Times of great trouble, require great sacrifices.
During WW1 (1914-1918) 61,000 Canadians were killed and 172,000 returned home missing key body parts.
During WW2 (1939-45) 42,000 Canadians were killed with 55,000 wounded.
The coronavirus has so far killed five Canadians.
We are not being asked to fight a war.
We are being asked to “Socially Distance” (keep 2 meters from other humans).
The instructions have two parts:
- Stay home and watch Netflix.
- If you get hungry, order pizza.
As sacrifices go, this one seems manageable.
Still, it has proven challenging for many North Americans.
U.S. President Trump, for instance, continues to shake strangers’ hands and stage press conferences rubbing shoulders with glum white men in suits.
“I’m practicing as much social distancing as I possibly can” stated Dr. Anthony Fauci, White House Director of Disease, “I’m working on getting the boss [Trump] to do this. I may not be successful, but we’re working on it.”
For investors, in the last two weeks, there have been few places to hide. Bio-techs who claim to be developing coronavirus vaccines get a bump. Uber Eats is going gangbusters, but that does not replace the revenue lost from suspended ride-sharing.
“Usually, in a crisis, you can put your cash into gold, or crypto, or bonds, and it’ll be protected from doom,” wrote Equity Guru’s Chris Parry on March 13, 2020, “But not this time – all of those safe havens are falling, because folks aren’t moving their cash, they’re taking their cash out of the system.”
Here are three stocks positioned to benefit from “Social Distancing”:
Grubhub (GRUB.NYSE), is $3.7 billion company that specialises in online and mobile food ordering. The company’s platform assists diners in searching for local restaurants, tracking orders and re-ordering.
Last year it had revenue of $1.3 billion, quarterly growth of 18% and gross profit of $520 million. It has $425 million cash-on-hand and $613 million in debt.
Grubhub’s growth is driven by a demand for convenience and accessibility, especially among millennials – who take pride in lifestyle efficiencies (cooking is yesterday).
Typically, restaurants aren’t good at running their own delivery services, so they are signing up with Grubhub to reach customers and build a new sales channels.
The company has chosen not to use corona virus as a short-term-cash grab, but instead to deepen loyalty with existing customers and build new relationships.
Grubhub founder and CEO Matt Maloney announced last week that he will temporarily suspend the collection of up to $100 million in commission fees from local restaurants while they deal with the economic fallout from lack of in-store customers.
“It’s very important for us to support our restaurant partners,” stated Maloney while standing next to Chicago Mayor Lori Lightfoot, “This is a is a no-brainer. Independent restaurants’ business is our business.”
By mid-morning, Grubhub rose 14% to $41.
Blue Apron (APRN.NYSE) is an $88 million company that delivers original recipes, and fresh and seasonal ingredients along with poultry, beef and lamb, along with a wine delivery service that can be paired with its meals.
Last year it had revenue of $454 million, quarterly growth of -33% and gross profit of $174 million. It has $45 million cash-on-hand and $125 million in debt.
Blue Apron is a service for people who like the gestalt of cooking (heating edibles for loved ones) but don’t give a damn about the creative aspect of ingredient-selection.
“What’s for dinner tonight, honey?”
“Mushroom brown butter cavatelli, with kale and soft-boiled eggs, served with full-bodied Pinot Noir from Oregon, followed by a Peach Champagne Granita.
“Overall, Blue Apron’s food was among the best from the services I tried,” stated an Observer Blogger, “But I also feel their selection is lacking. There are only six meals to choose from, and while the dishes themselves change each week, there still isn’t a ton of variety. Every new menu has one chicken dish, one seafood dish, one salad dish, one soup/stew/chili dish and one that is either pork or beef.”
By mid-morning, Blue Apron rose 73% to $6.60.
Zoom Video (ZM.Q) is a $30 billion company that facilitates virtual conferences and web meetings.
Last year Zoom had revenue of $622 million, quarterly growth of 77% and gross profit of $507 million. It has $855 million cash-on-hand and $64 million in debt.
Zoom allows remote workers to meet and work together productively “face-to-face” when meeting in-person isn’t possible.
In 2020 the number of Zoom users has grown significantly. The company has added 2.1 million active users, compare to 1.9 new users for all of 2019.
Zoom understands that physical self-consciousness can be a point of friction for video conferencing users.
“Bless the creators of Zoom for offering this modern equivalent of Vaseline on the lens,” stated The Cut, “Your face will look slightly more dewy, but not so much that your boss will suspect you’ve been spending all your time at home slathering on Good Genes instead of working.”
Zoom’s CEO Eric Yuan added $2 billion to his net worth in 2020, the fourth-biggest increase in the Bloomberg Billionaires Index,” stated Fortune, “a ranking of the world’s 500 richest people.”
By mid-morning, Zoom rose 3% to $111.
Today, the DJIA is up 1,000 points. Yesterday, it sunk 3,000 points, wiping out about $4 trillion of market value.
“The world’s 500 wealthiest people lost a total of $258 billion on Monday,” confirms Forbes, “Pushing their collective losses this year to more than $1 trillion”.
Facebook (FB.Q) co-founder Mark Zuckerberg, the world’s fifth-richest person, incurred the biggest one-day decline, with his fortune plunging $9 billion to $56.3 billion.
That’s ironic, because FB has already perfected the art of “Social Distancing”.
– Lukas Kane