States across the U.S. are beginning to gradually reopen businesses after sweeping lockdowns due to the coronavirus pandemic brought the economy to a virtual standstill.
California Governor Gavin Newsom on Monday detailed plans for his state, announcing that some retailers deemed non-essential, such as florists, clothing, book, music and sporting goods stores, will be permitted to offer curbside pickup from Friday.
New York, the epicenter for coronavirus in the U.S., is planning to start to reopen retail stores in phases, with a select number beginning May 15.
Taking that into account, here are three stocks which stand to benefit from the economy reopening:
1. Starbucks
Starbucks (NASDAQ:SBUX) shares rallied on Tuesday after the coffee giant announced plans to reopen more than 85% of its U.S. stores by the end of this week.
Initially, shops will have modified hours of operation and will offer pickup, delivery and drive-through options only. By early June, the company expects to have more than 90% of its outlets open, albeit with limited hours.
The world’s largest coffee chain followed the same return-to-operations plan in China, it's second-largest market, where sales are starting to recover. CEO Kevin Johnson said:
"The foundation of our approach comes from what we have learned in China, where more than 98% of our stores are now open and operating under revised protocols."
Starbucks also stands to benefit from a scandal plaguing its main China rival, Luckin Coffee (NASDAQ:LK), which is facing investigations in both its home market and in the United States over the alleged fabrication of more than $300 million in 2019 sales.
Seattle-based Starbucks suffered a nearly 50% selloff in its stock from January through the end of March, taking prices back to 2018-levels. Despite a decent pop off the lows, shares are still down 17% in 2020.
The company missed earnings expectations when it reported first-quarter results on April 28. It anticipates that the negative impact of the coronavirus pandemic will increase in the second quarter, before abating in the third quarter.
2. MGM Resorts International
MGM Resorts International (NYSE:MGM) operates the largest number of properties on the Las Vegas Strip, including the Bellagio, Mandalay Bay, MGM Grand and Park MGM.
Shares of the gaming-and-lodging giant have made an impressive recovery from the lows reached during the peak of the coronavirus-selloff in March, rebounding an astonishing 140% over the past six weeks. Despite the recent uptick, the stock is still down 57% year-to-date and earnings, released April 30, disappointed.
While it remains unclear just when casinos and hotels will be allowed to reopen in Nevada, some Las Vegas Strip resorts aim to open by Memorial Day, May 25.
In the company’s post-earnings call, Chief Executive Bill Hornbuckle explained the gradual relaunch plan, saying once the Las Vegas Strip is approved to begin operations, MGM will open a few casinos, including the mid-price New York-New York Hotel & Casino and the luxury Bellagio.
The company will lay out safety measures that will be implemented in a plan to be released later this month.
Hornbuckle explained:
“Consumer confidence is key to economic recovery, and thoughtful reopening strategies are vital to building public trust.”
Corey Sanders, MGM’s chief financial officer, noted that half of the traffic into Las Vegas is from automobiles, a method of travel that is considered safer than flying amid COVID-19 fears. Sanders went on to say that the casino-and-hotel operator expects “some pent-up demand” in the months ahead.
3. TJX Companies
The final name to consider as the economy reopens is off-price retailer TJX Companies (NYSE:TJX), which owns T.J. Maxx, Marshalls, and Home Goods brands.
The chain, which offers a wide selection of well-known designer brands at a steep discount, is likely to benefit from the end of stay-at-home measures as consumers migrate to discount retailers in search of value, especially in light of still-extensive unemployment and the recessionary trend currently hitting global economies.
That should help TJX get back on track when normal operations return as its business model is heavily dependent on customers visiting its stores.
The stock, which settled at $48.17 last night, has managed to stage a 47% rally since tumbling to a more than five-year low back in March, but is still down 21% so far this year.
The Framingham, MA-based discount clothing and home decor chain, which operates a total of 4,412 stores in nine countries—including the U.S., Canada, the UK, Ireland, Germany, Poland, Austria, the Netherlands and Australia—is projected to report first-quarter results ahead of the opening bell on Tuesday, May 19. Consensus estimates call for the retailer to post earnings of $0.05 per share on revenue of $6.22 billion.
"Stores located off-mall are likely to see early benefits from reopening as consumers avoid crowded malls," according to a recent note from Bank of America analysts. That should bode well for the discount retailer.