4 Under the Radar Stay At Home Stocks
When trading each day during the pandemic, one thing becomes clear.
There are 2 stock markets currently: the “stay-at-home” stocks and everything else.
So while banking, auto and other industries keep going lower, the stocks of companies that provide the needed products and services for the current pandemic are in high demand.
While some stay-at-home stocks are real obvious and well-known, like ZOOM and Netflix, there are others that were flying under the radar when we caught them out of bullish chart patterns. Many more will likely take off out of good base patterns in the weeks ahead.
This article will go over some of the hottest yet less well-known stay-at-home stocks we have been trading and where they may go from here.
Healthcare Stocks More Important than Ever
Diabetes is one of the unfortunate health trends of our time. The number of people in the US who have diabetes is expected to soar from 22.3 million in 2014 to nearly 40 million by 2030.
After doing the research, we found that diabetes is one of the risk factors for a severe reaction to the coronavirus. So, we immediately thought of one of the top growth stocks in the market over the past few years – Dexcom (ticker DXCM) during the severe correction in March.
We always want to consider putting our trading and investing capital towards companies that are producing the most needed products and services currently. Staying on top of a degenerative disease like diabetes is obviously very important when its a risk factor for serious complications from the virus.
Its one thing to have strong growth in earnings and sales over a short period of time. Its a lot better when the company has already managed strong growth in the past and done so very efficiently.
The ideal stock for us is a company with very strong growth in sales and earnings over a number of years followed by accelerating growth. Its a magic combination for investors and traders.
Its one reason the 3 Stocks to Wealth strategy taught on investtobefree.com has done so well over its first 8 years. The annual performance update is now on the site.
DXCM had strong sales growth of 41% per year over the past three years. Now we are seeing growth acceleration.
DXCM was one of the first top growth stocks to form a bullish cup with handle pattern and break out after the bullish market signal we alerted customers to that occurred around the beginning of April.
The stock was also in a real nice bullish inverse head-and-shoulders pattern. The price reached the entry point and only then quickly raced 20% higher within a few days. It then formed a strong flag pattern, broke out, and raced another 25% within a week.
This under-the-radar stay-at-home stock had a very strong quarter despite hospitals being very busy and having to delay non-emergency appointments in many cases.
The stock has formed another strong bull flag pattern – perhaps due to so many who may be concerned they have undiagnosed diabetes or pre-diabetes. If it meets all the requirements in our high tight flag strategy, we will be playing it on a breakout.
Only about 20%-30% of these high tight flag breakouts will meet our high standards taught in the high, tight flag course. So be sure to check the course rules before jumping in.
This Stay at Home Stock is Soaring Thanks to Social Distancing
Life will go on despite the pandemic one way or another and so will business that requires documents to be signed. Services provided by Docusign (ticker DOCU) allow businesses to create, manage and have all parties sign required documentation for business transactions.
There is a good chance you have already used their service through a car or home purchase or another transaction executed remotely. Now, most transactions may have to be executed remotely instead of at a closing table.
Like DXCM, DOCU already had very strong, consistent growth in sales ahead of the pandemic. The pandemic will likely accelerate their growth as consensus estimates have been rising ahead of their earnings release in early June.
After a record month last month, the 3 Stocks to Wealth strategy has been riding DOCU in May along with VRTX and NFLX. DOCU is leading and already up nearly 20% for clients in less than 3 weeks.
This stock could have a very big earnings report when it delivers numbers and the outlook in early June. It beat by a wide margin the past couple quarters and estimates have been rising. Obviously, their services will be more needed in the era of social distancing.
Like DXCM, however, they had the very strong growth even before the pandemic. This is a key consideration.
As with any earnings report, they could disappoint also when they report in June. Its always more risky to hold through earnings.
Like DXCM, DOCU may consolidate and offer another great technical entry point for a top growth stock. We will be watching for clients in the alert service.
An Under-the-Radar Covid Testing Stock
Testing, testing, testing. Its all about the testing, right?
One of the best new rapid anti-body tests was developed by Quidel and just approved by the FDA for emergency use. Like the other 2 stocks listed above, QDEL has strong average sales growth over the past three years. See the patterns yet?
Like the others, QDEL has a great shot at accelerating growth in the quarters ahead. This was our biggest winner in the 3 Stocks to Wealth strategy on investtobefree.com in April.
It also made a killing for us out of a high tight flag that met the rules in the high tight flag course. It made a 35% max gain out of the high tight flag in about a week.
As we have been saying in the alert service, we have to give these a little more room than we normally would due to the high market volatility but it easily held the stop listed in the alert service.
QDEL may break out of another strong flag pattern in the days ahead. If all the rules are met (aside from the market volatility rule), it could make another nice run if it breaks out again.
Another Under-the-radar Stay-at-home Stock Soaring
After business were forced to shut down their storefronts, there has been a clamoring to grow an online presence. Or even have one to begin with in many cases.
Of course, the stock of Shopify and Wix have been running due to the strong demand for new website services. However, few experts have been discussing one of our under-the-radar favorites – Fiverr.
Fiverr (ticker FVRR) is a company that allows small businesses to find freelancers to develop websites, do graphics design and pretty much anything else you might need. Its a popular, low cost way to quickly get the technical or other help you need.
It was surprising that the stock did not perform better early on after going public. However, you can bet that the strong shopify numbers and other signs of increased demand will likely lead to accelerating growth for Fiverr.
Fiverr is another stock that has had over 40% average annual sales growth over the past three years. Estimates are rapidly improving as they raised guidance after a big beat and raise quarter last week.
We discussed FVRR in the alert service when it formed an explosive bottoming pattern in April. It reached the entry point and nearly doubled since then. Again, giving it a little more room than we normally would due to the high market volatility.
The stock just broke out of another strong flag pattern and we will definitely be looking for the next good technical entry point so we can play it with a fairly tight stop, a good win rate and upside potential.
Perhaps we will see another good flag pattern developing or a rebound off the 50 day moving average in the weeks ahead.
Summary and Final Thoughts
The stay-at-home bull market has been the place to be for obvious reasons. Once the pandemic subsides, this will likely change but we are looking at stocks that had very strong growth for years before the pandemic.
The growth will likely continue after we achieve enough herd immunity, a vaccine and/or cure in the months or years ahead to finally get past the pandemic. In the meantime, we could see accelerating growth after the impressive growth beforehand.
Each of the stocks will be on our watch list. We will be looking for good high tight flag breakouts (only the ones that meet all the rules in the high tight flag course at the breakout point), bottoming patterns around the 50 day moving average and other bullish consolidation patterns in the weeks ahead.
Without a good technical entry point, its just chasing performance which often ends badly.