Goldman Sachs Says These are the Stocks to Buy on Coronavirus Fear

Markets are flat on coronavirus fears – and could slip at any moment.

China’s National Health Commission has now confirmed 3,062 new cases, and a total of 97 additional deaths.  That brings totals to 40,171 cases and 908 deaths. 

Worse, it’s just starting to spread around the world.  In the UK for example, “The Secretary of State declares that the incidence or transmission of novel Coronavirus constitutes a serious and imminent threat to public health,” the U.K. health ministry said.  France was forced to close two school after five British citizens caught the virus at a French ski resort. 

Now even the director of the World Health Organization (WHO) warns that countries outside of China should be prepared for the spread to accelerate.  ‘The detection of a small number of cases may indicate more widespread transmission in other countries; in short we may only be seeing the tip of the iceberg,’” says WHO’s Tedros Adhanom Ghebreyesus, as quoted by MarketWatch.

Also, research firm Capital Economics says that based on forecasts for global GDP, the outbreak could cost the world more than $280 billion during Q1 of 2020, as reported by Zero Hedge.

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.