With markets becoming increasingly turbulent in the face of the escalating coronavirus pandemic, it is important to remain level-headed when considering your investment strategy. There are still pockets of hope in the market, but it is probably best to switch from a focus on growth towards one more centred on defence and value.
A lot of blue-chip companies with solid fundamentals are being oversold in the market right now, so there are abundant opportunities to strengthen your portfolio. If you seek out good companies with strong balance sheets you could even emerge at the other end of this crisis with a more secure, less volatile portfolio than you had when you entered it.
With that in mind, here are 5 companies I’m looking at that I think offer great value for long-term investors.
NextDC Ltd (ASX: NXT)
ASX technology company NextDC operates data warehouses which provides vital infrastructure for a digital economy. NextDC recently announced that it had seen little disruption in demand for its technology as a result of the coronavirus pandemic. In fact, demand for its infrastructure could actually increase as more people make the transition to working from home arrangements during rolling lockdowns. The company reaffirmed its FY20 revenue guidance of between $200 million and $206 million.
Woolworths Group Ltd (ASX: WOW)
Woolworths is the largest supermarket chain in Australia. Along with Coles Group Ltd (ASX: COL) and Metcash Limited (ASX: MTS), which operates the IGA branded supermarket chain, Woolworths will be relied upon heavily to support communities through the pandemic. We have already seen Coles expand its workforce in order to cope with the sudden spike in demand.
I prefer Woolworths to the other 2 chains because it seems to offer greater relative value right now. The Coles and Metcash share prices have both surged recently and are now trading near their 52-week highs, whereas the Woolworths share price has been slower to rebound.
Cochlear Limited (ASX: COH)
The Cochlear share price has been hit hard as a result of the coronavirus pandemic, but I believe it has been significantly oversold. Shares in the ASX 200 healthcare company have collapsed from a 52-week high of $254.40 in mid-February to their current low of $159.86.
The company made the extraordinary move of withdrawing its FY20 earnings guidance completely due to the severe adverse impacts from the coronavirus outbreak in China. However, it may actually be companies with larger Chinese exposure that recover the quickest, as life there returns to some degree of normality following the worst of the outbreak.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
ASX healthcare company Fisher & Paykel Healthcare specialises in the development of medical devices used to treat respiratory illnesses. The New Zealand-based company recently announced that it had seen an uptick in demand for its products in China as a result of the coronavirus outbreak. The increased demand was significant enough to cause the company to upgrade its FY20 profit guidance from NZ$255–$265 million to NZ$260–NZ$270 million.
CSL Limited (ASX: CSL)
ASX healthcare giant CSL is one of the largest companies on the S&P/ASX 200 Index (ASX: XJO). The company specialises in the development of influenza vaccines, as well as the treatment of other rare diseases. While it isn’t working directly on coronavirus treatments, it did recently announce that it was lending its expertise to the University of Queensland for their research into the virus.
This will be an important year for influenza vaccines, as the common advice is to ensure the population is vaccinated against the flu so that community spread of the coronavirus can be better tracked and managed.
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Rhys Brock owns shares of Cochlear Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Cochlear Ltd. and CSL Ltd. The Motley Fool Australia has recommended Cochlear Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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