The COVID-19 pandemic has taken a terrible toll. In many countries, cases continue to rise. Everyone, including the stock market, is hoping for a quick vaccine — our best chance at a return to normalcy.
But the future is still uncertain. A vaccine may not arrive for years. If one is discovered this week, it could take many months to secure approvals, scale manufacturing capabilities, and distribute on a global basis.
Even then, we won’t be sure what the overall efficacy rate is for protection, meaning millions will still be hyper-cautious about their habits.
The future is uncertain, but your stock portfolio doesn’t have to be. Many companies will suffer if the pandemic worsens, but others will gain, as they rush to meet demand for new goods and services.
If you want to protect your investments from another virus surge, the two picks below should top your buy list.
Bet on digital retail
When the pandemic first began, retail sales fell off a cliff. Physical store locations shuttered around the world. Many still haven’t fully reopened.
But retail isn’t dead. In fact, there’s one segment of the market exploding in value: e-commerce. If pandemic conditions get worse, digital sales will surge higher.
The best stock to own is Shopify (TSX: SHOP)(NYSE:SHOP). It’s even a better buy than Amazon.
“At first glance, Shopify isn’t an Amazon competitor at all: after all, there is nothing to buy on Shopify.com,” wrote Ben Thompson, founder of Stratechery. “And yet, there were 218 million people that bought products from Shopify without even knowing the company existed.”
You can experience this magic for yourself. Go to an e-commerce site like Allbirds or De Lune. You won’t see a single mention of Shopify, but all of the backend is powered by the company’s platform. This ensures Shopify gets a cut of every transaction.
Shopify stock continues to rise in value as digital sales grow. The company’s tools are by far the best in the industry, making it the perfect fit for a COVID-19 world.
Gold stocks will rise
There’s a tried-and-true solution to uncertain markets: own gold. Apparently, even Warren Buffett is joining the fray. Last month, he purchased $560 million of Barrick Gold (TSX: ABX)(NYSE: GOLD) shares.
Buffett’s move was surprising because he’s traditionally hated gold.
“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head,” he said in 1998.
Apparently, he’s changed his tune.
“Owning gold would help insulate his portfolio from future downturns, and even long-term inflation,” I wrote recently. “If you want to own gold, Barrick stock is a great way to get quick exposure.”
To be sure, a $560 million bet isn’t a huge wager considering Buffett’s holding company is worth more than $500 billion. But if you’re nervous about where COVID-19 is heading, this gold stock should be a great way to mitigate your volatility.
