In times of crisis, investors are looking for stocks to buy and hold: in this sense, two strong brands like Starbucks and Visa are a safe investment for the future.
The COVID-19 pandemic triggered a severe recession, decimating the demand for goods and services in a variety of sectors: as explained in analyzes such as How markets will change due to the Covid crisis and Sectors and stock that will not recover after the coronavirus crisis, the changes will be profound.
This crisis has also shown that some companies are holding up better than others. For example, with lockdowns and movement restrictions in numerous countries, physical stores and malls have experienced a decline in foot traffic. However, companies with strong franchises, a digital presence and adaptability to new trends have ended up stealing market share from the companies that have failed. These resilient companies are the ones that will emerge unscathed from the pandemic, or even become stronger.
For these reasons, stocks of companies that offer a strong guarantee of growth and resilience to crises should always be present in a well-constructed and balanced investment portfolio. Visa and Starbuck shares are two perfect examples of stocks to buy and hold, forever or nearly forever.
Stocks to buy and hold: Visa
Visa (NYSE: V), one of the largest financial services firms in the world, with a long track record and a strong brand, has seen its business adversely affected by the pandemic. Total transactions fell 14% yoy in the second quarter, while cross-border volume was still down 38% yoy, even though lockdowns in many countries were lifted. However, this trend is likely to be temporary, as processed transactions have continued to improve steadily since April.
Recently CEO Alfred Kelly highlighted some trends that will benefit Visa over the long term. One of these is the shift to contactless payments as the pandemic has caused more people to give up handling cash and checks.
Visa has seen a sharp rise in both interest and use of tap-to-pay and has helped more than 55 countries increase tap-to-pay limits. In the United States, the company added more than 80 million contactless cards in the first half of 2020 and is seeing the tap-to-pay trend accelerate during the Covid crisis as people’s habits are permanently changed.
A second positive trend is the growth of e-commerce and digital payments. This is beneficial for Visa as its share of digital commerce is approximately three times greater than physical stores. Around the world, both e-commerce transactions and average spend have increased year on year.
Stocks to buy and hold: Starbucks
Starbucks (NASDAQ: SBUX) has been severely impacted by the lockdowns in the various countries where its cafes are located. These closures peaked in April, but as early as the end of July, approximately 97% of Starbucks stores had reopened, while approximately 87% of its portfolio of globally licensed stores is now open.
CEO Kevin Johnson explained in detail, during the conference call for the presentation of the latest quarterly, the operational protocols of the new stores and the service channels that have improved the contactless experience for customers. These steps included mobile ordering and payment and delivery. The ability to include these options allowed weekly US sales to improve steadily during the quarter.
Starbucks plans to launch other services, and these initiatives demonstrate management’s determination to adapt the business for a post-pandemic future. Interventions that will allow Starbucks to continue to grow in a sustainable way.
The third quarter saw significant growth in customers who downloaded the Starbucks app and joined Starbucks Rewards, totaling 3 million and a 17% increase over the second quarter.