The Impact of COVID-19 on the Stock Portfolio Construction: Advice Based on Indicators

Abstract

Contemporarily, it is challenging to quantitatively predict or backtrack stock performance in financial markets to determine stock selection portfolios, especially after the outbreak of COVID-19 in early 2020, and more uncertainties are reflected in various stock indicators. The purpose of this study is to examine the judgment criteria of stock selection portfolios according to the stock indicators in different categories and to explore the impact of the COVID-19 pandemic based on these indicators. The annual data of 3,255 stocks is used between fiscal 2015 and fiscal 2021 to evaluate the stocks on the basis of four categories: Profitability, Payout, Growth, and Value. Besides, five companies are chosen (i.e., Intuit, TransUnion, Equifax, H&R Block, and Paychex) as examples. According to the analysis, the suggestion is that the pandemic impacted the stock market significantly, resulting in the indicators decreasing. The value of stocks might be hard to measure because of the unpredictable changes. The recommendation is to put importance on stocks with smooth growth and stable profits. In the complex market environment, a coronavirus pandemic is an event that suggests that the uncertainty in the future will increase. These results shed light on guiding further exploration of the stock portfolio from the perspective of individual investors.