- (0:45) - Is The Recession Officially Here?
- (10:30) -- Where Should Investors Be Watching To Deploy Cash
- (16:45) - Will The Housing Market Continue To Grow?
- (23:10) - What Sectors Could Benefit From The Work At Home Enviroment?
- (31:40) - Does The Market Still Look Bullish?
- (42:50) - Episode Roundup: HD, KBH, PHM, LEN, URI, HEES, CAT, W, DIS, FUN
Welcome to Episode #220 of the Zacks Market Edge Podcast.
Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.
This week, Tracey is joined by John Blank, Zacks Chief Equity Strategist, while she is still in her dining room in Chicago and he is in California, enjoying the spring sunshine and flowers during the coronavirus statewide shut downs.
An Event Driven Recession
They have done many podcasts about the US economy going into a recession over the last 4 years, and what that may look like, but none included a discussion about an event recession, like the one we may have from the coronavirus pandemic.
Event recessions are just that: an event such as 9/11 or a pandemic, are what start the recession.
They are different from cyclical or regulatory/monetary policy type recessions.
According to John, the average event recession lasts just 9 months, or 3 quarters, from start to finish.
With the coronavirus hitting the United States in March, that would take the economic slowdown through the end of the year.
What Does That Mean for Investors?
The unemployment and GDP are going to be really bad, but hopefully a lot of people head back to work pretty quickly.
With the recovery expected to happen within 9 months, investors should be thinking the long-game.
That means companies with good balance sheets and strong brands.
Is Home Where the Investment Is?
With everyone sheltering in place, suddenly our homes have taken on even greater importance.
That could have implications as the shutdowns end on consumer behavior.
Home Depot HD is still open during the shutdown. Not only might people be gardening or painting while staying home, but after the shutdown is lifted, they may decide to remodel that kitchen or put on that new deck.
Home Depot is trading at 19x but earnings are expected to be down just 2% this year.
Similarly, some may decide to buy a new home.
KB Home KBH, one of the larger home builders, has seen its shares fall 40% year-to-date. It’s now trading at just 6.7x forward earnings.
Pulte Group PHM is another large home builder which is equally as cheap. It’s trading with a forward P/E of just 5.4.
Wayfair W, which sells furniture and accessories online, already reported that first quarter demand doubled. Could other furniture makers be seeing hot sales too?
A non-residential construction play is a company like United Rentals URI. It’s the largest equipment rental company in the country. Customers are building casinos, office buildings and apartment towers, among other things.
If there’s an infrastructure stimulus plan, it could be a big beneficiary.
What else do you need to know about how to invest for a coronavirus recovery?
Tune into this week’s podcast to find out.
5 Stocks Set to Double
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Today, See These 5 Potential Home Runs >>
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The Home Depot, Inc. (HD) : Free Stock Analysis Report
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
United Rentals, Inc. (URI) : Free Stock Analysis Report
Wayfair Inc. (W) : Free Stock Analysis Report
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