As coronavirus continues to roil the markets both abroad and at home, many are wondering just how to trade through the market’s volatility. As many investors frantically pull their money out of equities and rush to Treasurys and safe-haven assets like gold, others are looking to the adage of “buying the dip” as a guidepost to put new money to work.
But with the markets in turmoil, where should new or millennial investors place their bets?
According to Dryden Pence, Pence Capital Management’s chief investment officer, coronavirus is a 60-90 day “phenomenon” that has presented buying opportunities.
And Pence said there are “several” companies that investors should start eyeing.
“Look for companies that have income streams that are either detached from the current crisis, or that are much longer than the 60 day, 90 day stop that we have,” he said.
Pence said investors should consider large defense companies like Northrop Grumman (NOC) and UTX (UTX) because they have “large contracts for a very long time that -- that aren't affected by this.”
“There is an opportunity. They have been taken down,” he said.
But these aren’t the only companies that represent good buying opportunities.
“The other companies to take a look at are ones that really are helping people enable through this. That would be where you look at Amazon (AMZN),” Pence said. “People are cocooning and staying home. They’re going to be buying off Amazon.”
“Think of AWS, the cloud doesn't get the virus,” he said. “And so those services are very important.”
Since the coronavirus outbreak, Amazon has seen a surge in online orders as people increasingly look to online shopping to fulfill household needs.
Despite warnings from both Visa (V) and Mastercard (MA) that their earnings would be hit due to coronavirus, Pence believes these two companies should be considered.
“Then the next thing that you can look to is a Visa, Mastercard because transactions continue and people continue all the way through this. These are companies I think that will work their way through this and probably recover exceedingly well as we get through it.”
Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.
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