accumulate shares of one of the most iconic brands in history at prices we might not see again for a long time.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 19 of 21

CVS Health

Getty Images

Advertisement
Advertisement

Market value: $73.3 billion

Dividend yield: 3.6%

America's retailers are suffering due to the lockdowns, and the pain might not end when they are lifted. With the economy now likely already in recession and with unemployment shooting higher, many retailers no doubt face a rough road to recovery.

But convenience stores and pharmacies would seem largely immune to both the effects of the lockdowns and whatever slowdown in consumer spending follows in the recession. Spending on basic sundries doesn't generally fall much during a recession.

This brings us to pharmacy chain CVS Health (CVS, $56.22).

CVS's core pharmacy and retail business should be mostly unaffected by the virus scare. Non-emergency trips to the doctor's offices are down, and that will likely translate to moderately lower prescription spending for a quarter or two. But CVS's retail businesses benefitted from crisis hoarding of basic necessities, and lost prescriptions will mostly be caught up once life more or less returns to normal.

Meanwhile, CVS was already making inroads in the overburdened health system with its chain of walk-in clinics. America's health system was broken long before COVID-19 hit, and it's no less broken now. CVS's affordable convenient-care clinics are, for now, part of the long-term solution.

SEE ALSO: 12 Bond Mutual Funds and ETFs to Buy

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 20 of 21

Intel

Getty Images

Advertisement
Advertisement

Market value: $250.1 billion

Dividend yield: 2.3%

PC sales are simply destined to slow this year. When money is tight, companies and consumers alike tend to put off hardware spending and try to get a little more use out of their existing equipment. And as employment generally falls, there are fewer employees that need upgrading.

In prior cycles, the onset of a recession would have been bad news for leading chipmaker Intel (INTC, $58.43). Yet interestingly, Intel is down only 13% in this bear market and only off a mere 2% for the year.

It comes down to server spending and, to a lesser extent, spending on laptops to keep a home-bound workforce working.

Raymond James analyst Chris Caso recently wrote that Intel "is exposed to the right end markets for this pandemic – namely, notebooks and data center. While we expect the current surge in notebook sales to be relatively short-lived and roll off in the back half of the year, cloud and service provider data center spending is expected to remain strong through 2020."

The rise of the cloud was one of the single most important trends of the past decade, and that hasn't changed due to the coronavirus outbreak. If anything, the lockdowns have made the need for robust tech infrastructure all the more obvious.

Advertisement
Advertisement
Advertisement

20 Best Stocks to Buy Now for the Next Bull Market | Slide 21 of 21

Brookfield Asset Management

Getty Images

Advertisement
Advertisement

Market value: $47.7 billion

Dividend yield: 1.5%

Finally, one potential (and some would say likely) outcome of the coronavirus recession will be a major infrastructure spending bill. Both parties have talked about the need for infrastructure for years, but until now, the conditions simply weren't right to make a bipartisan deal.

That's changed. The waves of unemployment claims have created comparisons to the Great Depression of the 1930s. Back then, the government responded with massive infrastructure projects via the Works Progress Administration, Tennessee Valley Authority and other newly created agencies.

With an election coming up and with a lot of unemployed Americans looking for work, budget concerns have been thrown out the window. It seems to be less a question of whether an infrastructure spending bill gets passed and more a question of how large it will be.

This trend puts Brookfield Asset Management (BAM, $31.50) among some the best stocks to buy now. Brookfield is an asset manager overseeing a sprawling empire of gritty, real-economy businesses. In particular, it specializes in infrastructure and renewable power via its listed investment partnerships Brookfield Infrastructure Partners LP (BIP) and Brookfield Renewable Partners LP (BEP).

You could invest directly in the partnerships, of course. But by investing in the management company, you get exposure to the entire Brookfield empire, which includes rail, toll roads, utilities and more.

Advertisement
Advertisement