The Companies Behind These Beaten-Down Value Stocks Just Raised an Absurd Amount of Money
There are definitely winners and losers from the stay-at-home economy caused by COVID-19. But since the market has rebounded, a lot of the stay-at-home stocks may be close to fair value -- or even above it. Meanwhile, many of the "losers" of the outbreak in the travel, leisure, hospitality, and big-ticket consumer discretionary sectors have taken huge hits. Like, revenue-going-to-zero-type hits.
Thus, many out-of-favor stocks have plunged to very, very low levels; however, those low levels are largely justified, given the outsize risks of bankruptcy or dilution associated with all affected sectors.
Yet help could be on the way. Last week, the Federal Reserve added to its unprecedented bond-buying program, extending the program to even buy junk bond ETFs. Junk bonds are below the coveted "investment-grade" line, meaning they're some of the highest-risk, highest-yielding debt out there, funding the most troubled companies. With the Fed taking the unprecedented step of backstopping a portion of those loans, bond-buyers now appear willing to lend at the most affected companies, and perhaps extend their lives through the pandemic... albeit at a price.
Source Fool.com
