Yesterday, Pfizer announced the results of its COVID-19 vaccine trial, and data showed it had an efficacy rate of over 90%. If this vaccine is approved for emergency-use authorization from the FDA, this will be a significant step in the fight against the coronavirus…
This news sparked a market rally and the Dow Jones and S&P 500 indices touched record highs. This rally was led by several companies in beaten-down industries including airlines, energy, hospitality, entertainment, and brick-and-mortar retail surged higher.
Here, we look at three such stocks that should stage a rebound in the next few months if the vaccine is approved for widespread use.
An airline company
The passenger airline space was one of the hardest-hit industries in 2020 as international borders were closed and air traffic came to a standstill. The airline industry is a capital-intensive one and companies including Southwest Airlines (LUV) burnt millions of dollars at a time when revenue declined at a massive rate.
However, Southwest Airlines gained close to 10% on November 9 on the vaccine news and is a stock to keep on your radar in the next year. Prior to the pandemic, Southwest was one of the best performing airline stocks and returned 390% in the last decade between 2010 and 2019.
Southwest experienced a 68% year-over-year revenue decline in Q3. While its revenue of $1.79 billion was in line with consensus estimates, Southwest’s adjusted loss of $1.99 per share surpassed Wall Street forecasts of a loss of $2.35 per share.
Southwest ended Q3 with a cash and investment balance of $14.6 billion while debt and lease liabilities stood at $12.6 billion. Its liquidity position is robust and the company has maintained a fundamentally strong balance sheet to tide over these uncertainties. It will take at least two years for air traffic to reach pre-COVID-19 levels and Southwest’s strong financials will help it overcome a tough period with minimum damage.
A dividend giant
Stocks in the energy sector also traded higher yesterday. Shares of midstream heavyweight Kinder Morgan (KMI) rose 7.1% to close trading at $12.30. The company operates over 38,000 miles of pipelines and 180 terminals in North America.
Though Kinder Morgan remains relatively immune to oil prices, the stock is still…
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