By Glory May, 08, 2020 Private

The impact of the coronavirus pandemic on businesses differs as not every company has been badly hit. Amid the coronavirus pandemic, certain companies have stood out in their industries and they could be considered as good investments to strengthen your portfolio in such times. The information provided is based on recent quarterly earnings reports and current performances.

Peloton Interactive Inc (NASDAQ: PTON)

Closed: 8 May, 18:06 GMT-4

After hours: 42.88 -0.12 (0.28%)

Previous close: 44.12

Following Peloton’s Wednesday earnings report, investors and traders are expecting that there would be a moderate move higher for its shares. During its fiscal third quarter, Peloton’s revenue jumped 66% as more people purchased its fitness equipment and subscribed to its online live workout classes to keep in shape during the coronavirus lockdown.

The fitness technology company took a different turn in its Q3 earnings report, beating the expectations of Wall Street analysts. Wall Street analysts had estimated an adjusted loss of 17 cents, on revenue of $487.7 million in the third quarter, based on a Refinitiv poll. However, the company reported a 66% increase in its sales from a year ago to $524.6 million. Investors and traders are betting that more revenue will be generated and subscriber growth will increase by the next quarter.

Within the last few months, the company has made a “strong move up,” though it suffered a minor collapse in March which it soon recovered from. Todd Gordon, managing director at Ascent Wealth Partners said that Peloton’s stock has been “mostly sideways,” averaging $36. But since the company’s pullback after its abrupt collapse in March, Gordon thinks that there has been a “consolidation” below the stock’s previous high of $38.08.

He also expects the Peloton’s stocks to move higher to a new all-time high based on its strong earnings report. He also mentioned that a good way to trade Peloton’s stock with some defined risks is by using options.

There is a possibility of the stock reaching a high of $40.22 if it “responds well to earnings,” according to the options market.

On Wednesday, Peloton’s shares were up 2% in the premarket, trading at $36.99. It closed up almost 7% at $36.22 on Tuesday.

On the other hand, Peloton’s “earnings are not received well, options markets are expecting a move down as far as 31.” Gordon advises that traders consider “the upside based on fundamentals, based on the technical…” He suggests playing Peloton stock by setting up a “butterfly spread”: The trader would buy a $38 strike call and sell a $40 strike call, then sell an extra $40 strike call and buy a higher $42 strike call. The butterfly spread is a trade strategy used to hedge downside risk while capping profit to bet on a specific move on the security involved.

Amazon.com Inc. (NASDAQ: AMZN)

Closed: 8 May, 18:04 GMT-4

After hours: 2,379.26 -0.35 (0.015%)

Previous close: 2,367.61

While many companies have emerged as the “biggest losers” in their industries due to the coronavirus pandemic, Amazon has emerged as the winner in its category. Some other companies like eBay and Etsy have also benefitted from the pandemic, with increased sales. Over the past months since the start of the pandemic in the US, Jeff Bezos’ net worth has expanded by $13 billion. While Amazon’s total revenue has increased to $75.4 billion, up 26% compared to a year ago.

Though Amazon’s earnings fell 29% and didn’t meet up analysts’ expectations, the company still performed impressively despite the pandemic. The company also released a Q2 revenue guidance of $75 billion to $85 billion.

With the web booming with billions of users, Amazon Web Services has managed to remain dominant in its industry. That segment also generated $10 billion, up 33% on a year-over-year basis, for the first time. The biggest growth drivers for this segment are Netflix (NASDAQ: NFLX) and the World Health Organization (WHO), among its other clients.

In as much as Amazon is making head-ways in the cloud business, major competitors like Microsoft Corporation (NASDAQ: MSFT), which recently won the JEDI contract over Amazon, and Alibaba Group Holding Limited (NYSE: BABA) which is has invested $28 billion to step up its cloud infrastructure; Amazon would have to step up its game to remain highly competitive in the market.

Electronic Arts Inc. (NASDAQ: EA)

Closed: 8 May, 17:31 GMT-4

After hours: 117.13 +0.51 (0.44%)

Previous close: 116.80

During its fiscal fourth-quarter report, Electronic Arts reported adjusted earnings of $1,31 per share, topping the consensus estimate of 97 cents per share. The company’s adjusted revenue reached $1.21 billion, beating the consensus estimate of $1.18 billion.

Despite beating all expectations in its fourth quarter, shares of the company fell Tuesday evening.

EA said it has seen an increased level engagement, and remarkable growth in its live services net bookings amid the coronavirus pandemic lockdown. Though the gaming company is experiencing tremendous growth in some of its segments, the full impact of the coronavirus pandemic on its business, operations, and financial results is yet to be known—dependent on unpredictable factors.

The continued postponements, disruptions, and cancellations of sports seasons and other sporting events could continue to have an impact on EA sports. Given that, the company’s bestselling and popular sport simulation games carry titles like Madden NFL and FIFA. The sport simulation games need to keep in step with new sports seasons, going ahead to develop a new NFL game without the influence of any current sport season would spark mixed reactions

The company has provided guidance for 2021 like many of its business counterparts. It expects earnings per share of $3.35 and total net bookings of $5.5 billion. There would also be changes in how the company reports its metric.

PayPal Holdings Inc (NASDAQ: PYPL)

Closed: 8 May, 18:33 GMT-4

After hours 144.75 -0.21 (0.14%)

Previous close: 146.29

PayPal Holdings (PYPL), on Wednesday, reported its first-quarter earnings. Shares of PayPal fell after its earnings report and management outlook. The company’s earnings fell 18% to 66 cents, adjusted share, compared to a year ago. A major contributing factor to its decline was the 17 cents move to set aside cash reserves linked to business and consumer loans on the company’s balance sheet amid the coronavirus stay home orders.

According to PayPal, its revenue increased 12% to $4.62 billion as reported in the first-quarter earnings. While total payment volume rose 19% to $191 billion. Prior to that, analysts expected a total payment volume of $193.37 billion and the acquisition of iZettle.

During its earnings call, PayPal acknowledged that some of its business segments improved in April. The company also forecasted revenue growth of 13% by the time the current quarter ends on June 30, while analysts estimate an 11% growth. According to the IBD Stock Checkup, PayPal stock was rated 91 out of a possible 99.

Before the earnings report release late Wednesday, PayPal stock was up 3.5% near 133 in extended trading. Its stock had traded in a Buy zone, slightly above an entry point of 124.55.

A year ago, PayPal earned 78 cents per share on revenue of $4.13 billion. Analysts estimated 75 cents on revenue of $4.74 billion for the quarter that ended on March 31.

Union Pacific Corporation (NYSE: UNP)

Closed: 8 May, 17:26 GMT-4

After hours: 158.26 0.00 (0.00)

Previous close: 156.17

On April 23, 2020, Union Pacific Corp presented its first-quarter earnings report that topped Wall Street’s expectations. The company reported that its first-quarter net income rose 5.7% to 1.47 billion, or $2.15 per share, compared with its $1.39 billion or $1.94, a year ago. Zacks (Zacks Consensus Estimate) also estimated $1.86 per share. In the Q1 report, Union Pacific said there was a 2.9% decline in quarterly revenue, to $5.23 billion from $5.38 billion in the year-ago period.

Despite the Covid-19 pandemic, the Class I railroad company has put in much effort to produce strong financial results. According to Union Pacific CEO Lance Fritz, the company “leveraged productivity to deliver strong financial results, including an all-time best operating ratio of 59%.”

“We also made substantial improvements in employee safety, which is a testament to our dedicated employees. Our rail network has never run better, providing a safer, more reliable, and efficient service product to our customers,” he said.

While the oil and gas industry faces challenges due to the impact of the coronavirus pandemic, companies that demand oil and gas products are benefiting. Union Pacific has noted that the falling price of oil and gas products, specifically diesel fuel, has boosted its bottom-line results by cutting down 10% on fuel costs.

On a conference call with reporters and analysts, Chief Financial Officer Jennifer Hamann said the company is “running at efficiency levels” that have never been experienced before as a company. “With the strength of our balance sheet and our strong cash generation, I can confidently say that we are well-positioned for the challenges we are facing.”

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