What's ephemeral. What's forever changed? I think that when we get through this pandemic, some things will go back to normal. I expect that we'll be going for beers, seeing plays, and going to games, although the latter will, initially, be too scary for many to bear.
But there are other behaviors that have so quickly become ingrained that they are already investible. We know the obvious: Zoom (ZM) , Cisco's (CSCO) Webex and now RingCentral (RNG) -- all allowing us to communicate with each other in ways that were thought to be only done in the old television show "24."
It's not science fiction anymore. Virtual classes, virtual meetings, virtual cocktail parties, it's all here and now and with the exception of the online beer bash, millions of workers are going to be working at home from now on. It's too convenient and it's too environmental, and too time-saving, because of the despicable traffic that's prevalent in almost every major city. Oh, and how about the coming shrinkage of the need for office space. I see those prices plummeting once leases are up.
But now we have to think about what's going on while you are at home. Right now, we have a lot of pantry stocking, the buying of canned goods and frozen foods; we heard from Conagra (CAG) the other day, the center of the super market is back. I like that stock plenty. Yesterday, Nestle told us that the stay at home worker's snacking much more aggressively than expected. I like Nestle, if you have a European account, but, to me, that means you should buy the stock of PepsiCo (PEP) , which owns the No. 1 snack food company in the world, Frito-Lay. I know it seems like ages ago, but Pepsi had one of the best quarters of the consumer-packaged goods companies, a number that sent its stock up to $147, and even though it had a four-point move Thursday, it's still down 25 points from its high.
People are cooking more than they ever have. When they do, they use spices, and that makes McCormick (MKC) a screaming buy. The stock got knocked down when it reported, because its Chinese business had been hammered. Now that's coming back at the same time that that the home office worker is cooking and baking like never before. When I interviewed CEO Lawrence Kurzius Thursday, he said that McCormick's been crushing it, led by Franks but also seeing a doubling in French's mustard sales. That's extraordinary. What a fantastic acquisition that was. McComick's got a food service business that's getting hurt, hurt badly, but Kurzius told me that the at-home business is so strong that you don't have to be too concerned about either the restaurants or offices that are closed. The consumer business is 75% of the pastiche, so you are fine. Remember McCormick's stock has always excelled in recessions, including 2001 and 2007-2009, so this one's doubly blessed.
Finally there's Amazon (AMZN) . Every time you are confined to your house, Amazon gets more business. This time around, people are buying staples like never before. It's been the lifeline for many. And I think it's going to have a gigantic quarter, not just because of retail, but because of web services, which has exploded in traffic as competitors can't seem to keep up with business. I think that Amazon's been gaining share with retailers, too, something that some had been skeptical about because Amazon's such a competitor. The data's pretty clear that retailers want execution and don't want any concerns about too much traffic or breakdowns. Amazon hasn't had any. It's built for this moment.
Oh, speaking of web services, the other day I read a statistic from a Microsoft (MSFT) blog about how, and I quote "We have seen a 775 percent increase of our cloud services in regions that have enforced social distancing or shelter in place orders." Given that so many countries and states and cities have those kinds of orders, I was astounded, and suggested that it must be a huge increase for the company's business.
Wednesday, though, Microsoft issued a special 8K correction, saying that the order was not intended, and I quote, "to provide information about the performance of Azure and cloud services generally, Microsoft's Intelligent Cloud segment or Microsoft as a whole." It was really just about Italy!
Hmm, suboptimal disclosure. Glad it was changed. Buy Amazon.