Concern over the coronavirus has taken stocks on a wild ride over the last week. All three of the major indexes in the U.S. entered correction territory last week, more than $6 trillion in market value erased in just five days, marking the worst week for stocks since the financial crisis
The pain continued on Tuesday, with the Dow dropping -2.9%, the S&P 500 sinking -2.8%, and the Nasdaq retreating -3% as investors processed the Fed’s emergency half-point rate cut.
While the market got a reprieve on Wednesday as investors cheered Joe Biden’s Super Tuesday victories as he seeks the Democratic nomination for president and Congress agreeing on an $8.3 billion funding package to tackle the coronavirus outbreak, many on Wall Street are warning that the market hasn’t yet reached its bottom.
Still, the global equity selloff has given investors a “golden opportunity” to pick up some solid stocks at a more attractive price point.
That’s according to analysts from Wedbush who say there are 10 names investors should consider buying amid the coronavirus rout.
The analysts led by Daniel Ives and Strecker Backe wrote in a note to clients this week that the long-term trends are still in place, even if the virus outbreak proves to deliver a near-term hit on supply chains and demand.
“Our long standing view during this last decade… is that we are in the midst of an unprecedented tech bull market with themes such as the enterprise move to cloud computing, a transformational 5G super cycle, EV auto demand inflection, streaming cord cutting paradigm shift, and cyber security… does [the] coronavirus massively disrupt/erase [those] long-term transformational bullish trends? The answer in our opinion is a resounding NO,” the analysts wrote.
At the top of their 10 stock shopping list is Microsoft (NASDAQ: MSFT).
Microsoft shares fell more than -7% last week, and while the stock has recovered a bit this week, shares are still down -5% over the last month. According to the Wedbush analysts, while Microsoft is seeing some supply-chain issues from China, the company is a significant long-term cloud player that investors shouldn’t dismiss.
“In a nutshell, Microsoft firmly remains our favorite cloud play for 2020 and beyond; despite the bad news from the PC/supply chain (which we view as temporary) this does not change our bullish thesis around Azure’s growth and the longer-term prospects for Redmond over the coming years,” the Wedbush analysts wrote.
The analysts also like Apple (NASDAQ: AAPL). While Apple was one of the first companies to issue a guidance warning due to the coronavirus, Wedbush says that once Apple’s supply chain gets back up to full speed, the iPhone growth story will resume.
“Our thesis since the coronavirus outbreak began is that it is primarily a timing issue for iPhone demand and ultimately once the supply chain gets back towards full capacity, the Apple renaissance of iPhone growth story will resume,” the analysts said in the note.
“While the last few weeks [have] been an exogenous ‘shock event’ to Apple’s ecosystem on both the supply and demand side due to its China exposure,” Ives wrote, “we believe this will be short lived as the longer term 5G super cycle thesis and services re-rating remain the crux of our bull thesis on Apple for the next 12 to 18 months.”
Ives also argued that a “perfect storm of demand” is forming for Apple, with 350 million of the company’s 925 million iPhone customers “in a window of an upgrade opportunity.”
“Clearly there will be some speed bumps along the way as Cupertino navigates the coronavirus outbreak,” Ives wrote. “However, we continue to focus on the golden installed base, pent up iPhone upgrade demand activity, and 5G super cycle on the horizon as core components of our bull thesis, along with the $50 billion+ annual services business.”
Up next on Wedbush’s list is Tesla (NASDAQ: TSLA), which fell -25% last week.
“The coronavirus outbreak naturally ruffles the feathers of the China Tesla thesis bulls, however we believe it represents a speed bump that will be short lived and could move out a handful of deliveries in the region from March to the June quarter,” the analysts wrote. “Tesla remains a leader in EV with an inflection in global demand on the horizon, as we believe Musk & Fremont are still in the early innings of capitalization on this transformational consumer growth trend for the next decade.”
Adobe (NASDAQ: ADBE) is also on the Wedbush analysts’ buy list.
“Adobe represents a defensive and offensive core SaaS software stalwart that is successfully moving from its consumer stronghold to the B2B landscape with success from Market and Magento,” they wrote. “In our opinion, Adobe represents a company leading the digital transformation among both consumers and enterprises over the coming years… We also see negligible impact from the coronavirus outbreak for the company’s business.”
Rounding out Webush’s list are cloud-security companies ZScaler (NASDAQ: ZS) and SailPoint (NYSE: SAIL), software companies Nuance Communications (NASDAQ: NUAN) and Nice (NASDAQ: NICE), e-signature technology pioneer DocuSign (NASDAQ: DOCU), and ride-hailing giant Uber Technologies (NYSE: UBER).
“While Uber is clearly impacted by less travel globally due to the coronavirus that could negatively affect growth and take rates in the near-term, we are taking a forest through the trees approach on owning Uber here,” the analysts wrote. “The ride-sharing industry has become one of the most transformational growth sectors of the consumer market over the past 5 years with Uber establishing itself as the clear #1 player and in our opinion is paving a similar road to what Amazon (NASDAQ: AMZN) did to transform retail/ e-commerce.“
Needham analyst Brad Erickson also likes Uber and reaffirmed his Buy rating on the stock this week.
“We think [the] coronavirus concern has created a very attractive buying opportunity,” Erickson wrote. “We acknowledge the airport & related Rides could be hurt in the near term… We’re buyers and add UBER to our conviction list. …Uber, long-term, represents a multi-bagger, mega-cap value creation opportunity. We think Rides we rebound strongly at some point.”