25 Mar The Pandemic Portfolio – Update
Back on March 6th we came up with a list of stocks that we thought could benefit from a world in which coronavirus becomes a long-term problem.
You can read the original post here
Taking this original concept further, we have found a few more stocks that could do well. For even in these strange times of isolation and even men washing their hands, there are companies that are set to benefit from the isolation rules.
Countries shutting down is a new thing. It has only been a few days of this new phenomenon so of course markets are reacting badly to it. But just as we, a population locked inside, comes to terms with what this means and how we are going to deal with it, so too will the stock market. The stock market learns fast so whilst there might be more downside for some sectors, there will be upside for those companies who can service an isolated world.
Even after this main threat from this virus passes, it is likely our world will be changed forever. Your favourite restaurant might not re-open. Air-travel will resume but with increased screening. The cruise industry will not recover for some time. Home-delivery and take-out will be the norm for a while.
Companies are also likely to learn from having remote staff. If remote staff are nearly as effective as those in the office, expect companies to decrease office floor space to save cost and tell half their workers to stay at home. Companies servicing remote workers will prosper.
The world will change. Maybe it is time you changed your portfolio and started to position towards the new remote living reality.
With that in mind. Here are 24 stocks for the new remote economy.
|TDOC||Teladoc||Digital Doctor Visits|
|ZM||Zoom Video||Digital Workforce|
|PETS||1-800-PetMeds||Online Pet Healthcare|
|CHWY||Chewy||Online Pet Shopping|
|CPB||Campbell Soup||Staples Food|
|JNJ||Johnson & Johnson||Staples Health|
|PG||Proctor & Gamble||Staples Health|
|EA||Electronic Arts||Video Games|
|AKAM||Akami Tech||Internet Infrastructure|
|ELY||Callaway Golf||<10 person leisure|
|HD||Home Depot||Home Improvement|
We have grouped these into industries for you so you can understand why the company fits with the concept.
People always need staples of food and health, hence CPB, HRL, JNJ and PG. We wrote about GILD and REGN in the previous Pandemic Portfolio update
TDOC enables people to see a doctor without leaving their home.
As companies transition to remote working, it offers opportunity to those who are already offering this service – WORK, and we have written about ZM here
People who spend more time inside need access to news, TWTR and exercise becomes important with all gyms closed – PTON
The pet care industry is huge and with more time at home and less interaction with people, we see companion animals only growing in popularity – hence PETS and CHWY
AMZN is an easy one for online shopping and their two hour delivery window will revolutionise the way we shop for food.
FB because although we are isolated we want to feel connected and of course we want to be entertained. We don’t know when live sporting events will start again, and perhaps we are about to see eSports become the most popular live events, hence ATVI, EA and TTWO.
We will need to be entertained inside our houses and NFLX is perfect for that. AKAM makes the infrastructure that keeps the internet running. There will be more and more demand so expect to see build-outs of new networks.
You might wonder why HD, a home improvement company is in this list, but with everyone suddenly at home and with nothing to do on weekends, improving your surroundings will move up the “to-do” list.
Finally, if there is one sport you can still play while practicing social distancing it is golf. As we eventually come out of lockdown and the weather in the northern hemisphere gets better, people will likely still be told to avoid large gatherings. With golf courses so large, a decent number of people can still get out and have a game. Callaway Golf (EWY) has been absolutely decimated recently, down from $22 to around $5. That is a very tempting proposition for the future.
We will keep updating our Pandemic Portfolio with more indepth coverage of the companies within it. Watch this space.
The author has not been paid for this report and does hold positions in some of the companies mentioned.