In Reply to: V shape vs W-shape and K shape ??? posted by Cz? on Jul 23, 2020 at 20:01:51:
The coronavirus-ravaged U.S. economy is expected to take any shape of recovery – V, U, W, L, I or K – from the ongoing recession.
While V refers to a steep decline followed by quick recovery of the economy, U-shape indicates long recovery time (in months). Meanwhile, W indicates quick recovery but a second decline, a scenario known as double-dip recession. Further, L and I are the worst-case scenarios, where recovery takes years. K is the latest to join the list, which indicates that one branch of the economy is advancing while another is declining.
On Jun 8, the Business Cycle Dating Committee of the National Bureau of Economic Research announced the beginning of a recession, led-by the coronavirus pandemic and related lockdowns and shelter-in-home guidelines that resulted in severe decline in employment and production levels.
Since then, the shape of economic recovery has been debated by pundits. The chances of a V-shaped recovery increased following a swift recovery in stocks in May after a plunge into bear market in mid-February. Unprecedented government stimulus and reopening of the economy were the primary drivers.
However, the Fed’s gloomy outlook amid fears of a second wave of coronavirus outbreak somewhat dampened the swift recovery sentiments. Although chances of a V-shaped have not been ruled out (depends on the availability of an effective vaccine), a number of analysts and market observers believe the economy is more likely to see a W-shaped recovery. (Read More: Market Recovery to Be Like "Rolling W's"? Value Stocks to Buy)
Here we discuss five stocks that have shown great resilience amid the pandemic. Apart from having solid fundamentals, these companies have significantly low debt levels. These factors make them well-poised for further growth despite the shape of economic recovery.