EP 061: How to Evaluate Stocks During a Pandemic

With the Coronavirus (COVID-19) being declared a pandemic, there is so much about our lives that are affected...

Including how we need to look at the stock market. 

There is BIG opportunity in this market, BUT you need to make sure you are asking yourself the right questions about the right stocks. 

Let's break it down...

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First of all, I want to take a moment to say that I truly am wishing you the best during this time. My thoughts are with you and your family... we are in this together. So while we are at it, might as well try to make some money

If you have been following me for awhile, you know I am a big believer in the power of option trading. 

I can't think of a better time in history where option strategies could have saved your portfolio from a complete disaster. 

You can learn more about option trading in our Option Trading series here: Episode 1, Episode 2, Episode 3, Episode 4, and Episode 5.

But what I want to focus on today is...

Every week I go live with our members inside of Power Trades University. This week we dove into some really good learning lessons...

And I want to share them with you. 

We discussed how to evaluate stocks in this market... Because there are a lot of rumors flying around right now about how to approach this market. 

And the reality is, there is great opportunity. 

There are companies that are currently trading for 20%, 40%, 60% off right now. 

The question is... 

Do you know which ones you should be pressing into? And which ones should you be staying away from?

A big myth is that all of the stocks are going to bounce all the way back. 

That simply isn't true. 

You need a methodology in order to determine which stocks with survive, even thrive, in this type of market. 

When you are looking a stock chart in this current market, this is the first question you should ask yourself. 

If the future depends on this stock or if it offers something of the future, that means when the pandemic is over that company will still be standing. 

This means the world is moving toward this particular company and what they offer, and a pandemic isn't going to stop that. 

So many businesses right now have been impacted from the pandemic. 

This question makes you think: Is the revenue they would have had during this time completely lost? 

OR is it just delayed and they will get that revenue back in the future?

When the pandemic ends, will the revenue of this company pour back in immediately? Or will it be very slow, trickling back in? 

This will give you an idea how quickly the industry or stock can come back after this is over. 

This would help you indicate if this is a stock that needs to be pursued now, or it can be waited on. 

There are companies right now doing horribly in the market climate. 

These are stocks that don't benefit from people being stuck at home. 

BUT there are others that are soaring. 

This is the time to determine if the stock is doing well in the current environment and also if it will CONTINUE to do well once the pandemic is over. 

Be careful not to dive into stocks that are only relevant because of the current world scene. 

Let's walk through some examples. To help you, we developed a custom free "Evaluation Check List" download. 

Click the image below to download the PDF. 

When using these questions to analyze stocks, they either get a CHECK for positive, or an X for negative. 

This isn't a simple "yes" or "no". 

It is either positive (CHECK) or negative (X).

1. Is this a company of the future? Does the future depend on it?

This gets a CHECK. 

Electric cars are the wave of the future, that's the way things are going. It is important for the future to reduce emissions into the air. 

2. Is the revenue lost or is it delayed?

This gets a CHECK for delayed.

If you want a Tesla, you will get one when the world as turned back to normal. You wouldn't decide to go buy a Ford instead just because there is a pandemic going on. 

They aren't buying this minute, but they will. 

3. Will revenue be slow to return in the new normal environment?

This gets a CHECK (meaning it is a positive result. The company will not have a slow return to revenue)

If things pick back up, people will get back to buying cars, especially those who are interested in purchasing Teslas. 

4. Does this company thrive in the current environment? 

This gets an X. 

A high end electric vehicle is not essential in this market. 

EVALUATION:

3 CHECKS
1 X

1. Is this a company of the future? Does the future depend on it?

This gets a CHECK. 

Streaming is not only the present but it is also the future. It is here to stay.

2. Is the revenue lost or is it delayed?

This gets a CHECK for positive. 

They are actually probably increasing their revenue right now, it is not lost or delayed. 

3. Will revenue be slow to return in the new normal environment?

This gets a CHECK (meaning it is a positive result. The company will not have a slow return to revenue)

The revenue is probably picking up, so there is no slowness of revenue.

4. Does this company thrive in the current environment? 

This gets an CHECK. 

Yesssss - people are stuck at home! They are looking for things to watch.

EVALUATION:

4 CHECKS

1. Is this a company of the future? Does the future depend on it?

This gets a X. 

The future does not depend on cruise lines. If they went away today, it would not change the way we would live. 

2. Is the revenue lost or is it delayed?

This gets a X.

There are only 365 days in a year. If a cruise ship were to sell every single day, they could only make that much in a year. 

Any day they lost revenue, that is revenue that they cannot get back. It's just lost. 

3. Will revenue be slow to return in the new normal environment?

This gets a X meaning it will be slow to return. 

At what point will the general public feel comfortable getting back on a cruise ship again? It most likely will not be immediately after the pandemic is over. 

4. Does this company thrive in the current environment? 

This gets an X. 

I mean this is obvious. People are not getting on cruise ships right now. 

EVALUATION:

4 Xs

So from this example, why in the world would you consider getting into cruise ships when there are stocks out there (like the 2 mentioned above) that are thriving right now?

With our members inside of Power Trades University, we were able to create a list of a BUNCH of stocks that could potentially thrive in this market, depending on how many CHECKS and Xs they got. 

This is how you need to evaluate stocks right now, too. 

People now more than ever need information - do not let emotions take over. 

Just follow these questions. 

There WILL be a time where the market will rebound. 

And it is my hope that this information will help you be a part of it when it does. 

Please share this podcast/blog post with someone who needs this information. 

If you need guidance, please reach out. Get some free content OR... 

 ...if you want to kick it live with us every week where we find potential new trades even in this market... You gotta check out www.PowerTradesUniversity.com 

There is opportunity right here, right now, in this market. 

Those who know what they are doing are able to take advantage of it. I want you to be one of those people. 

I wish you and your family the best during this critical time.