Barron’s Weekend Summary: Telemedicine is getting a big boost from the coronavirus pandemic, which could be the catalyst that pushes it to the mainstream; Tech Trader looks at seven stocks to play the work-at-home trend.
* Cover story: Positive on TDOC, LCGO, MASI, IRTC, American Well: The coronavirus epidemic is catapulting telemedicine from the outskirts of healthcare to its core, with the crisis giving millions of Americans their first taste of virtual medicine, which may be the catalyst that pushes online care into the mainstream; For that to happen, emergency measures that have relaxed federal regulations allowing more virtual visits would need to be made permanent, but the biggest hurdle is financial incentives that favor healthcare providers seeing patients in person.
* Tech Trader: Positive on AKAM, NET, RNG, EGHT, BOX, DBX, NFLX: ZM has become “an absurdly expensive stock” and “makes sense only for the most speculative portfolios,” but there are other ways to play the new stay-at-home recovery at a far lower multiple of sales, including content delivery networks, document storage companies, other internet-based communication platforms—and Netflix, which should continue to see high subscriber growth.
* Trader: “You don’t have to dig into index performance to see that the big and the strong are just getting bigger and stronger as the small and weak get crushed”—giants such as AMZN and NFLX, benefiting from the coronavirus crisis in different ways, are hitting all-time highs; Positive on CODI: The small-cap company—which essentially operates like a middle-market private equity firm, acquiring, operating, and divesting businesses in several niche consumer and industrial end markets—is poised to emerge from the coronavirus recession stronger than when it entered it.
* Profile: Claire Hart, manager of the $28B JPMorgan Equity Income fund, faces a major challenge because of the coronavirus pandemic, but she has used market volatility to stick with bets she believes in and to abandon less certain ones, and says she doesn’t expect a quick return to normalcy (top 10 holdings: BAC, CVX, CME, BMY, JNJ, BLK, MSFT, PNC, CMCSA, MCD).
* Interview: Tiffany Hsiao, who runs the Matthews China Small Companies fund, talks about how Chinese consumers and businesses are recovering after the country eased restrictions, the risk of a second wave of outbreaks, and why the portfolio has been so resistant to a black swan development that has rattled markets.
* Features: 1) Cautious on Compass: Despite a $370M investment from SoftBank’s Vision Fund and other venture capital investors, the company has failed to live up to its promise that its technology would make its agents more productive and profitable than traditional brokers, and it continues to play catch-up with leaders such as RLGY and RMAX; 2) A rush to get back life back to normal raises the risks of a coronavirus relapse and setting the recovery back even further, and if confidence isn’t restored, consumers may refrain from spending even after the all-clear is finally given; 3) Many investors expect a Covid-19 vaccine within 18 months, but that timeline may be wildly optimistic, according to SVB Leerink analyst Dr. Geoffrey Porges, who says there is little chance of a vaccine for widespread administration in 2021, and that a vaccine for the majority of the population, necessary to end social distancing, won’t come until 2022 or 2023; 4) “The pharmaceutical industry may be one of the best places to take shelter as Covid-19 ravages the economy, given its focus on new products, a promising sales outlook, and low price/earnings ratios”—cancer treatments remain as crucial as ever, as does development of a coronavirus vaccine; 5) Positive: RTX, OTIS, CARR: The three companies, launched after the merger between Raytheon and United Technologies, hit the market at possibly the worst time for any business, but they nonetheless look appealing, despite the fact this year’s downturn will ding their results; 6) Active ETFs have existed on the fringes for years, mostly in fixed income and quantitative strategies, but new regulatory changes and ETF structures have led to a wave of “nontransparent” or “semitransparent” active ETFs with stock pickers at the helm, who hope the trend further proves their viability; 7) In an interview, F chief Jim Hackett talks about the company’s ability to weather the pandemic and the future of pickup trucks, ride-sharing services, electric vehicles, and more.
* Financial Planning: 1) Barron’s annual list of the Top 100 Financial Advisors in the US features some of the largest practices at the big brokerage firms, as well as some of the best independent advisory teams; The top five are Lyon Polk, Gregory Vaughan, and Andy Chase of Morgan Stanley PWM, Mark Curtis of Morgan Stanley Graystone, and Brian Pfeifler of Morgan Stanley PWM; 2) A list of the Top 50 private wealth management teams is topped by the Jones Zafari Group, the Erdmann Group, and the Westmoreland Group at Merrill Private Wealth Management.
* European Trader: Because the coronavirus pandemic has radically changed perceptions and rules, “companies paying dividends are being frowned upon in Europe after years of being celebrated as the avant-garde of the long, post-financial-crisis recovery,” leaving investors to determine how long dividends will be gone, and what they should do about it.
* Commodities: “Milk prices this year have more than erased the gains they scored for all of 2019, as the closure of restaurants and schools to prevent the spread of Covid-19 forced changes in the dairy market and in consumer buying behavior.”
* Streetwise: Morgan Stanley’s Adam Jonas envisions a long list of changes that will affect automobile industry after the pandemic: less commuting, less car renting, younger cars, fewer dealers, more digital, and touchless dealer services—as well as greater transparency on prices.