The last two months have been volatile for equity investors. The stock market crash of 2020 is primarily driven by the COVID-19 pandemic.
A significant portion of the global population is largely staying at home due to countrywide lockdowns. This has led to a considerable decline in consumer spending, resulting in business closures and high unemployment rates. Governments are stepping in and boosting the economy via stimulus packages, which have helped the markets stage a comeback in recent times.
Long-term investors should view the recent market crash as an opportunity to create massive wealth. The equity market continues to remain an attractive option in times of low interest rates. The ongoing bear market may allow investors to rake in millions if they can identify stocks that will gain big once the downturn is over and the market rebounds. So, which stocks look attractive at the current prices?
High-growth tech stocks
Growth stocks have created stupendous wealth for long-term investors. If you had invested $1,000 each in Apple and Amazon back in April 2000, your investment would be worth close to $120,000 now. Canadian growth stocks such as Shopify, Lightspeed, Descartes Systems, Kinaxis, and Aritzia have huge potential to multiply your wealth in the long term.
Tech stocks in the United States such as Alteryx, The Trade Desk, Twilio, Splunk, Okta, and many others are also solid bets.
Warren Buffett stocks
It bodes well to replicate the strategies of top investors. Warren Buffett has been one of the most successful investors in the world. The recent sell-off has dragged Buffett’s portfolio lower as well. But the Oracle of Omaha holds top-quality stocks and might well be using the recent correction to add to his portfolio.
Buffett’s Berkshire Hathaway holds stocks such as Mastercard, StoneCo, Visa, Verisign, Restaurant Brands International, Sirius XM, Kraft Heinz, and Coca-Cola. Several of these stocks have lost momentum in recent times and can be bought at lower valuations.
Several economists expect the current downturn to lead to a recession far worse than the 2008-09 financial crisis. In case you are bearish on the economy, investing in alternative assets such as gold can help diversify your portfolio and increase your wealth.
Gold mining companies such as Barrick Gold, Kirkland Gold, Eldorado Gold, and Franco-Nevada have returned 35%, -10%, 5.1%, and 30%, respectively, in 2020, easily outperforming the broader markets.
Stocks in the travel and transportation sector have been decimated, as countries have shut borders and announced social-distancing measures. Shares of Air Canada, Delta Air Lines, Uber, Lyft, and Expedia are down by 68%, 64%. 42%, 60%, and 60%, respectively, from 52-week high. Cruise line companies such as Carnival, Royal Caribbean, and Norwegian Cruise Lines are also down 79%, 75%, and 81%, respectively, from 52-week highs.
China, which was the epicentre of the COVID-19 outbreak, is slowly limping back to normalcy. If countries in Europe and North America can successfully contain the dreaded virus, the markets should bounce back, sending these stocks higher in 2020 and beyond.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. David Gardner owns shares of Amazon and Apple. Tom Gardner owns shares of Mastercard, Okta, Shopify, The Trade Desk, and Twilio. The Motley Fool owns shares of and recommends Alteryx, Amazon, Apple, Berkshire Hathaway (B shares), Delta Air Lines, Mastercard, Okta, Shopify, Shopify, Splunk, The Trade Desk, Twilio, and Visa. The Motley Fool owns shares of Lightspeed POS Inc and Stoneco LTD. The Motley Fool recommends Carnival, KINAXIS INC, RESTAURANT BRANDS INTERNATIONAL INC, Sirius XM Radio, and Uber Technologies and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short June 2020 $205 calls on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.