Which Companies Are Flourishing In A Covid-19 World?

Earlier this week, General Motors (GM) said it’s suspending its dividend and halting all share buybacks. This is tough to hear but I can’t say this much of a surprise. The auto giant has been taking it on the chin recently.

It’s no secret why. As a result of the novel coronavirus pandemic, car sales have dropped sharply. The automaker has scaled back production. GM has also temporarily shelved work on at least half a dozen future models.

It’s been a painful time for GM. Last August, the shares were over $40. Today, the stock is hovering near $20.

We can see the impact of the coronavirus across many markets; it’s not just GM. While some large companies have enough cash to make it through, many smaller firms do not, which means many companies are suffering. The Gap has stopped paying rent on its stores and furloughed 80,000 employees. Both TJX Companies (parent to TJ Maxx, Homegoods, Marshalls and others) and Macys have furloughed employees as well.

And of course, you were probably watching last week as the oil market went haywire. The price for May crude famously went negative. The Oil ETF (USO) is now close to $2 per share. There’s a good chance that the June contract for West Texas crude will go negative as well, which is really a reflection of how little storage capacity for oil is left. With fewer people driving, all this excess crude has to go somewhere.

Along with the price of crude oil, share prices for many energy companies have dropped to the floor. Shares of Occidental Petroleum Corporation (OXY) are down 80% from their 52-week high. Last month, “Oxy Pete” slashed its dividend by 86%.

How’s this for rough treatment from the market? Occidental’s new lowered dividend yields 3.4%. That shows you how bearish the market is about the company’s future prospects.

Gaining During the Pandemic

But not every stock has been trashed by the coronavirus. Some have actually flourished, and I don’t mean obvious examples like Zoom Video (ZM) or Clorox (CLX).

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