The coronavirus is infecting the equity markets as this disease spreads past China’s borders. South Korea and Italy both saw a sharp increase in cases overnight with 833 and 223 total infected, respectively. The US has also seen 18 new cases in the last 24 hours, putting its total infected at 53 individuals.

This anxiety is causing global panic in the financial markets with every major index seeing substantial losses ranging from 1 to over 5%. The S&P 500 lost over 3% and is now officially down for 2020. Gold just hit a 7-year high, and the 10-year Treasury yield is approaching all-time lows as investors flock to safe havens.

The US equity market was due for a pullback. We have been trading seemingly straight up with future earnings driving most of the growth and valuations have been inflating. 

This is a tumultuous time for the market, but anxiety-driven markets are ones that are prone to volatility. The frightened equity market may be opening buying opportunities for some of the top blue-chip stock.

What to Keep Your Eyes On

The rich multiples are slowly falling to reasonable levels, and some of the markets favorite stocks are ripening for a buying opportunity. In these times of uncertainty, I think it is most opportune to put your faith in blue chips with proven track records because they tend to weather storms more effectively than smaller firms.

The three stocks that I like right now are Microsoft (MSFT - Free Report), Nvidia (NVDA - Free Report), and Alibaba (BABA - Free Report). All these enterprises dominate their respective markets and have compelling offerings that will continue to drive growth.

Microsoft has become a cloud-driven tech giant that has stayed ahead of the competitive tech curve for decades. This firm has quintupled the S&P 500’s returns over the past 5 years and is still boasting and a more than 1% dividend. Microsoft was the largest publicly traded company in the US at the turn of the century and resumed its position at the helm two decades later. MSFT has fallen over 8% from its high two weeks ago and ripens as a buy every dollar it drops. These shares are fast approaching their 50-day moving average of $168, which has been a robust support level.

The world of semiconductors is in awe of how advanced Nvidia’s image rendering chips have become. Nvidia’s hyper-fast GPUs are becoming a necessity in datacenters and a central component in the development of AI. These are the chips of the future, and investors are pricing in their potential. NVDA has seen a 73% price appreciation over the past 52-weeks, despite an over 12% drop since Thursday. I would look to buy this stock as it approaches its 50-day moving average of $250 (currently trading at ($275).

The Amazon of the East has is very exposed to the Chinese originated coronavirus and its stock has seen a 3.3% decline since the beginning of the year. Alibaba’s stock drop is less pronounced than I would have expected considering that it is a China based company, but the Chinese government is infusing the economy with billions of dollars of stimulus. Alibaba is beginning valued at roughly half that of Amazon, yet the enterprise is more profitable, drive substantially stronger revenue growth and operates in the most populous country in the world. BABA is my China pick.

Take Away

The long-term impacts of the coronavirus can only be speculated as its advancement in countries outside of China grows. The death rate of this virus stands at 3%, which is substantially lower than its sister virus SARS, which had an 11% fatality rate. The spread of the disease has considerably slowed down in China, and it hasn’t proliferated in any other country.

Today’s equity drop off was fear-driven, and this could continue for some time, but I don’t believe that this virus will have long-term implications on the positive fundamentals that the global economy has exhibited. The virus has merely paused China’s demand, which will resume once the infection is under control.