The S&P/ASX 200 Index (Index:^AXJO) (ASX:XJO) returned yesterday's strong gains – and then some – as the market rout deepened in afternoon trade.
Those who were kicking themselves for missing the Tuesday's rally are getting a chance for a second bite at the cherry!
I say that half in jest, but regardless of how the market is trading today, few would be thinking that the volatility is over and that the worst is over.
Ugly ducklings today, swans tomorrow
But this doesn't change the fact that longer-term investors should be using any bear market, virus-induced or otherwise, as a buying opportunity.
What's more, some of the most badly hit stocks in this market meltdown are starting to look good value – at least according to top brokers who have upgraded a number of these ASX dogs in the last day.
Not grounded yet
One stock that's worth putting back on your buy list is Qantas Airways Limited (ASX: QAN) after Citigroup upgraded the airline to "buy" from "neutral", albeit with a "high risk" warning attached.
The question of whether to buy the beaten down stock comes down to whether it can survive the global quarantine.
"We model a scenario where Qantas' entire flying operations are grounded and generating no revenue for the company," said the broker.
"This would increase the reliance on Frequent Flyer to cover ~$465 million of monthly fixed costs for Qantas resulting in cash burn of ~$330 million a month."
Citi reckons Qantas could last for between six and 11 months of no flying before it has to cut costs further or look for new sources of funding.
The broker's price target on Qantas is $3.70 a share. The stock is certainly looking even better value today as the Qantas share price nosedived a further 9.3% to $2.60.
Looking like a good bet
Another coronavirus hit stock to get an upgrade is casino operator Crown Resorts Ltd (ASX: CWN). Credit Suisse lifted its recommendation on the stock to "outperform" from "neutral" even as it slashes its earnings estimates for the group.
But the broker believes Crown's balance sheet is strong enough to withstand the big drop-off in business as the government moves to limit crowds.
The impact of the quarantine measures on the group's Barangaroo project in Sydney is also expected to be short-lived.
"The risk remains whether the building site is shut to protect workers from coronavirus," said Credit Suisse.
"Even if there is a delay, it may be short enough to have the venue open in time for Chinese New Year 2021 – and that remains our assumption."
The broker's 12-month price target on Crown is $11 a share.
The good oil
Meanwhile, ASX energy stocks is taking a double whammy from falling oil demand as the virus crimps economic activity and the tanking oil price from an ugly price war between Saudi Arabia and Russia.
But JP Morgan believes that a Brent oil price of US$30 a barrel is sustainable and prices will recover.
"Overall, we see the sector as attractive for investors looking for long-term returns but note potential for further downside near-term.
"With value everywhere, we believe companies with strong balance sheets and limited growth should be the priority."
JP Morgan thinks that Beach Energy Ltd (ASX: BPT) fits the bill and upgraded the stock to "overweight" from "neutral". The broker's price target on the stock is $2.15 a share.
