Mar 5, 2020 - Economy

The emerging coronavirus economy

Illustration of someone holding a medical mask made out of a dollar bill

Illustration: Sarah Grillo/Axios

Companies that make products geared toward staying at home — think peanut butter, exercise bikes and telecommunication software — are the unexpected beneficiaries of the evolving coronavirus economy.

Why it matters: There are dour forecasts for the global economy as the coronavirus runs its course. But investors are placing bets on what consumers will need as the fast-spreading outbreak worsens.

Where things stand: While last week's coronavirus sell-off in the markets left few companies unscathed and this week's rebound has been a big help, there are some companies whose stock movements — up or down stand out:

  • Only 7 out of 500 publicly traded companies in the U.S. gained value last week, according to the Wall Street Journal — including Clorox, the disinfectant manufacturer, and Gilead Sciences and Regeneron, which are working on coronavirus treatments.

Other noteworthy stock gainers throughout the stock market's jittery run include other pharma companies — like Moderna, whose vaccine is in the midst of an early clinical trial — and tech companies that connect people when movement around the globe is limited, like Zoom, Teledoc and Dropbox.

  • Peloton, whose home exercise bikes save people trips to germ-laden gyms, briefly saw its shares spike amid the broader market's sell-off.

Conversely, travel companies — like the major cruise lines, plus big airlines and hotel chains — have been punished. American Airlines, which flies lots of Pacific routes, lost 25% of its value over four trading days, Forbes noted.

There's been a clear trend favoring companies that could benefit from people staying home, filling their pantries and preparing for a worsening outbreak.

  • B&G Foods, which makes long-lasting pantry goods including B&M canned beans and Cream of Wheat, has caught relative favor with investors, as has comfort food producer J.M. Smucker, which makes peanut butter and jelly.
  • Clorox's bleach and disinfectant wipes are being piled into shopping carts across the country.

Purell hand sanitizers and wipes are flying off store shelves so quickly that consumers complain they can't get hold of them. The maker of Purell — privately held Gojo Industries — tells Axios that it has increased production.

  • Supply of hand sanitizers and medical face masks — which consumers are also stocking up on, despite warnings from medical professionals — "have already dried up in some markets, with no clear indication of when supplies will be replenished," according to a new report by Nielsen.

The big picture: Even as market pressures eased, investors crowded into names that could see increased demand amid coronavirus fears.

  • On Monday, the S&P 500 jumped 4% and Costco was the best-performing stock in the index, rising 10%.
  • "As consumers prioritize a dwindling number of trips to stores, Costco will likely be at the top of the list," Michael Lasser, an analyst at UBS, wrote in a note to clients this week.
  • Products like toilet paper, frozen food and bottled water are inspiring "panic buying" and stockpiling, the Washington Post reported.

Supermarkets and other suppliers of basic goods are hunkering down and preparing for increased traffic to their stores.

  • What they're saying: "Instead of one eight-hour shift, retailers are adding a second or third shift to do 24-hour around-the-clock deliveries to get products people need for maximum safety," Burt Flickinger, who runs Strategic Resource Group and is a longtime consultant to the retail industry, tells Axios.

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