This outbreak is already hitting the Chinese economy, with millions of consumers staying home. 🏡<\/p>\n
Using the 2003 SARS<\/a> outbreak as an example. China’s GDP growth from 2.9% in Q1 to 0.8% in Q2, then rebounded to 3.7% in Q3. Of course, there’s no telling what will happen with the coronavirus, but its impact will be greater than SARS.<\/p>\n In 2003, China’s economy made up 4% of world GDP; today, it’s 17%.<\/p>\n Last week, we analyzed stock sectors to buy or avoid in the wake of coronavirus (vacations stocks, biotechs and Chinese giants)<\/a>. We also answered 10 of the most frequent Stock Market Coronavirus questions<\/a>. This week, we look at three stocks<\/strong> hit by coronavirus and offer a prognosis of whether to buy them or not.<\/p>\n Nutrien<\/a><\/p>\n The world’s largest potash producer has had a tough year and the coronavirus could extend that pressure through 2020. NTR<\/a>‘s chart shows a distinct downward trend of lower lows and highs, amounting to a one-year decline of -16.78%.<\/p>\n Then again, revenue growth YOY is 335% and the stock’s profit margin is 18.2%. Since the virus made headlines worldwide in mid-January, Nutrien<\/a> has plunged nearly 10% to around $57 after enjoying a modest lift on Christmas Eve, closing at $64.12. In 2019, Nutrien<\/a> was caught in the middle of the trade war<\/a> between its two big customers, the U.S. and China, but recently analyst Peter Imhof<\/a> noted that Nutrien<\/a> has not rallied on the U.S.-China trade talks, despite both sides signing phase one of their agreement. William Chin<\/a> is also concerned that the stock price does not reflect the story, and needs to see NTR<\/a> build a base for three-to-six months to change his mind. (Chin made his comments at the start of the global outbreak.)<\/p>\n On the bullish side, Christine Poole<\/a> cites NTR<\/a>‘s strong retail performance in the States and Australia, and sees potential in Brazil. Nutrien<\/a> also boasts healthy free cash flow which supports share buybacks and a dividend paying over 4%. Greg Newman<\/a> admits NTR<\/a> is a contrarian call, while technical analyst Hap Sneddon<\/a> advises more caution, taking a half-position now and buying more at $52.<\/p>\n However, Sneddon<\/a> warns, if NTR<\/a> falls below $52, then watch out. Imhof, a shareholder himself, would just hold for now.<\/p>\n My take: be very cautious, unless you’re making a contrarian play.<\/p>\n The Canadian insurer has had a rocky few years with wildly fluctuating<\/a> revenues, but since it issued its last quarterly in November, it has been outperforming. In fact, just as the coronavirus hit global markets in mid-January, MFC<\/a> hit a 52-week high of $27.78, returning to $27 for the first time in 24 months. The reason? In early-November 2019, the company’s CEO<\/a> boasted \u201csolid double-digit\u201d growth in insurance and wealth management across Asia (including China and Hong Kong).<\/p>\n This growth was one major reason why investors have pushed the stock up. But MFC<\/a>‘s presence in China has also turned on MFC<\/a>, which just shed $2 from its high. MFC<\/a> has managed to stay above $25.75. Meanwhile, its near-4% dividend yield pays you to wait. Even during this outbreak, Bay Street remains generally optimistic about MFC<\/a>. Lorne Steinberg<\/a> made it a top pick last week, citing its 10x PE, share buybacks and debt reduction. Christine Poole<\/a> councils patience, expecting MFC<\/a> to grow its book value and earnings over time. William Chin<\/a> suggests buying on a pullback to $26, which is the current level actually, liking MFC<\/a>‘s uptrend, but warning of long-term resistance.<\/p>\n In contrast, Barry Schwartz<\/a> can’t figure out MFC<\/a> and would rather buy a bank. MFC<\/a> has beaten its last three quarters and next reports on Feb.12. Watch for guidance. Consensus says to hold long-term or enter at weakness, which is right about now. (Disclosure: I own MFC-T<\/a>.)<\/i><\/p>\n Nike<\/a><\/p>\n Nike<\/a> surprised the street by actually growing their business in China during last year’s trade war. Jamie Murray<\/a> explains that Chinese consumers view Nike<\/a> as a local brand, not an American one.<\/p>\n He also notes that Nike<\/a> is moving to a direct-to-consumer model via online sales and storefronts to expand margins. Momentum is strong, soaring 28% for the year leading up to its recent high of $105.62. Its one-year return was 23.41% with revenue growth of 7.47%. Nike<\/a> dipped as low as $96.28 on Jan. 31, but bounced above $100 during the next session. So, there is support, but any investor must be mindful of future earnings given how Chinese consumers are hibernating during the coronavirus.<\/p>\n Traders can worry over Nike<\/a>, but long-term investors are holding on. James Telfser<\/a> says the sneaker craze is here to stay and this brand will stay strong for years. If you’ve ever been to sneaker convention, you would agree. Keith Richards<\/a> does and advises buying MKE on a pullback. In its last four reports, Nike<\/a> beat three times, two of them by wide margins.<\/p>\n My take: buy for the long-term.<\/p>\n","protected":false},"excerpt":{"rendered":" As Chinese authorities contain the coronavirus and biotech companies in North America race to find a vaccine, markets continue to bounce like a basketball. 🏀 Naturally, the most volatile ones do substantial business in China, whether it’s insurance (Manulife) or […]<\/p>\n","protected":false},"author":12,"featured_media":145106,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cwp_meta_box_check":"No","cwp_rev_product_name":"","cwp_rev_product_image":"","wppr_links":[],"cwp_rev_price":"","wppr_options":[],"wppr_pros":[],"wppr_cons":[],"footnotes":""},"categories":[17],"tags":[126,450],"class_list":["post-144830","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lists","tag-china","tag-coronavirus"],"wppr_data":{"cwp_meta_box_check":"No"},"_links":{"self":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts\/144830","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/comments?post=144830"}],"version-history":[{"count":0,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/posts\/144830\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/media\/145106"}],"wp:attachment":[{"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/media?parent=144830"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/categories?post=144830"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockchase.com\/discover\/wp-json\/wp\/v2\/tags?post=144830"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Nutrien\"](\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2019\/09\/Nutrien-1-760x254.jpg\")
<\/p>\n![\"MFC-T](\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2020\/02\/MFC-T-1-760x254.jpg\")
<\/p>\n![\"Nike\"](\"https:\/\/stockchase.com\/discover\/wp-content\/uploads\/2020\/02\/Nike-1-760x254.jpg\")
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