My 3 stocks to watch this week are Amazon, Delta Airlines, and Disney.
First and foremost, Amazon. A household name across the globe, this e-commerce giant-turned-conglomerate still has plenty of room to grow. Amazon has dominated the United States e-commerce industry, with over 100 million Americans subscribed to its Prime service, not to mention the tens-to-hundreds of millions of customers who are not subscribed. As we move further into the future, we are seeing e-commerce, or online shopping and marketplaces, develop an increasingly significant role. E-commerce is continually taking a larger and larger share of the retail sales pie, slowly luring customers away from the traditional brick and mortar stores.
As the online marketplace grows, no company is set to benefit more than Amazon, the largest e-commerce company in the world, and the one which has revolutionized and dominated the industry. In addition to this, Amazon has used its vast profits to invest in other industries, acquiring a large web of subsidiary companies. Its most profitable investment has been Amazon Web Services, a company that provides computing power to countless companies. These companies rely on software and databases to operate, but it is cheaper for them to “rent” computers from Amazon in order to function than it is for them to buy their own. As software and data become even more vital to the world economy, Amazon is in the ideal position to profit.
Delta Airlines (DAL)
Delta Airlines is in a tough spot right now. Since the coronavirus pandemic has hit, the company has seen demand for its service, airplane flights, drop drastically. This has caused its profits this year to shrink and its stock price to plummet. For a new investor, this is a very good thing. Delta is one of the largest airlines in the United States and has a significant market share in the airline industry. This means that once demand finally recovers after the coronavirus pandemic, whether it be six months or two years from now, it is poised to provide a large percentage of all flights in the US.
Obviously, assuming that the airline industry will return to the way it was before the virus hit is an oversimplification. Some elements of consumer behavior and the behavior of the firms themselves will be different, but in the end, people will be back on planes in large numbers. The coronavirus has put companies at risk of bankruptcy, testing even the largest companies like Delta. Fortunately, Delta has a strong balance sheet, meaning that it has enough cash stores to make it through hard times like now. The stock may be set to tumble a bit more before it rebounds, but in the long term, Delta’s price is almost certain to increase again.
What company comes to mind more than Disney when talking about the entertainment industry? You may list a few, but on the whole, Disney is one of the main companies that has revolutionized modern entertainment. From theme parks to streaming services, Disney seems to have it all. Disney is another company whose stock price has dropped since the start of coronavirus, but that is because of a large temporary decrease in demand for some of its services. Disney theme parks shut all across the world, forcing the company to miss out on huge profits. However, Disney is still a good buy for the future. First off, demand for the theme parks will return in a few years once the current virus subsides, although the world at that point will look different from the one now.
In addition, Disney’s streaming service Disney+ looks prepared to compete with Netflix and others for viewers. Given the amazing movies and TV shows Disney owns, Disney+ is sure to continue to attract viewers as long as they cannot watch these favorites on other streaming sites. Finally and most importantly, Disney is a giant company that owns countless subsidiary entertainment companies, networks, studios, and so on. These will continue to attract hundreds of millions of viewers and are sure to provide Disney with a revenue stream for years to come. All of these factors make it likely that Disney’s stock price will rise in the future, although there will certainly be bumps on the road.
While our writers talk about these stocks, we are in no way giving the reader investment advice or urging them to buy any stocks. The goal of this series is merely to provide an opinion on certain stocks; what our readers choose to do with this opinion is entirely up to them. This is not meant in any way to be investment advice.