Coronavirus Fears Are Overblown! Buy Beaten-Down Stocks Now

Lately, the U.S. stock market has been going through a rough phase, thanks to the outbreak of a new coronavirus in Wuhan, China. Millions of Chinese nationals and foreigners have been evacuated from the region and flights have been canceled. After all, at least 170 people have died and almost 8,000 infected, throughout China. Alarmingly, the disease has now started to spread outside China as well.

The virus, affecting respiratory organs, is quite similar to SARS (severe acute respiratory syndrome). Lest we forget, SARS, which erupted in 2002, resulted in the death of 800 and triggered a severe economic slump that fettered global stocks.

But let’s admit, investors are panicking a bit too much. Though it’s a serious concern, it certainly shouldn’t kill your investment appetite. In fact, it has created the opportune moment to buy certain stocks.

Firstly, experts are pretty confident about containing the outbreak. Medical experts at Johns Hopkin have downplayed the threat from this particular type of coronavirus or the 2019-nCoV. Gabor Kelen, a medical doctor and director of the Johns Hopkins Office of Critical Event Preparedness and Response, recently said that “the immediate health risk from 2019-nCoV to the general public in the United States is thought to be low at this time.”

Moreover, coronavirus isn’t as deadly and contagious as Ebola, SARS and Middle East Respiratory Syndrome (MERS). All the previous outbreaks could have had disastrous effects on the global economy. However, they were contained before serious damage was done.

Secondly, the China government has taken appropriate actions to curb the spread of the virus and its impact on the economy. Cities like Wuhan have been locked down, affecting 60 million people instead of the total population of 1.4 billion. Similarly, Wuhan only accounts for 4.7% of China’s overall GDP, per the National Bureau of Statistics of China.

China’s economy usually winds down following the Chinese New Year holiday. Thus, productivity is likely to take a seasonal hit. And with the virus fear and unrest, China’s economy is sure to feel the heat, compelling China’s Premier Xi Jinping to take an easier path toward trade negotiations with President Trump, which should bode well for business confidence and the U.S. stock market.

Hence, with the economic impact of the coronavirus expected to be short lived, stocks that were particularly hit by their significant exposure in China seem like solid buys now. With the broader markets poised to gain in the long run, these beaten-down stocks will certainly gain traction on fundamental strength. Here’re the picks –

The Walt Disney Company (NYSE:DIS) , together with its subsidiaries, operates as an entertainment company worldwide. Shanghai Disney Resort and Hong Kong Disneyland Park are some of its establishments in China.

The acquisition of majority of Fox’s assets, impressive line-up of big budget movies, launch of direct-to-consumer service and robust visitor growth rate are Disney’s key catalysts. The company currently has a Zacks Rank #2 (Buy). The company’s expected earnings growth rate for the next five years is 5.1%. So far this year, the company’s shares have declined 4.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

NIKE, Inc. (NYSE:NKE) , together with its subsidiaries, designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. NIKE more or less generates 17% of its revenues from mainland China every year.

NIKE expects to continue investing in key capabilities to aid digital transformation and deliver robust growth in fiscal 2020 and beyond. The company currently has a Zacks Rank #2. Its expected earnings growth rate for the current year is 20.9%. On a year-to-date basis, the company’s shares have lost 3.1%.

Yum China Holdings, Inc. (NYSE:YUMC) owns, operates, and franchises restaurants in China. The company operates through two segments, KFC and Pizza Hut.Yum China Holdings, Inc. was incorporated in 2016 and is headquartered in Shanghai, China.

Menu innovation, digital enhancement and strong brand recognition are expected to effectively drive Yum China Holdings’ sales, going forward. The company currently has a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 15%. So far this year, the company’s shares have tanked 8.4%.

Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. China is a key growth area for Apple. The iPhone maker shipped nearly 3.2 million iPhones in China last December, up from 2.7 million shipped a year ago.

Apple is benefiting from momentum in the Services business, strong adoption of Apple Pay and growing Apple Music subscriber base. The company currently has a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 12.1%. The stock fell 0.1% in the last trading session.

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