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Best Stocks to Buy in 2020 Amid the Coronavirus Pandemic

Mohit Oberoi, CFA - Author

Aug. 6 2020, Updated 12:45 p.m. ET

US stock markets have recouped their 2020 losses. The S&P 500 and the Nasdaq Composite Index are positive for the year. Incidentally, some of the stocks have benefited. Consumer habits have changed during the coronavirus pandemic. What are some of the best stocks to buy right now? Certain stocks can deliver handsome returns over the long term.

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Best stocks to buy in 2020

There is not a specific list of the best stocks to buy this year. The choices depend on your investment style, risk tolerance, and investment horizon. If you are a risk-averse value investor, Berkshire Hathaway looks like a good stock to buy in 2020 and hold for the long term. The stock has underperformed badly over the last two years. The underperformance might be an overreaction from the markets. Last month, the company reportedly repurchased $5 billion worth of its shares. If so, the repurchase would reflect Warren Buffett’s approval of the stock’s undervaluation.

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If you can brace the short-term volatility, you can also look at energy stocks. Currently, crude oil prices are around $40 per barrel. The prices are down from over $60 per barrel at the beginning of the year. However, crude oil prices should recover to more normalized levels of above $50 per barrel over the long term. Energy companies, like Suncor Energy, that have a strong balance sheet could deliver good returns over the long term.

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Stocks to buy during the coronavirus pandemic

The coronavirus pandemic has increased the pace of digitization. As Microsoft CEO Satya Nadella said in April, “We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security—we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”

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If you are looking to play the digitization story during the COVID-19 pandemic, there are several stocks that you can buy. The stocks include Amazon, Apple, Microsoft, and Shopify. All of these stocks have risen sharply this year. While they may suffer a short-term pullback, they look like buys for the long term. There are concerns that U.S. tech stocks are in a bubble, which we saw in the late 1990s. However, many investors see the rally in tech stocks as a reflection of the increasing digitization. Also, unlike the dot-com boom days, many tech companies in the current era are making handsome profits.

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Cruise line stocks to buy in 2020

Along with the digitization story, cruise stocks look like a good bet if you want to play on the reopening story. Cruise stocks like Carnival Corporation, Norwegian Cruise, and Royal Caribbean Cruises are down between 60 percent and 80 percent this year. Right now, cruise companies are not generating any revenues. Countries have banned cruises in a bid to control the spread of the coronavirus.

So far, the trials for COVID-19 vaccine candidates have been encouraging. If the medical world comes up with an early vaccine for the deadly coronavirus, cruise stocks could skyrocket. However, cruise stocks are a high risk and high reward sector. If there is not a vaccine in the next year, some cruise stocks will struggle to survive. 


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