The Coronavirus pandemic cratered entire sectors of the stock market in 2020. Some stocks have rebounded. Some have even thrived. But many quality companies are still trading at a fraction of their pre-pandemic value, and that creates opportunity.
I went looking for potential value plays among stocks that had strong historical charts but were still beaten down. My criteria was simple: companies that were performing well before COVID-19, have solid management based on their track record, but are currently trading at roughly half their pre-pandemic prices.
If these companies recover to their previous levels as the economy normalizes, they could double. That's the thesis behind these eight picks.
The Recovery Play Strategy
This isn't a short-term trading strategy. Recovery takes time. A lot needs to happen before these stocks reach their former levels:
- The pandemic needs to be controlled (vaccines, treatments, declining case counts)
- Consumer confidence needs to return
- People need to be working and spending money again
- These specific companies need to survive until the recovery happens
There's real risk here. Not every company survives a prolonged downturn. Cash burn matters. Debt matters. Management decisions matter. But for companies with strong pre-pandemic performance and the balance sheet to weather the storm, the upside potential is significant.
I chose these eight stocks because their historical charts showed consistent strength before the pandemic. That's a signal of good management, solid business models, and competitive positioning. The pandemic didn't make these bad companies. It just put them in difficult circumstances temporarily.
Performance Tracking
The table below shows the share price when I started writing this analysis, my projected rebound target, the gap between current price and projection, and how much you'd gain per $100 invested if my projections prove accurate.
Keep in mind these are projections, not guarantees. Markets are unpredictable. Individual company situations change. Do your own research before investing.
8 Stocks Positioned to Double
ANI Pharmaceuticals Inc (ANIP)
Sector: Pharmaceuticals
ANI Pharmaceuticals is a specialty pharmaceutical company focused on developing, manufacturing, and marketing branded and generic prescription pharmaceuticals. They operate in a sector that should be relatively recession-resistant, as people still need medications regardless of economic conditions.
The stock had a strong upward trajectory before the pandemic but got caught in the broader market selloff. Pharmaceutical companies with diverse product portfolios and the ability to navigate regulatory environments tend to recover well. ANI fits that profile.
EPR Properties (EPR)
Sector: Experiential Real Estate REIT
EPR is a REIT specializing in experiential properties: movie theaters, entertainment venues, ski resorts, attractions, charter schools, and early childhood education centers. This is exactly the type of real estate that got hammered during lockdowns.
The recovery thesis here depends on people returning to out-of-home entertainment. Movie theaters have been declared dead multiple times in history, yet they keep coming back. EPR's diverse portfolio across entertainment and education gives it multiple paths to recovery.
The risk is obvious: if consumer behavior permanently shifts away from theaters and venues, EPR's properties lose value. But if you believe people will eventually want to leave their houses again, EPR offers significant upside from current levels.
The Marcus Corporation (MCS)
Sector: Entertainment & Hospitality
The Marcus Corporation operates two main business segments: movie theaters (Marcus Theatres) and hotels and resorts (Marcus Hotels & Resorts). Both businesses were devastated by pandemic restrictions and travel limitations.
Marcus has been around since 1935 and has weathered multiple economic cycles. They've shown they know how to manage through difficult periods. The company had solid fundamentals before COVID-19, and if travel and entertainment normalize, both segments should recover.
This is a pure recovery bet on the return of normal leisure activity. The stock price reflects deep pessimism about that recovery. If you disagree with that pessimism, MCS offers value.
PBF Energy Inc (PBF)
Sector: Oil Refining
PBF Energy is one of the largest independent petroleum refiners in the United States. When people stopped driving, flying, and traveling during the pandemic, demand for refined petroleum products collapsed. Refiners like PBF got crushed.
Energy stocks are always cyclical, and refiners are particularly volatile. But if you believe gasoline demand will recover as people return to offices, take vacations, and resume normal travel patterns, PBF represents a leveraged play on that recovery.
The risk is that the shift to electric vehicles and remote work permanently reduces gasoline demand. The opportunity is that those shifts take longer than pessimists expect, giving refiners time to recover and adapt.
PrimeEnergy Resources Corporation (PNRG)
Sector: Oil & Gas Exploration
PrimeEnergy is an independent oil and natural gas exploration and production company. They acquire, develop, and produce oil and gas reserves primarily in Texas, Oklahoma, and West Virginia.
This is another energy play, but focused on the production side rather than refining. The same recovery thesis applies: if energy demand rebounds and oil prices rise, production companies benefit directly.
Smaller independent producers like PNRG tend to be more volatile than major oil companies, which means more risk but also more upside potential in a recovery scenario.
Phillips 66 Partners LP (PSXP)
Sector: Energy Infrastructure MLP
Phillips 66 Partners is a master limited partnership that owns and operates midstream energy infrastructure: pipelines, terminals, and processing facilities. They provide the infrastructure that moves and stores petroleum products.
MLPs like PSXP often pay high distributions, which makes them attractive for income investors. The pandemic reduced energy demand, which hurt volumes moving through their infrastructure. But the infrastructure itself retains value, and distributions can recover as volumes normalize.
The advantage of infrastructure plays is that they're less dependent on commodity prices and more dependent on volumes. If energy consumption recovers, PSXP benefits without needing oil prices to spike.
Retail Value Inc (RVI)
Sector: Retail REIT
Retail Value Inc is a REIT that was created as a spinoff to hold and operate retail properties. Retail real estate has been under pressure for years due to the shift to e-commerce, and the pandemic accelerated that trend dramatically.
RVI is a contrarian play. The market assumes retail real estate is dying. If you believe quality retail locations retain value and that physical retail isn't disappearing entirely, RVI offers deep value. The risk is that you're catching a falling knife in a sector with long-term structural challenges.
Universal Health Realty Income Trust (UHT)
Sector: Healthcare REIT
UHT is a healthcare REIT that owns medical office buildings, acute care hospitals, behavioral health facilities, rehabilitation hospitals, and childcare centers. Healthcare real estate should theoretically be pandemic-resistant, but occupancy patterns shifted, elective procedures were canceled, and costs increased.
The healthcare sector isn't going away. Demographic trends favor continued healthcare demand. As procedures normalize and occupancy stabilizes, healthcare REITs like UHT should recover.
This is also featured in my REIT portfolio for similar reasons. Healthcare real estate offers both recovery potential and long-term demographic tailwinds.
Important Update on RVI
Something unusual happened with RVI on October 29, 2021. The company issued a special dividend of $22.04, which is dramatically higher than their normal dividend. As a result, the stock price fell sharply.
There was significant confusion among investors about what was happening, and the stock traded erratically. I decided to cash out my position and took the dividend. The gain/loss per $100 in the tracking spreadsheet reflects the dividend received.
After researching further, it appears RVI was created as an offshoot from a larger retail REIT with the purpose of managing and eventually liquidating properties. They don't have many properties left, which explains the liquidating dividend strategy.
There was another dividend of $3.24 on January 18, 2022. If you bought when I originally recommended it, the dividends would have more than covered your cost basis. At this point, anyone still holding is essentially freerolling.
Note: I am not automatically reinvesting dividends from this position and will try to remember to update the spreadsheet as events unfold.
The Risk and the Opportunity
These are not safe, stable dividend stocks. These are recovery plays with genuine risk of permanent capital loss if the companies don't survive or if the recovery takes longer than their balance sheets can handle.
But risk and opportunity are two sides of the same coin. The market has priced in a lot of pessimism. If you believe that pessimism is overdone, and that a return to normalcy eventually happens, these stocks offer asymmetric upside.
I'm not putting my entire portfolio into these picks. This is a calculated bet with money I can afford to lose if I'm wrong about the recovery timeline or the strength of these businesses.
What's your take on pandemic recovery stocks? Are you buying the dip on beaten-down sectors, or do you think the market is right to be pessimistic? Have you found other recovery opportunities I missed? Let me know in the comments.
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