Coronavirus: The Top “Blood in the Streets” Opportunities Already Running

The coronavirus virus just won’t die.

It’s now killed more than 1,100 people and infected more than 45,000 worldwide – with the vast majority of them in China.  There are now 175 confirmed cases on a cruise ship quarantined in Japan. In the U.S., 13 have tested positive with 60 reports still pending.

Even the Dalai Lama just canceled all public engagements until further notice thanks to the outbreak.  “His Holiness will not be doing any public engagements for now until further notice due to coronavirus,” the Dalai Lama’s secretary, Tenzing Taklha, told CNN.

However, even with the outbreak, investors are shrugging off the news, as the number of cases begin to slow.  

Many are Now Buying the “Blood in the Streets”

All as the “percentage of bullish investors has bounced back to where it was before the coronavirus outbreak rattled the market,” Peter Boockvar of Bleakley Advisory Group said, as quoted by CNBC.  “Bottom line, after seeing extreme bull readings in a variety of metrics literally days before the virus outbreak, the pullback in stocks rung some of that optimism out but it’s coming back rather quickly. Buy on the dip remains firmly embedded in the mentality of the investor as we know.”

Cruise stocks are being bid higher, for example.

Shares of Carnival (CCL) are now up $1 a share, even though it could see an EPS loss of 55 to 65 cents a share if operations in Asia are suspended through April 2020.  “While that has not come to pass and may be averted, the cruise line said there will be a material impact on the business due to suspended cruises in Chinese ports, cancellations in other parts of Asia, and the impact on bookings, which the company said is determined by the length of time that an event influences travel,” reported MarketWatch.

Shares of Royal Caribbean (RCL) are up nearly $4 a share.  Norwegian Cruise Line Holdings (NCLH) is up $1.40 on the day, as well.  

Goldman Sachs Says Impact will be “Limited”

Goldman analysts say, “The impact of the lower global and U.S. economic activity on 2020 S&P 500 earnings per share will be limited,” as quoted by MarketWatch, as well.  “Investors who believe the economic consequences of the coronavirus will be limited should increase exposure to cyclicals and value stocks.”

Goldman also noted that barring a “significant change,” the virus’ impact would be focused on a select group of companies that are most exposed to China, including Yum China (YUMC) and companies like Qorvo (QRVO).  Sectors such as airlines and Macau casinos could also be impacted, given travel restrictions.

We must also consider that a good amount of fear has been priced into the markets, as well.

Perhaps it’s time to start buying the “blood in the streets,” as Baron Rothschild would, or even buy the extreme pessimism as Sir John Templeton would often do.