3 Stay-At-Home Stocks to Own This Winter

As we end the week, investors have received a mix of positive and negative news to digest. Earlier this week, investors received news that Moderna (MRNA) reported positive results in its COVID vaccine, following Pfizer (PFE) and BioNTech (BNTX) positive news last week. But investor optimism might have gotten ahead of itself as production and distribution will be more difficult than previously thought, COVID cases are soaring, and many Americans will likely refuse to get vaccinated.

In addition, one of the recent drivers of market volatility was the election, which we thought was done. But the waters have been clouded by Trump’s efforts to contest the results. Then we have recent news of sagging employment numbers mixed with a mainly positive earnings season. 

All this likely leads to more volatility in the future and what I believe will be a return to stay at home stocks such as Roku, Inc. (ROKU), RingCentral, Inc. (RNG), and Match Group, Inc. (MTCH).

Now let’s take a step back to see how the broader market has performed, and I will follow that up with more insights on the stocks I mentioned.

Market Commentary

Stocks were in the red today due to worse than expected unemployment claims and rising COVID cases that triggered fear that the U.S. could see more restrictions put in place to stop the spread of the virus. This could once again threaten business activity and send our economy off a cliff.

Making matters worse was a dispute between Fed Chairman Jerome Powell and Treasury Secretary Mnuchin about renewing emergency lending programs. Mnuchin believed the program served its purpose and pulled the plug on emergency Federal Reserve lending programs. Powell felt that the money should remain as a backstop to prop up a possible double-dip recession.

The S&P 500 finished the week slightly down 0.77%, while the Dow Jones Industrial Average fell 0.73%, and the Nasdaq Composite Index was up 0.22%. The big surprise this month has been the small-cap Russell 2000 index, which is up 16% for the month, and finished the week up 2.4%.

Market Outlook

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The market has mainly rallied this month as investors are digesting upbeat vaccine news, but as I mentioned, we won’t see benefits until the spring at the earliest. Rising case counts are about to unleash a host of restrictions in many big cities and states in the meantime.

The number of cases in the U.S. reached another daily high yesterday with more than 185,700 new infections. Over 252,000 Americans have now died of the disease. Europe saw the same thing a month ago and has been able to slow the spread with lockdowns and strict mask mandates. I’m afraid we will need to do the same, whether it is mandated or not.

While the current administration is adamantly opposed to another lockdown and closing schools, the fact of the matter is that the virus is spreading faster here, with hospitals in many states running at capacity. We already see curfews and mask mandates in the Northeast, and I believe many other states will follow.

This could lead to further volatility in the market and a return to gains in stay-at-home stocks, particularly companies that will thrive after the pandemic is over. The following three stocks are poised to benefit from a return to stay-at-home measures and should continue to gain through the winter.

Roku, Inc. (ROKU)

ROKU is one of the best-known streaming platforms out there. Before cable and smart TVs started streaming services such as Netflix (NFLX) and Hulu, many people attached a Roku device to access shows. While the company initially generated revenue from these devices, it now sees revenue from advertisers and content publishers’ fees.

As people will likely be forced to stay at home again, ROKU should see a bounce as many younger people have been cutting the cable cord and using ROKU to access their favorite shows. The stock got a big bump recently on news that the company was in discussions with AT&T (T) to bring HBO Max to the Roku platform, which would be a big coup for the company.

ROKU is rated a “Strong Buy” in our POWR Ratings system. The company holds a grade of “A” in Trade Grade, Buy Hold Grade, and Peer Grade, three of the four components that make up the POWR Ratings. The stock is also ranked #8 in the Technology – Hardware industry.

RingCentral, Inc. (RNG)

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Much like Zoom (ZM), RNG is a unified-communication-as-a-service provider. Its software lets businesses communicate and collaborate using voice, video, text, Internet messaging, and conference calls on a single platform. While ZM has skyrocketed this year, up 546.1 %, RNG is only up 74.6%, which could mean it has more room to grow than ZM.

Since RNG is more business-focused than ZM, it could see stronger gains as workers continue to remain home. It reported impressive results last week, driven by demand for its services in the pandemic. The company is benefiting from strong subscription-revenue growth driven by expanding clientele and should see further gains as it expands its international presence.

The stock is rated a “Strong Buy” in our POWR Ratings system. It holds a grade of “A” in Trade Grade and Buy & Hold Grade, and a “B” in Peer Grade and Industry Rank. It is also ranked #14 in the Software – Business industry.

Match Group, Inc. (MTCH)

The last stock on my list is dating mega-company MTCH. In addition to its well-known website app, Match.com, the company owns a vast portfolio of dating apps, including Tinder, OkCupid, PlentyOfFish, and Meetic. The company primarily generates revenue through paid user subscriptions.

While many investors have focused on video games, e-commerce, and video chatting stocks during the pandemic, online dating provides a massive opportunity. Before the pandemic, people used to connect at places such as bars, at work, or just out and about. Now that bars are closed in many areas of the country and most people are staying home, online dating apps are flourishing as it’s the only place to meet these days.

The company recently reported third-quarter results that came in well above estimates. MTCH is rated a “Strong Buy” in our POWR Ratings system. This fairly recent IPO has “A” grades across the board in every POWR component, including its overall grade.

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About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. He is the Chief Value Strategist for StockNews.com and the editor of POWR Value newsletter. Prior to StockNews, David spent eleven years as a consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More…

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