Pfizer's coronavirus vaccine could be a game-changer. The pharmaceutical company's announcement that the vaccine has been more than 90% effective in early trials is shaking up the stock market's dynamics and pointing toward the potential for some companies to go on explosive runs.
It's too early to tell exactly how the vaccine situation will pan out, but the market appears to have entered a new phase, and investors who build positions in companies that go on to outperform in a post-vaccine world could be richly rewarded.
Read on for a look at three stocks that look poised to do just that and deliver explosive returns in what could be the next bull market.
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1. Impinj
Impinj (PI +3.48%) is a maker of radio-frequency-identification (RFID) tags, sensors, and software that's faced tough times due to virus-related challenges. The company counts on retail as its largest market, and store closures and reduced consumer traffic quickly put a halt to the business' streak of sales growth. The air-travel and automotive industries represent significant end markets as well, and demand in these categories has also been hurt by the pandemic.
After posting sales growth of 24.6% last fiscal year and 44.6% year over year in this year's first quarter, Impinj's sales plummeted roughly 31% in both the second and third quarters of this year. An effective vaccine could dramatically accelerate a recovery in the retail sector and pave the way for Impinj's sales to rebound and reach new heights.
Impinj's small, durable RFID tags can store and transmit information without the need for a power source. These tags can be updated to store new data and are capable of transmitting much more information than is possible with simple bar-code systems. The company's technologies can be used to prevent theft and counterfeiting in the retail world, dramatically improve the speed and efficiency of inventory checks, track things like airline baggage or packages, and monitor manufacturing processes and the age and safety of goods and materials.
The market for RFID technologies remains very young, and adoption for Impinj's technologies remains very low. Even after recent gains for its share price, Impinj is still a small company with a market capitalization of roughly $800 million, and it has the potential to deliver explosive stock performance if its RFID solutions gain ground.
2. Hanesbrands
Hanesbrands (HBI +0.00%) disappointed investors when it reported third-quarter results earlier this month. Top- and bottom-line performance for Q3 came in ahead of the market's expectations, but the company's weak guidance spooked investors, and shares saw a steep sell-off following the release and conference call.
New CEO Steve Bratspies used the occasion of his first earnings call as the company's chief executive to tell investors that a "detailed, objective assessment of the business" is underway. The company is evaluating its global product portfolio and may move on from some brands in order to devote resources to those that are better positioned to drive growth.
If Hanesbrands emerges into a recovering retail environment as a tighter, more focused company, it could leverage its strengths to deliver stellar returns for investors. At today's stock prices, the company is valued at 0.7 times this year's expected sales and 9.5 times expected earnings.
The company also pays a dividend, which boasts a yield of roughly 4.7%. Hanesbrands hasn't delivered payout growth since 2017, but the company's stock is boasting a strong yield at current prices, and management has stated that maintaining its payout is one of the company's top priorities.
Hanesbrands remains a turnaround story, but the company's stock is looking very attractive again, and performance could come in much better than expected if a vaccine helps the retail world start to return to normal.
3. Match Group
Match Group (MTCH +0.93%) saw its growth curtailed by social-distancing and shelter-in-place initiatives, but things could be heating back up. If concerns about the virus ease, the dating world will probably start to look a lot more active and vibrant again.
Match leads the online dating market in the U.S. and Europe, and a vaccine-driven return to more-normal conditions should prime the business to enjoy better user sign-up and spending trends. The company operates popular dating apps including Tinder, Hinge, Plenty of Fish, OkCupid, and Match.com, and it looks poised for long-term growth as an increasing number of romantic connections are made through digital channels.
Match managed to continue posting growth even with significant headwinds from the pandemic, recording 12% year-over-year growth in the second quarter and 18% growth in Q3. Easing of restrictions in many territories already started helping growth to reaccelerate in the third quarter, and potentially game-changing vaccines could help pave the way for even better performance.
Online dating will only become more popular with time, and Match's forefront position in the industry should enable it to capture much of the growth. The company's deep resources and ecosystem of romance-focused apps have it set to win the game of love in a post-vaccine world.
