At Grizzle, we’ve been following the Coronavirus pandemic closely, especially its effect on the financial markets.

After almost four months of watching how different stocks behave when Coronavirus cases are rising or falling we’ve put together two portfolios of stocks.

One portfolio excels when consumers are stuck at home and businesses are closed, while the other is built for an economy reopening and returning to normal.

If you had done nothing but flipped between our two portfolios as cases rose and fell this year you would be beating the market handily.

Source: http://www.ycharts.com

Below we’ve laid out the two portfolios in detail along with a brief explanation of why we chose each stock.


The Reopen America Portfolio

The reopen America portfolio is built to win when governor’s are reopening local economies, Coronavirus cases are declining and social distancing is no longer a concern.

In April as case counts fell, these stocks outperformed the broader market, rising 50%+ while the S&P 500 was up only 10%.

Reopen Portfolio Performance vs COVID-19 Cases

Source: http://www.ycharts.com

To help us build the portfolio we went searching for the activities that put you at the highest risk for catching the virus and then found the company’s that offer these activities.

Coronavirus Risk Level of Different Activities

We also favored stocks with lots of debt and a limited cash runway, as the reopening of their businesses will avert bankruptcy and lead to big increases in the stock simply because the stock is longer a potential zero.

We ended up with stocks in the casino, cruise ship, amusement park, concert, restaurant and airline industries.

Own the “Reopen America” portfolio when coronavirus cases are falling and economies are reopening for business. You can also short these stocks or buy puts if Coronavirus cases and hospitalizations are rising. 

The Reopen America Portfolio

Source: http://www.Ycharts.com

The Quarantine Portfolio

The quarantine portfolio was slightly more difficult to build as it required identifying unique stocks offering services consumers can’t do without while stuck at home.

You own the quarantine portfolio when the number of people hospitalized for the virus is rising or if states begin to tighten restrictions on social gatherings and require social distancing.

Quarantine Portfolio Performance vs COVID-19 Cases

Source: http://www.ycharts.com

Amazon (Ticker:AMZN) is a no brainer as we know consumers need to make purchases online if the local brick and mortar store is closed.

Shopify (Ticker:SHOP) is also a winner as they provide off the shelf digital storefronts, to retailers who no longer can reach their customers in person.

If your store is shut down and you need to quickly build a website, Shopify is the easiest and quickest option by far.

More difficult to identify were the tech stocks providing services to make up for the loss of face to face interaction.

The COVID-19 Portfolio

Source: http://www.ycharts.com

For collaboration (Video and text) Zoom Video (Ticker: ZM), Slack (Ticker:WORK), Docusign (Ticker:DOCU) and Bill.com (Ticker:BILL) are the four winners.

When you can’t see your family in person, Zoom’s easy to use video software has been a huge winner worldwide, while Slack has become the go-to collaboration software for remote businesses.

Docusign is how you sign important contracts when you can’t do it in person.

Bill.com allows small and medium businesses to easily pay bills and send invoices digitally, saving them time and money compared to the traditional bill in the mail approach.

Also with employees now largely working from home, internet security and speed has become a major concern for all corporations big and small.

Crowdstrike (Ticker:CRWD) and Cloudflare (Ticker:NET) provide cloud-based internet security to keep sensitive business information safe and secure.

Cloudflare also speeds up browsing and downloading so your work can get done faster.

Keep it Simple

In this time of maximum uncertainty, we are simplifying the job of stock picking.

As long as we are dealing with a global pandemic these portfolios are all you need to make money regardless of if case counts are going up or down and the economy is closing or opening back up.

If you have the ability to short stocks or buy put options you have even more flexibility to profitably play any scenario this virus may throw at you.

So remember….

Cases going up you buy the “COVID-19” portfolio

Cases falling and economies reopening, you flip to the “Reopen America” portfolio.

Ignore the noise, keep it simple and make money.

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.