Barron’s Weekend Summary: Cash-rich companies with durable businesses such as AAPL, MSFT, and GOOGL may offer a haven during the coronavirus outbreak; “Stay at home” stocks like NFLX, ZM, PTON, and WORK are also good options
* Cover story: “The black swan event that Wall Street has long feared materialized with the coronavirus epidemic, rattling equity markets and badly shaking investor confidence after an 11-year bull market,” leaving investors to fear the worst about its impact on the economy and profits; Investors looking for a haven may want to consider companies with cash-rich balance sheets and durable businesses such as Berkshire Hathaway, AAPL, GOOGL, and MSFT.
* Tech Trader: Positive on NFLX, ZM, WORK, PTON: Several tech stocks have been doing well since investors started worrying about coronavirus—they’re included in a basket of “Stay at Home” stocks created by MKM Partners, and are outperforming the S&P 500 by eight percentage points since the virus emerged as a threat.
* Trader: The coronavirus could push the economy into a slowdown or recession, and a rebound, when it comes, might best be used to rebalance investors’ asset allocation and prepare for another downturn, rather than to stock up on supposed bargains.
* Interview: Ron Baron, founder of Baron Capital, says he has “never seen a president so fascinated with envisioning the stock market as the most important element for his re-election”; Baron notes that as a long-term investor, he doesn’t worry about the news, and predicts TSLA could be worth $1.5T by 2023.
* Profile: Katherine Renfrew and Anupam Damani, who manage the TIAA-CREF Emerging Markets Debt fund, like the corporate space, where they can get higher yields with less duration risk than quasi-sovereigns (top 10 countries: Brazil, Mexico, Indonesia, Ukraine, South Africa, Russian Federation, India, Turkey, Ecuador, Egypt).
* Features: 1) Tech companies, apparel makers, and industrial-equipment manufacturers are likely to be hurt most from the coronavirus outbreak, because of their dependence on inputs from China and Southeast Asia, and a prolonged delay in parts procurement would threaten corporate earnings and could imperil companies’ ability to make debt payments; 2) Positive on INTC: Chip giant, which pioneered the practice of investing in venture capital, invests side-by-side with traditional venture-capital firms, but its preferred position as a lead investor also puts the company in competition with Silicon Valley’s top venture firms when it comes to deal flow; 3) Positive on TM: The automaker’s interest in venture capital is part of a growing trend in which corporations place early bets on untested technology, hoping to capture much of the upside—and excitement—that was long reserved for traditional venture-capital firms; 4) As the coronavirus outbreak grows, the outlook for health-care companies has become murkier, and if a patchwork of local epidemics becomes a pandemic, health-care companies will be on the front line and a range of sectors—biotech, pharmaceuticals, health insurers, and hospitals—will face challenges; 5) “As the coronavirus outbreak upends global markets, companies worldwide are grappling with everything from supply-chain disruptions to quarantines that effectively amount to consumer lockdowns”; 6) China’s economy is getting hit much harder by the coronavirus outbreak than markets currently recognize—economic data privately collected by China Beige Book shows that the state of Chinese businesses is significantly worse than investors have assumed for weeks; 7) Landmark retirement legislation passed late last year requires 401(k) statements to show participants how much monthly income they could receive if they use their account balance to buy an annuity—the law gives the Department of Labor a December deadline for prescribing the assumptions to be used; 8) Positive on DIS: Bob Chapek is a logical choice to replace Bob Iger as chief executive, the seventh in the company’s 96-year history—as the head of Disney’s parks business since 2015, Chapek has overseen a doubling of profits, while delivering on high-profile projects.
* European Trader: Positive on Pernod Ricard: The beverage giant is taking a hit in the short-term from the outbreak of coronavirus, which has closed bars and clubs in its key Chinese market, but it is in the midst of structural change that could boost profit margins and the stock price for the long term.
* Emerging Markets: “Emerging market bonds have been a better investment than US government debt lately, as borrowers get their financial houses in order and yields remain three to four percentage points higher.”
* Commodities: OPEC faces a unique challenge from the coronavirus, as the major oil producers prepare for talks aimed at supporting prices and balancing global supply and demand.
* Streetwise: Eric Hagen, an analyst at Keefe, Bruyette & Woods who covers the mortgage industry, says that borrowers who can save at least one percentage point on a mortgage refinancing should consider it.