A vaccine for COVID is great news for the world’s population. But it may mean the end of a good run for certain stocks.
In late October, J.P. Morgan analysts compiled a list of 25 stocks that could respond negatively to the introduction of a vaccine. Given Monday’s news that a candidate from Pfizer/BioNTech prevented 90% of infections in trials, that list appears to be newly relevant.
“As we are getting closer to a vaccine, we are introducing COVID-19 Vaccine Tactical Short Candidates,” the J.P. Morgan analysts wrote. “This is a list of stocks that are in the upper echelon of Momentum and have crowded positioning, that could see the second derivative of their profit growth decrease as consumer/corporate activity normalizes.”
Already on Monday several of their predictions appeared to be playing out, with names like Zoom down 17% and Peloton down 20% as of the close. The list also included online education provider K12, lawn care chemical maker ScottsMiracle-Gro, and retailers such as Wayfair, Overstock, and Costco that have benefited from people stocking up and staying home.
Meanwhile oil prices surged Monday, as did sectors such as carmakers, airlines, and cruise operators, on hopes that a vaccine would mean an end to lockdowns. As Fortune’s Katherine Dunn wrote: “Such a surge may be completely premature, but ‘in the eyes of traders, a vaccine will help ensure no future lockdowns are needed and will bring people back to the streets, allowing road and air transport to recover,’ said Bjornar Tonhaugen, head of oil markets at Rystad Energy in Oslo.”
Here is J.P. Morgan’s full list of COVID-19 Vaccine Tactical Short Candidates:
- ScottsMiracle-Gro
- Peloton Interactive
- YETI Holdings
- Vista Outdoor
- Chipotle Mexican Grill
- Chegg
- K12
- Wayfair
- Grubhub
- Fiverr International
- Stamps.com
- Overstock.com
- Big Lots
- Costco Wholesale
- Boston Beer
- Clorox
- Central Garden & Pet
- American Well
- Moderna
- Novavax
- Zoom Video Communications
- Logitech International
- Bandwidth Inc. Class A
- Equinix
- Digital Realty Trust
To be sure, the J.P. Morgan analysts cautioned that “these screens should be viewed as tactical opportunity to express a view on the catalyst rather than a fundamental call on these companies.”
And indeed, with a pandemic still raging and Donald Trump not yet having conceded the presidential race, it might be a bit premature to short stocks like Boston Beer…just yet.