Top shares to buy following the COVID-19 sell-off

March 11, 2020 08:30

stock market

The coronavirus has caused global markets to plummet, with stock markets crashing 15% on Monday March 9, and oil dropping by 30%.

Over the past few weeks, we've asked whether coronavirus could push WTI lower (the answer: yes), whether the outbreak could cause Apple's share price growth to stumble (also yes), or whether it could push the DAX to 10,000 (not yet, but there's still time).

Now the question is: Has the coronavirus outbreak created opportunities for investors to make strong assets for a bargain price?

The effects of the coronavirus on the market

In the real sector of the economy, the virus and its consequences have led to the shutdown of a number of industries and enterprises.

The most obvious one is the travel industry - people are not travelling due to fear of contracting the virus. Consequently, airlines have fewer passengers, hotels have fewer guests, and theme parks and other attractions have fewer visitors.

However, the travel industry is not the only one to suffer. With people avoiding public places, cafes, restaurants and fast food establishments are also feeling the pinch, with a number of McDonald's and Starbucks' franchises closing down in China.

Even the tech industry is feeling the impact, with Facebook cancelling it's F8 developer conference and a March marketing summit, not to mention announcing delays in the production of its VR headset.

Apple is going to miss it's quarterly revenue target and has shut all of its 42 stores in China, while Google has shut down all of it's Chinese offices and cancelled its Google News Initiative Summit.

These are just a few of the announcements being made by the world's largest tech companies about cancelling events, suspending travel and closing offices.

Our top 5 stocks to buy following the sell-off

The question for investors and traders is, has this volatility created opportunities for buy-and-hold investors, or long traders?

We think it has, and here are our top 5 stocks to buy at bargain prices amid the COVID-19 sell off.

1. Apple (#AAPL)

Apple's share price has pulled back ever since the company cut its second quarter revenue forecast, making Apple's stock cheaper than it's been since early December 2019.

This means Apple's price-to-earnings ratio is now less than 23 - lower than the 2019 average of nearly 25. So, while Apple may continue to face short-term resistance to growth due to the coronavirus outbreak, in the long-term it still has strong fundamentals.

AAPL Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on, #AAPL Daily chart (between July 3, 2019, to March 10, 2020). Accessed: March 10, 2020, at 5:20pm EET - Please note: Past performance is not a reliable indicator of future results, or future performance.

2. Microsoft (#MSFT)

Like Apple, Microsoft shares have also dropped to their lowest levels since early December 2019. While coronavirus has caused supply chain disruption in China, these issues are temporary and don't alter the positive momentum gained by the business's shift to cloud computing.

MSFT Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on, #MSFT Daily chart (between July 3, 2019, to March 10, 2020). Accessed: March 10, 2020, at 5:30pm EET - Please note: Past performance is not a reliable indicator of future results, or future performance.

3. Adobe (#ADBE)

Like the other tech stocks on this list, Adobe has seen significant drops over the past week. However, aside from the market panic, Adobe doesn't have as many vulnerabilities to COVID-19 as Apple and Microsoft, meaning that the dip is a good opportunity to get a stock with strong fundamentals at a discount.

With Adobe's focus on cloud transformation and digitisation, targeting both enterprise and consumers, Adobe still has room for strong growth, with these trends expected to continue for years to come.

ADBE Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on, #ADBE Daily chart (between July 3, 2019, to March 10, 2020). Accessed: March 10, 2020, at 5:35pm EET - Please note: Past performance is not a reliable indicator of future results, or future performance.

4. NVIDIA (#NVDA)

Following NVIDIA's 2019 rally, the stock became quite expensive despite having a lacklustre financial performance. Investors kept buying, even though NVIDIA wasn't performing, hoping that a turnaround would arrive.

Fortunately, that turnaround hit in Q4, so the downward pull of its share price in the midst of the coronavirus means that it's a bargain - trading at 58 times earnings instead of 70 times earnings, like it was just a couple of weeks ago.

NVDA Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on, #NVDA Daily chart (between July 3, 2019, to March 10, 2020). Accessed: March 10, 2020, at 5:30pm EET - Please note: Past performance is not a reliable indicator of future results, or future performance.



5. Uber (#UBER)

Uber's share price fell in the months following its IPO, following a steady downward trend until November. It appeared to have bottomed out just over $25 a share, and began a strong climb in December before hitting a 2020 high of almost $42 in February.

The recent dip has taken the share price back towards support, currently hovering around $28, with a good chance it will climb back from this level, especially when the coronavirus hysteria dies down.

On top of this, the trend towards ride-sharing rationalisation will favour Uber as the market leader, while cost cutting measures will improve the company's balance sheet.

UBER Daily chart

Source: Admiral Markets MT5 with MT5-SE Add-on, #UBER Daily chart (between July 3, 2019, to March 10, 2020). Accessed: March 10, 2020, at 5:40pm EET - Please note: Past performance is not a reliable indicator of future results, or future performance.

And there you have our top 5 stocks to buy following the coronavirus sell off! For longer-term investment ideas, remember to check out our best shares to buy in 2020.

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