Tag Archives: NYSE:DIS

Coronavirus Stock Market Crash 2020: When’s the Best Time to Buy Stocks?

The coronavirus stock market crash is in progress. The storm came fast and furious with the U.S. and Canadian stock markets falling about 21% in a month. And that was after they were somewhat lifted by a relief rally on Friday.

Image of viruses being airborne in a Chinese city
Keep you, your family, and friends safe

The turnaround or contrarian stock ideas I discussed, in my last video, were way too early to be considered. My positions in Carnival (NYSE:CCL, LSE:CCL) and Booking Holdings (NASDAQ:BKNG)stocks, respectively, are down 40% and 18%.

In the previous video, I said Carnival stock could triple one’s investment. At the current levels, it can be a six-bagger over five years, if it makes a comeback. 

Of course, the coronavirus pandemic can drag these stocks even lower. In the worst-case scenario, Carnival could go bankrupt. However, it’s too early to conclude that it will. The probability of it going bankrupt should be slim given it is a leading global cruise company and has an A-grade balance sheet

How the Coronavirus is Affecting Stocks

Stocks are driven by their underlying businesses. Due to the coronavirus, Walt Disney (NYSE:DIS) will begin shutting down its theme parks in Florida and Paris and new departures for Disney Cruise Line starting this weekend for a month. However, it’ll continue to pay its employees.

These follow the forced shutdowns of its parks in Shanghai, Hong Kong, and Japan. Without a doubt, all of these suspended operations will pressure Disney’s near-term earnings.

Across Italy, Starbucks (NASDAQ:SBUX) is closing its stores until April 3, while Burger King, a part of Restaurant Brands (NYSE:QSR, TSX:QSR), will remain closed until the end of the health emergency

It’s no wonder Disney stock has fallen 27% since its high in February. Starbucks stock has dropped 22%, and Restaurant Brands’ stock value is slashed 31%.

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Stock Market Crash 2020: 3 Top Stocks To Buy

Summary

  • Top stocks: United Airlines (and airline stocks in general), Carnival, and Booking
  • Higher risk investors can do their due diligence to see if the stocks are suitable investments for them
  • Carnival pays a dividend but it can cut the dividend if things get really bad

I made this video, and I hope it gives a broader perspective on the investment landscape on top of the usual dividend ideas I give.

In late January, in my video “Will the Stock Market Crash in 2020?”, I essentially said that any negative impact on the economy can “drag the market down to its normal valuation of about 17 times earnings or even lower.”

It’s actually happening.

Stock Market Crash 2020?!

The 2020 stock market crash came fast and furious! In about a week, the U.S. stock market has corrected 12%, while the Canadian stock market has fallen 9%.

Source: Ycharts with author annotation

Actually, I wouldn’t call this a stock market crash, yet. To me, a market crash is when the market falls 30-50%.

I know it’s scary to think that you can lose half of the value of your stock portfolio, but this has happened before and can happen again.

I’d visualize my stocks being cut in half periodically so that I won’t panic when it happens.

It’s a Normal Market Correction So Far

From time to time, it’s normal for stocks to correct 5-15% for whatever reason that may appear in news headlines.

Frankly, I welcome the decline as it was getting harder and harder to deploy money into the stock market. In case you haven’t noticed, the S&P 500, which is a proxy for the U.S. stock market, delivered total returns of 31.5% in 2019, which was more than 3 times its long-term average returns of 10%.

So, it’s only natural that the market is giving some of the gains back in a correction.

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The King Of Content Is Bigger And Better And This Is What I’m Doing

Walt Disney (NYSE:DIS) is a king of content but it needed to deliver that content to consumers the way they want to consume it. Since 2016, it has begun transforming for that need…

Should You Buy Disney Today?

The last year was a major investment year for Disney, namely Twenty-First Century Fox for $71 billion and capital expenditures (“CapEx”) that were up 9.2% year over year to $4.9 billion, and the CapEx is set to increase by a further 10% next year.

Moreover, Disney expects the DTC & International segment to generate ~$800 million in operating losses for fiscal Q1 2020 but to be accretive to EPS for fiscal 2021 and realize cost synergies of more than $2 billion from operating efficiencies by 2021.

Because Disney is fully valued today, we think there are better investment ideas out there, such as from our top dividend ideas list. Investors may just get a better entry point in the coming 12 months.

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