fbpx

Working From Home is Here To Stay – Which Stocks Will Benefit?

The coronavirus pandemic has affected our lives in a multitude of different ways, and will no doubt continue to have a distinct impact on many aspects of our lives going forward. Whether it be forced social distancing in pubs and restaurants, being prevented from attending sporting events, concerts or the theatre, or in the ways that we shop, or how we dress.

Changes to the way we work may prove to be the biggest cultural change, however. In March of this year, companies around the globe realised that their employees would be much safer working from home rather than coming into the office. The big tech companies were the first to implement such changes. They were already set up for it and had the technology at the ready to utilise when needed. But it didn’t take long for the rest of the corporate world to catch up – with the help of technology companies of course.

And now that workers have had a taste of working from home it’s likely they’ll be keen for it to continue. There’s a lot of selling points to not having to go into the office. Taking out the daily commute is a massive time saver. Being able to go to work in your pyjamas is another – unless you have to attend a video meeting of course. There are fewer distractions (except when school’s are closed down during pandemics – as I have recently found out), a superior work-life balance, and studies have suggested it is even better for your health.

Importantly many companies are realising it too. While initially they may have been forced into their current predicament by a rampant virus many are now wondering why they haven’t been doing this all along. They’ve realised there are massive savings to be made on cutting back on office space, or getting rid of it altogether. They’ll also spend less money on office supplies and other incendiary costs. It is estimated that IBM (IBM) managed to save around $100 million in supplied office snacks when it implemented its work from home scheme. On top of this, workers will be happier and more productive. It’s a win-win. 

Companies such as Twitter (TWTR), Facebook (FB), and Mastercard (MA) have already announced they plan to stick with working from home arrangements after the pandemic is over. Insurance company Nationwide have advised they will be moving to a hybrid work model, as well food giant Mondelez (MDLZ), and Morgan Stanley (MS) whose CEO recently said that bank would need much less real estate in the future, stating “we’ve proven we can operate with no footprint. Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely.”

All of the major commercial real estate companies set up in cities around the globe will be shaking in their boots. Hedge fund operator and “activist” investor Carl Icahn recently stated shorting such operations has been his best move during the economic shutdown. Unfortunately, such moves in big business have come at a time when many retail operators have been forced to unwillingly vacate their properties due to closures. It’s been a double whammy for the industry. 

But while we’ve got losers on one side we generally have winners on the other. And none will be able to take better advantage of the move to a more mobile and hybrid style workforce than the technology sector. Companies that offer video conferencing or IT support for home workers will see a huge boom in users and subscribers. 

The capital 19 pandemic portfolio includes a couple of these in Slack Technologies (WORK) and Zoom Video Communications (ZM). Slack is a chatroom for your entire office designed to take the place of emails as the go-to communication of choice. It is in effect a virtual workspace, setting up digital teams and workspaces and managing workflow. While you may have already used zoom in a social setting as a video conferencing service. Its downloads have increased thirty-fold over the last few months, with daily users spiking to 200 million in March – up from 10 million in December last year. 

Slack is up almost 40% year to date. And Zoom is up a leisurely 138%. You can check out the latest on the pandemic portfolio here https://capital19.com/investing-in-us-stocks/the-pandemic-portfolio-update-3/. And you can see our stock report on Zoom here https://capital19.com/investing-in-us-stocks/zoom-video-conferencing-zm/. The stock is up 40% since we published it back on the 6th of March.

Likewise, management software brand Trello works as a virtual boss, arranging and assigning tasks to team members, tracking the progress of projects, and building workflows. It’s owned by Australia’s own Atlassian Corp (TEAM) and is currently trading on the Nasdaq. We did a stock report on Atlassian back in June of last year. You can read it here: https://capital19.com/stock-report/stock-report-atlassian-and-servicenow/. The share price is up 34% since then.

Of course, all of the big tech hitters will be able to take advantage as well. Alphabet (GOOGL), Microsoft (MSFT), IBM (IBM) and the like all have video conferencing products, cloud storage support, and a host of other programmes that assist companies and employees in working from home. It’s a booming business that will only get bigger from here on out. You’ll want your portfolio to be heavily loaded with many of these companies in the years to come as workplaces continue to adapt and become more resilient. 

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.
Tags: