Investors may need a change in investment strategy if they want to make the best returns from ASX stocks in the post COVID-19 world.
The resumption of clinical trials testing the University of Oxford/AstraZeneca vaccine is fuelling hope that treatment can be available in early 2021.
Global bull markets will likely find a second wind as this turns into a reality but it won't be the COVID-19 ASX outperformers that will lead the next charge.
Best ASX stocks to buy are the biggest COVID losers
The stocks that have so far outperformed the S&P/ASX 200 Index (Index:^AXJO) are those that profited from the socially distance environment.
These include the likes of the Afterpay Ltd (ASX: APT) share price and Kogan.com Ltd (ASX: KGN) share price – just to name a few.
If an effective vaccine is found, it's the biggest coronavirus losers that will come roaring back. Macquarie Group Ltd (ASX: MQG) asked its analysts which of the ugly ducklings are most likely to blossom into a swan, and they hatched four ideas.
A healthy COVID-19 recovery stock
The first is the Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price. The hospital operator is the top pick in the health sector as there is a notable improvement in surgical activity outside of lockdown central Victoria.
The nationwide lockdown had forced many routine hospital procedures to be postponed but the resumption of surgeries is only one tailwind for Ramsay.
"Opportunities for increased interaction with the public system in order to reduce public waiting lists have been highlighted both in Australia and the UK," said Macquarie analyst David Bailey.
"In addition, activity levels in France/Nordics were ahead of expectations in June (with a positive result for the month)."
A winning bet
Another stock that's tipped for a re-rating is the Star Entertainment Group Ltd (ASX: SGR) share price.
Casino operators have been among the hardest hit from the pandemic and Star Entertainment is the best one to bet on in this sector, according to Macquarie analyst David Fabris.
The stock enjoyed a number of favourable outcomes recently, including a 20-year casino slot exclusivity for Star Sydney and securing Gold Coast exclusivity at no cost.
Tasting the recovery
Meanwhile, the top pick in the consumer space is the United Malt Group Ltd (ASX: UMG) share price. COVID restrictions had a big impact on on-premise alcoholic consumption but there has been month-on-month improvement in volumes since April.
"COVID-19 is having a short-term impact on beer volumes given the restrictions to on-premise. Sequential improvement in volumes at a modestly faster pace than expected is pleasing to us," said the broker's analyst David Pobucky.
"UMG also still looks attractive relative to global brewer peers, trading at a 4% discount, although the discount has narrowed recently."
Defensive growth play
The Sealink Travel Group Ltd (ASX: SLK) share price is the fourth pick even though the stock performed better than most through the COVID-19 mayhem.
"SeaLink's share price strength in recent months is reflective of its defensive earnings from public transport and commuter businesses," said Macquarie analyst Marni Lysaght.
"While we continue to find such characteristics appealing and a key reason for exposure to SeaLink, we have high conviction of further upside being realised."
This conviction is driven by contract wins, acquisition opportunities, bus contract renewals, further opportunities from social distancing and the reopening of domestic and international borders.
