It’s almost Thanksgiving and Covid-19 infections continue to rise alongside stocks. And while that seems like a trend that can’t continue, in reality, investors are completely used to buying shares in this environment.
Bulls have shown, time and time again, that they simply couldn’t care less about Covid-19 so long as it isn’t forcing severe lockdowns. Restrictions are being reimposed in many states, but the U.S. has mostly avoided another all-out quarantine.
More importantly, the U.S. economy is learning to live with a socially distanced population. A presumed Biden victory has brought some stability, too, along with his appointment of former Fed Chair Janet Yellen to Treasury Secretary.
“I think this is a strong sign that Biden will be focused on rebuilding the economy vs. pursuing aggressive regulatory policy,” Ed Mills, Washington policy analyst at Raymond James, said.
“She will be an effective voice of more fiscal support vs. someone who was seen as a partisan […] I would say that is a positive development for the market, but more importantly for the economy as a whole.”
Or, in other words, Yellen’s expected to be fully on board with providing more unprecedented stimulus.
That’s not to say that America’s completely back on its feet, though. Nor will it be any time soon, regardless of who’s setting monetary policy.
For the time being, “stay at home” companies have managed to pick up much of the slack, saving scores of retirement accounts and nest eggs in the process.
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The fact is that some stocks have absolutely flourished during the lockdowns. Retailers especially, and not just the “big dogs.”
Instead, some smaller companies saw a major lift by simply staying in business while the competition folded. Ollie’s Bargain Outlet (NASDAQ: OLLI) is a great example of this, as it ironically enjoyed massive Q3 sales growth (58.5%) despite offering zero online shopping options. EPS surged 200% as a result, easily beating analyst estimates.
The store’s business model is responsible for the impressive quarterly results. 70% of Ollie’s sales come from discounted items purchased from other brand-name retailers, while 30% are sourced from Ollie’s directly. As other stores closed-up shop, Ollie’s loaded up on brand-name closeout items at a major discount, boosting its margins considerably.
Armed with stimulus checks, customers were attracted to Ollie’s low-cost deals like never before. And Ollie’s made a killing off the “perfect storm” of conditions.
Whether Ollie’s can continue that run remains to be seen. OLLI shares hit their all-time high in August and have since fallen as investors expect the run of good luck to eventually end.
Conversely, for Amazon (NASDAQ: AMZN), which has absolutely dominated the market via online shopping, business might only get better from here. As local retailers dwindled, Amazon became an even bigger part of American life.
AMZN shares are down over 12% from their all-time high set in early September. Investors are losing faith in the retail giant with highly effective vaccines almost ready to be deployed in major metropolitan areas around the world.
However, many analysts believe Amazon can keep its hot streak going. Americans have shown in recent surveys that they won’t be returning to their pre-Covid shopping habits any time soon, if at all.
The convenience offered by 2-day shipping and online shopping is simply too great. With cold winter months approaching and a still-fearful populace, Amazon’s market share could actually increase despite the recent vaccine developments.
That means at its current price, Amazon is arguably presenting investors with a major buying opportunity.
We’ll see what happens after the holiday season draws to a close, but so far, America’s retailers look like they’ve only grown stronger.
At least, the ones that are still standing.