Coronavirus trading and investment opportunities

Fear of coronavirus caused stock markets around the world to crash. Investors had not seen such large drops since the financial crisis in 2008. Stock market crashes​​ can be scary, uncertain times but many seasoned traders would suggest that a stock market crash is a great opportunity to pick up highly valued stocks at bargain prices.

Industries that have been particularly impacted by the coronavirus crisis due to industry shutdowns offer many stocks that can be purchased at prices not seen for years. In terms of coronavirus, any industry related to travel (cruise liners, airline stocks​, travel companies) or hospitality (restaurant chains, pubs, alcohol manufactures) could represent bargain opportunities. Examples could include IAG and Carnival.

Think of blue-chip stocks​ that have survived past recessions and managed to stay profitable. These stocks could end up good opportunities for hefty stock price increases. However, it is worth noting that many of these stocks are in the ‘bargain bin’ as they have had to stop business operations for many months. Any business in the bargain bin without proper management and low cash resources has the chance to go bankrupt.

Additionally, just because these stocks are at a bargain price, does not assume that the stock price will rise in the near future. If you try to time the market, you may enter at the wrong time and make substantial losses. Bargain hunting coronavirus stocks can result in huge gains, but also losses.

Beyond bargain stocks is losing stocks. Following the spread of Covid-19, numerous stocks have seen tough times and some of these stocks may not survive. This is a much riskier coronavirus investment or trading strategy​​ as you are essentially buying troubled stocks that could potentially go under. However, if these companies manage to recover from their troubles, their stock prices could increase by ten or twenty times.

Examples of losing stocks could include struggling airlines, smaller-cap oil companies and other companies that have had their foundations shook following the coronavirus crisis. With such companies, you are risking complete collapse but could also witness a turnaround.

Many analysts predicted that tech stocks could fall the most if there was a market crash, due to their expensive price to earnings valuations. However, tech stocks have been one of the best-performing stock types on the market. This defies the logic that companies with higher valuations often depreciate more than companies with lower valuations when a stock market crashes.

Examples of these companies that have cruised through the COVID-19 crisis include Microsoft, Amazon and Google. However, as they have performed so well, most likely due to their ability to adapt to remote working, everyone is buying them. So, what was once an ‘expensive’ valuation of a share​​ could get pushed to an even higher valuation in a time of crisis.

New trend stocks represent any company or industry that has benefited positively because of the coronavirus crisis. However, it should be noted that it is best to look through a broad lens at companies who will also perform well once the coronavirus pandemic is over, as consumer behaviour is likely to change. Companies could include Zoom, Slack and Chegg. These stocks are any kind of company that can benefit from the digitalisation of normal human behaviour and social distancing measures.

Ultimately, investing in or trading stocks during the Coronavirus pandemic is a risky option, as markets are experiencing volatility not seen since the financial crisis of 2008. Additionally, the full impact of Covid-19 is yet to be realised so markets could continue to stay volatile. However, the market crash following the discovery and spread of coronavirus does also present opportunities for traders and investors alike, to capitalise from these price swings. The difference between success and failure is the quality of decisions made, therefore do enough research before making any investment decision or seek financial advice if you are unsure. Learn more about trading on volatility.

When you trade on with us, you can trade both sides of the market and can, therefore, capitalise from rising or falling stocks. Open a live trading account to start trading. Trading with leverage increases your exposure beyond your deposit, and therefore, can increase your profit and losses relative to your leverage ratio.