It has been a mixed bag of news on the pandemic front of late. Record levels of coronavirus cases in the U.S. and a reversion to lockdown conditions in parts of Europe rattled the markets for a while. More recently, better than expected vaccine news from Pfizer and BioNTech have sent the markets racing towards record highs.
So which development should investors focus on? While the so-called 'stay-at-home' stocks have been dropped like a bad habit in recent days, they are far from dead. Unfortunately, surging coronavirus cases will probably make for some dark winter months ahead. Vaccine distribution to the masses is still many months away.
This means companies like Teladoc (NYSE:TDOC), GrubHub (NYSE:GRUB), and Peloton (NASDAQ:PTON) are good choices for investors to bunker down with this winter. Let's take a closer look at why these stocks should bounce back quickly.
Can Teladoc Stock be Resuscitated?
While the latest vaccine news is certainly encouraging, the need for remote medical care is far from becoming obsolete. If and when a vaccine is approved, essential workers will be first in line. Meanwhile, virus cases will be likely still be rising and pandemic habits with us during the indoor winter months for the first time.
Accelerated adoption of telehealth services this year is unlikely to subside. People have become more comfortable with technology-led alternatives to traditional doctor visits and probably won't be anxious to storm back into medical offices until a viable vaccine is confirmed and distribution becomes widespread. Many medical offices are limiting building capacity anyway.
Teladoc has seen its paid membership soar in 2020 amid rising demand for remote medical services. And this is not just in the U.S. but internationally as well. More than 1 billion virtual care visits are forecast to take place this year.
Looking beyond the current environment, virtual care is here to stay. Research from Frost & Sullivan points to 38% annual growth in the telehealth market over the next five years.
Teladoc is expected to achieve this type of growth both organically and inorganically. The introduction of new clinical services, payment models, and care settings will take the company to new heights in the decade ahead. Value-added acquisitions will provide scale, cross-sell opportunities, and generate efficiencies that ultimately translate into shareholder profits.
Current Teladoc shareholders should stay with this stay-at-home play while new investors should consider booking an appointment with a clear long-term winner.
Will GrubHub Demand Drop?
Pandemic conditions are expected to get worse before they get better. As the headlines continue to show confirmation of a COVID-19 resurgence, people will be more than content ordering food from the comfort of their own homes. This means GrubHub's food delivery service should remain quite relevant.
GrubHub has made significant inroads in the food takeout business this year. Its platform now includes over 300,000 restaurants including key partnerships with the most popular fast food and quick service restaurant (QSR) chains like Chipotle, McDonald's, Burger, King, and Dunkin' Donuts. Not only have sales grown rapidly, but the average order size has increased. And these are trends that aren't likely to go away.
The jump in coronavirus cases combined with bad weather ahead in many parts of the country suggest remote work habits will persist in the near term—and have some level of permanence going forward. Instead of counting on Carol from accounting to bring in the daily box of donuts, workers will be left to their own devices (literally) to order from GrubHub.
GrubHub's recent takeover of JustEatTakeaway.com will go a long way in keeping hungry Americans pressing buttons to summons some sustenance this winter. Some will gravitate towards typically less healthy fast-food offerings, but GrubHub also has lucrative relationships with many restaurants that are perceived as healthier.
Investors can expect GrubHub's expanding restaurant line-up and convenience-hungry millennials to drive more strong results over the next several quarters. A share price below $70 would be a good time to place an order.
Is Peloton Stock a Buy?
And since many of us are likely to pack on some pounds from our GrubHub orders, we'll need to find ways to shed some pounds. Enter Peloton.
Once the hibernation period ends and the New Years resolutions start flying, Peloton's innovative home exercise technology will remain a hot commodity.
Health-minded individuals who have been reluctant to return to gyms have embraced Peloton's connected fitness cycling solutions this year. Last week management cited "extraordinary demand" for its products some eight months into the pandemic. And with the pandemic situation worsening, the company will have to pedal faster to fulfill holiday shopping orders. Peloton sees revenue reaching $1 billion during the holiday quarter.
While Peloton has struggled to keep up with demand, it has shown signs of getting up to speed. Investments to increase scale and automation have kicked into high gear. The new Shin Ji factory is on track to open next month and support production capacity of 1.5 million units annually to help meet demand. Here at home, Peloton plans to expand to seven major distribution centers and triple its transportation fleet by fiscal 2023.
Bottom line, the only major issue with Peloton is keeping pace with demand. This is a good problem to have—and reason for investors to hop on board during the recent share price weakness for a long growth ride.
Remote work trends and technology solutions that afford convenience in our daily lives are here to stay regardless of the upcoming virus and vaccine developments. Investors should take advantage of the pullbacks in Teladoc, GrubHub, and Peloton. All three companies are on paths to strong growth.
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