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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.

Ticker Company Industry
CLX Clorox Bleach/Wipes
GILD Gilead Corona Treatments
REGN Regeneron Corona Treatments
TDOC Teladoc Digital Doctor Visits
WORK Slack Digital Workforce
ZM Zoom Video Digital Workforce
PTON Peleton Home Exercise
CHGG Chegg Online Education
TWTR Twitter Online News
PETS 1-800-PetMeds Online Pet Healthcare
CHWY Chewy Online Pet Shopping
AMZN Amazon Online Shopping
FB Facebook Social
CPB Campbell Soup Staples Food
HRL Hormel Staples Food
JNJ Johnson & Johnson Staples Health
PG Proctor & Gamble Staples Health
NFLX Netflix Streaming Content
ATVI Activision Video Games
EA Electronic Arts Video Games
TTWO Take-Two 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.

Disclaimer: Capital 19 Pty Ltd ABN 17 124 264 366 AFSL 441891 (‘Capital 19’) believes the information contained is reliable, however, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. This communication is for general information only and was prepared for multiple distributions and does not take account of the specific investment objectives of individual recipients and it may not be appropriate in all circumstances. Persons relying on this information should do so considering their specific investment objectives and financial situations. Any person considering action based on this communication must seek individual advice relevant to their circumstances and investment objectives. Subject to any liability which cannot be excluded under the relevant laws. Any opinions or forecasts reflect the judgment and assumptions of Capital 19 and its representatives based on information at the date of publication and may later change without notice. Any projections contained in this presentation are estimates only and may not be realised in the future. The investment manager certifies that all the views expressed in this document accurately reflect their views about the companies and securities referred to in this document and that their remuneration is not directly or indirectly related to the views. Capital 19, its directors, representatives, employees or related parties may have an interest in any of the companies and securities in this document and may earn revenue from the sale or purchase of any financial product referred to in this document or any advice. Past performance is not a reliable indicator of future performance. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained in this document is prohibited without obtaining prior written permission from Capital 19.
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