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Zacks Investment Ideas feature highlights: Pfizer, BioNTech, Peloton Interactive, AMC Entertainment and Etsy

For Immediate Release

Chicago, IL – November 11, 2020 – Today, Zacks Investment Ideas feature highlights Features:Pfizer Inc. PFE, BioNTech SE BNTX, Peloton Interactive, Inc. PTON, AMC Entertainment Holdings, Inc. AMC and Etsy, Inc. ETSY.

More Foot-Traffic, Less Click-Traffic

Yesterday's hopeful vaccine news from Pfizer and BioNTech has put a light at the end of the tunnel for value investors. We are seeing massive portfolio reallocations as normality begins to be priced into equities. 2020's underperforming cyclicals are finally the stars of the show, driving the value-driven Dow and S&P 500 indexes to all-time highs. Secular tech is taking a breather as it grabs a seat on the sidelines.

Some of the pandemic's most pronounced digital trends are seeing a reversal. Investors and traders are adjusting the equity market for the anticipated increase in foot traffic and click traffic decline, with a vaccine ostensibly on the short-term horizon.

Vaccine Reversals

The world of technology has provided us with digital solutions to satisfy almost every human necessity from the comfort of your home. COVID-19 has conditioned global societies to rely on tech more than ever before, and the implications of the 'new normal' are yet to be realized.

Everyone just wants things to go back to normal, and this vaccine is a leap in that direction. 

There is no question that 2020's rapid digitalization will continue as technology's advantages are leveraged in every sector of the economy. Still, there is value in this year's cyclical underperformers.

This is the day that value investors have been waiting for all year, but I wouldn't be chasing the value rally on this potential vaccine announcement. There is still an enormous amount of uncertainty ahead, with fiscal stimulus looking less likely with a genuine vaccine candidate in the pipeline. Those familiar with the virus are saying that the worst of this second wave is still ahead of us.

Below, I will look at some of the sector trend reversals and whether these reversals have room to run.

Fitness 

Working out without the luxury of a gym has been a challenging endeavor for fitness enthusiasts. Peloton very effectively took advantage of the homebound environment. Its sales surged in the latest two quarters by 232% and 172% year-over-year, while its bottom-line flip to strong profitability.

PTON's shares have seen parabolic returns of over 350% at its peak, but the stock is down over 15% in trading yesterday as gyms timeline to full reopening is seemingly shortened on the vaccine news.

I still wouldn't touch PTON at its current rich valuation, despite the recent correction. Peloton has a solid product offering, and its subscription-based workout program has been good for long-term revenue consistency. PTON was a perfect stay-at-home stock with consumer demand surging for this high-end stationary bike, but once gyms reopen, I believe that demand will subside. Its subscription offering still only makes up a small fraction of revenue, not enough to offset a decline in bike sales.

Entertainment

2020's entertainment sector has been dominated by streaming services. New streaming apps are popping up left and right, with the biggest and baddest media players now in the arena.

This pandemic has pummeled movie theaters, on the other hand. Not only were theaters forced to close or significantly reduce capacity, but movie releases have been all but nonexistent, and production remains hampered in the US.

AMC rallied an incredible 51% in one day as investors priced out some of its 'inevitable bankruptcy' scenario. Hopes of a swift universal vaccine brought this stock out of the ashes of potential liquidation. AMC is still down 48% for the year. AMC and other movie chains may yet have a future, but they will need to further adapt to the shifting consumer that values ease and convenience above all else.

Shopping

The rise of e-commerce and the 'retail apocalypse' really hit the fan amid this pandemic, as the world relied on digital platforms to satisfy their shopping needs.

Online shopping is accelerating, and the pandemic has pushed the best-in-class players to fresh share price highs.

Etsy perfectly exemplifies two major trends amid the pandemic: 'do it yourself' (DIY) and a budding e-commerce platform.

ETSY had soared over 200% at its highs for the year last month, but the vaccine news hit these shares square in the face dropping them down over 17% yesterday. The market is pricing out click-traffic and time spent on crafts with an end to the pandemic in-sight.

There is no doubt that the world will be utilizing digital shopping tools more than ever before, but that does not mean that hybrid brick-and-mortar models will be obsolete. There still may be an opportunity in well-positioned retail hybrids like Nordstrom.

Final Thoughts

The implications of society going back to normal are beginning to be priced into the equity market, but we all know that will not be the case. Pfizer's vaccine could rid the world of this devastating pandemic, but the post-COVID world will not be the same one we left behind in 2019. The world will emerge from this biological terror stronger than ever with technology as our ally.

The rapid digitalization we have seen across the country has illustrated how much long-term potential well-positioned tech stocks have for the next decade of advancement. The recent tech pullback may be creating a buying opportunity for your favorite COVID winners. Be careful though. Tech remains at relatively lofty levels, and the current interest rate rally gives me some concern about the sustainability of frothy valuations in tech.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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Pfizer Inc. (PFE): Free Stock Analysis Report
 
Etsy, Inc. (ETSY): Free Stock Analysis Report
 
AMC Entertainment Holdings, Inc. (AMC): Free Stock Analysis Report
 
BioNTech SE Sponsored ADR (BNTX): Free Stock Analysis Report
 
Peloton Interactive, Inc. (PTON): Free Stock Analysis Report
 
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