Stocks will most certainly plunge again; it’s only a matter of time. Whether or not that happens within the next few months, you’ll want to be prepared. There are plenty of stocks worth buying right now, no matter where the market is going next. Some of them would probably score even bigger gains if there’s a second wave of COVID-19 lockdowns in store for us.
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Video game developer and publisher Activision Blizzard always looked like a winner during the lockdown era, and the company would benefit from a second helping of deeply bored consumers.
Activision’s second-quarter results proved the point, showing 38% year-over-year revenue growth and company-record earnings outside each year’s holiday period.
“We are delivering entertainment that inspires and unites, helps break down barriers and enables players to forge and sustain friendships and community through gameplay,” CEO Bobby Kotick said in the earnings call. “In the second quarter, our player base grew 30% year over year, adding more than 100 million monthly active players. Time spent in our games grew 70% over the same period and Q2 engagement and player investment were at historic highs.”
The sudden surge also accelerated Activision’s long-term growth plans. I would honestly not be interested in this company or its stock in any other case. The Call of Duty franchise has never seen a player base of this scale, and mobile gaming is an important growth driver these days.
“While we have over 400 million players already, there are billions of users and gamers out there worldwide,” COO Daniel Alegre said on the same earnings call. “We want to continue to find ways for them to experience our franchises in whichever way that they prefer. We have the pipeline in place to achieve that.”
The stock has gained 36% year to date and trades at a fairly lofty 24 times forward earnings. That’s OK, because you’re buying a market leader with clear growth plans and rock-solid financial results. Paying a premium for this high-quality company today will give you market-beating returns for years to come.
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The leading provider of streaming video services tapped into the COVID-19 opportunity in a big way this spring, boosting new subscriber sign-ups far past management’s guidance and driving revenues to a 28% year-over-year jump in the first quarter. The stellar growth slowed down somewhat in the second quarter, and management pointed to even softer subscriber adds in the back half of the year, which threw a wet blanket over Netflix’s share-price gains. The stock has now jumped 53% year to date, but that’s 13% below July’s all-time highs.
Another lockdown wave would reverse that tide again, setting Netflix up for record-breaking growth over the holidays this year. If we make it all the way through 2020 without another shutdown, that surge would boost Netflix’s results in the first half of 2021 instead. And you know what? I would still buy Netflix at today’s prices if I didn’t expect any stay-at-home orders at all in the near future.
Netflix is a winner in nearly any market environment. High-speed internet access is becoming widely available in developing nations, right alongside reliable banking systems that let companies like Netflix collect subscription fees. We’re looking at a truly global growth story here, with many years of high-octane growth left in its tanks.
With or without an imminent stock market crash, both Netflix and Activision Blizzard are poised to beat the market in the long run. They just happen to be equipped to benefit from any new coronavirus lockdowns, too. Either way, these two stocks are no-brainer buys right now.
Anders Bylund owns shares of Netflix. The Motley Fool owns shares of and recommends Activision Blizzard and Netflix and recommends the following options: long January 2022 $75 calls on Activision Blizzard and short January 2022 $75 puts on Activision Blizzard. The Motley Fool has a disclosure policy.”>