The ongoing COVID-19 pandemic has acted as a catalyst for societal change. A few notable examples include brick-and-mortar retailers shifting to e-commerce, IT companies scrambling to develop work-at-home solutions for their employees, and biotech giants entering the race to find a cure for the deadly virus.
Without a doubt, healthcare and tech companies are the biggest beneficiaries of the economic restructuring. Today, let's look at three stocks that are on the verge of flying higher because of the coronavirus's effects and why they are solid picks for investors looking to buy and hold for the long term.
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1. Overstock.com
First up, we have Overstock.com (BYON -2.22%), a top virtual retailer in the $120 billion home furnishing market. The company has more than 8 million products in its catalog and has 36% online penetration in the sector.
Due to the COVID-19 pandemic, retail customers began to switch en masse to shopping online in the comfort of home, fueling the demand for Overstock's products. In the second quarter of 2020, the company recorded a 109% year-over-year growth in its revenue, to $767 million, including a 149% year-over-year growth in its mobile sales. On top of that, Overstock's customer count tripled compared to last year.
While revenue rose, the company's expenses did not increase as much, leading to an efficient business model. During the same period, Overstock's operating expenses increased by just 62%, leading to earnings per share of $0.84.
The company's quarter was a breakthrough. More than 49 million monthly unique visits occurred during Q2 2020. After search engine optimization efforts, the company's organic search volume rose to an all-time high. Meanwhile, Overstock was able to keep shipping costs lower than those of its competitors.
With over $300 million in cash on its balance sheet, Overstock's financial position is sound as well. To date, its stock has increased by more than 1,400% and is on a path to further enrich its investors.
2. CureVac
Next up on the list is a recently IPO-ed biotech that is making a coronavirus vaccine. In early August, CureVac (CVAC -1.83%) managed to raise over $200 million to fund future research and development expenses. Before this, the company secured a 300-million-euro investment from the German government and support from Microsoft (MSFT -0.49%) founder Bill Gates.
CureVac's experimental messenger RNA vaccine against the coronavirus is currently in phase 1 clinical trials, with results anticipated by September or October. If successful, the company expects a pivotal phase 2/3 study to commence in winter.
There are significant hopes for the vaccine candidate even before clinical data are out. On Aug. 20, the company completed the first round of negotiations with the E.U. to supply the supranational organization with 225 million doses of its experimental vaccine. Currently, the E.U. Emergency Fund has about 2 billion euros available to finance advance purchases of coronavirus vaccines.
Having billions of dollars in potential revenue is no small feat for a company that recently became public. Within a week, the company already returned 18% to shareholders. Investors interested in coronavirus vaccine stocks may wish to add CureVac to their portfolios and be on the lookout for signs of neutralizing antibodies and T-cell levels in its vaccine candidate after the experimental vaccine's phase 1 results are published.
Image source: Getty Images.
3. 1Life Healthcare
Since the pandemic began, there has been a surge in demand for healthcare services, such as those provided by 1Life Healthcare (ONEM). The company delivers primary care services at its clinics, offering both in-person visits and virtual consultation. 1Life Healthcare also offers 24/7, on-demand online consultation to many of its members.
In Q2 2020, the company's membership count increased to 475,000, representing a 25% yearly increase. At the same time, 1Life Healthcare's revenue grew by 18% compared to the first quarter of 2020, to $78 million. During the quarter, 1Life also posted a decent 31% gross margin.
1Life Healthcare's momentum is not over, as it is expanding its capacity to provide outpatient services, including COVID-19 treatments and vaccines, when they receive regulatory approval. Right now, the company is projecting a particularly strong third quarter, with revenue increase to $84 million to $89 million and narrowing operating loss. By the end of the year, the company expects its total members to grow to 505,000 to 515,000.
As of June 30, the company's financial situation is ripe for expansion, with $664.4 million in cash and investments to offset $316.3 million in convertible note liabilities. Year to date, shares have gained nearly 35%, making it a reliable choice for investors interested in the healthcare sector.
