When facing a crisis as dire as the coronavirus pandemic, it’s natural to think that everything will change utterly and forever by the time it’s over. But people are resilient creatures of habit, so many aspects of life will return to what used to pass for “normal.”
But not all of them. Some are bound to be lastingly altered, and the changes may not be the ones that have been bet on, like less air travel and more spending in search of wonder drugs.
That could present moneymaking opportunities for patient investors. Here are some that fund managers and market strategists are looking at.
Nathan Brown, co-manager of the Ivy Midcap Income Opportunities fund
Americans became a society of homebodies by necessity and may remain one by choice, at least for a while, Mr. Brown says.
“We believe companies and employees now have a greater appreciation for remote working,” he said. “This likely means there are winners,” in areas such as telecommuting, “and some losers,” including business travel and commercial real estate.
Likely beneficiaries of an increase in telecommuting and the attendant need to stay hooked up to the office include tech companies like Arista Networks and Advanced Micro Devices, he said.
Along with working from home, people are warming to the idea of being treated for illness at home, Mr. Brown added.
Companies such as Teladoc Health, which provides virtual health services to businesses, could thrive “as patients and doctors have become more comfortable with the use of medicine through a portal that provides significant efficiencies to both parties,” he said.
Other businesses that could take advantage of a greater emphasis on home life cater to gardeners, landscapers and do-it-yourselfers.
Companies that he expects to benefit include Tractor Supply, RPM International, Trex and ScottsMiracle-Gro. These stocks and all the others Mr. Brown mentioned are held in Ivy portfolios.
He warned, though, that this trend may ebb sometime next year as companies like these “lose wallet share as other areas open for spending, and individuals spend less time at home.”
David Eiswert, lead manager of the T. Rowe Price Global Stock fund
Mr. Eiswert also anticipates a heightened desire to spend time and money at home.
“Many trends that were already in place, the virus has pulled forward by five years,” he said, including a shift in shopping and entertainment to the home from outside, and a greater appreciation for remote familial and professional interactions. Although the investment opportunities in these areas have been well flagged, he said, they may have more room to run.
Mr. Eiswert maintains a “digital transformation portfolio” within his fund that includes the stocks of such presumed winner-take-most companies as Netflix and Amazon. He acknowledges that their shares are expensive but says their ability to dominate their commercial niches more than justifies them.
Other holdings that he says fit the theme are Shopify, Square and Trainline. Shopify is a Canadian company that Mr. Eiswert considers the “anti-Amazon.” It’s a digital sales, payment and delivery platform for branded goods. While Amazon deems shoppers to be its main customers and uses low prices and an expansive array of available items as its main selling points, Shopify’s customers are the owners of the brands that use the site.
Square is a system for contactless payments. Once people get used to shopping outside again, they are likely to prefer not to touch cash, Mr. Eiswert said.
That same lingering caution should help Trainline, which offers an app for buying train tickets in Britain, Italy and France.
“Before the virus, Trainline was slowly gaining share for ticketing,” he said. “Suddenly, the U.K. government says, ‘We don’t want anyone touching ticket machines and using paper tickets.’ As trains open up, they’re going to at least have doubled their share of tickets.”
Humans may continue avoiding others of our species, but many people have been getting quite cozy with four-legged creatures. Mr. Eiswert noted that animal shelters have been emptied by people looking for companionship.
“Those pets are going to live for 10 or 15 years, and they’ll need medicines and diagnostic tests,” he said.
Two companies in his fund that produce them are Idexx Laboratories and Zoetis.
Carin Pai, director of equity management at Fiduciary Trust Company International
Ms. Pai is another fan of the digital transformation theme, although she said she “wouldn’t necessarily chase these stocks now” after their prices have risen so far so fast. Better choices today, in her view, are companies that provide products and services in certain niches related to health care and hygiene.
“Medical technology and supply companies should benefit longer term” as people who have put off elective surgeries or other treatments decide that the pandemic has eased and the coast is clear, said Ms. Pai. Her firm builds portfolios for investors using funds and individual securities.
Sarah Ketterer, chief executive of Causeway Capital Management
More people may work from home, but the pandemic is also likely to cause lasting change at conventional workplaces. Ms. Ketterer, whose firm offers a range of mutual funds focused on international stocks, identified some trends that she expects to accelerate.
The iffy nature of global manufacturing supply chains has grown more apparent, along with the difficulty of securing ingredients for coronavirus tests and treatments and gear for medical workers. That will prompt manufacturers to ensure that crucial supplies are available closer to home, she said. That, in turn, will raise demand for equipment, tools and gizmos that help bring about industrial automation.
“We expect that manufacturers globally will demand the best smart assets on a factory floor, such as robots, sensors and monitors,” she said. The German conglomerate Siemens “has what it takes to dominate automation in the next cycle,” in her view, because it has superior hardware and the software that makes it go. “No one U.S. competitor has that set of capabilities,” she added.
After the pandemic, just as during it, businesses will prize access to capital, something that tends to be in short supply during tough times. Bank stocks could show strength, she said, especially if the banks’ balance sheets are strong.
One winner could be the ING Group, a Dutch company whose stock recently was cheaper than it was during the global financial crisis, despite having three times the capital it had then, Ms. Ketterer noted.
Causeway funds hold both ING and Siemens.
“In the wake of Covid-19, enterprises globally will likely ensure they have an even greater access to liquidity than they did prior to the pandemic,” she said. “For companies of all sizes, strong banking relationships became vital once the crisis led to lockdowns and economic disruption.”
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