The catastrophic impact of the coronavirus pandemic on financial markets is being widely compared with the great financial crisis of 2008. Till now, this is yet to reach its peak in many big economies, which the researchers believe, will occur in the later part of April or beginning of May.
Meanwhile, a recent statement by the IMF, that the impact will be way worse than 2008, has all the more jeopardized investors, compelling them to remain in the sell-off territory.
Whether or not the situation will take a graver turn, it is quite definite that the coronavirus-led devastation is hugely potent to alter the economy as a whole. Here we are talking about the consumption-spending pattern of a rational individual, as well as of the entire social paradigm. Precisely, this can be change in hygiene sense, eating habit, spending on luxury items, leisurely travel, religious inclination, and over and above notion of livelihood and lifestyle.
From an investor’s point of view, it is essential to understand this transformation and shape one’s portfolio according to the shifting trends. However, the question that comes to our minds is whether to transform the entire equity portfolio or wait for the perfect time. But again, when is that perfect time and how would an investor know it has come?
As Jim Cramer says, "I love behavior-change investing. It can be incredibly lucrative, and when you have a behavior-change theme you can use selloffs to pick stocks based on those changes."
It's a huge opportunity out there and being myopic just won't work. A farsightedness is needed to reap the reward of this gain game.
Four Major Trend Changes to Focus On
Already a lot has been said on the growing prosperity of the telemedicine sector over the past three months as a major choice for contactless healthcare services. Despite the U.S. government’s measures to make telemedicine mainstream for the past few years, primarily to minimize healthcare cost and increase access of care, the sector was yet to receive mass acceptance. Nevertheless, post the COVID-19 outbreak, the situation has drastically changed. Telemedicine stocks received an impressive response, when in February, the Centers for Disease Control and Prevention asked healthcare service communities to increase the use of telemedicine in broader ways. Added to this, the House passed an emergency spending bill, allowing medicare reimbursement for telehealth during crisis situations.
We believe, even when normalcy resumes, the telemedicine stocks will keep gaining good reception banking on change in consumer spending toward more contactless services. Going by a Nielsen investigation's report, there will be Proactive Health-Minded Buying with consumer interest growing toward products that support overall maintenance of health and wellness. Here we ask investors to keep an eye on telemedicine stocks like Teladoc Health, Inc. (TDOC - Free Report) . The stock currently carries a Zacks Rank #3 (Hold).
With consumers unable to venture outdoors now, another thing that is changing from the core is the concept of education. Schools, universities as well as other learning institutes shutting down one after another for indefinite time period are dragging the future of millions of children into murkier waters. This is forcing the education system to widely call for the learn-from-home concept. While e-learning can never substitute classroom teaching, many economists believe this virtual delivery of education, which has become a necessity now, will not fade away even after the mayhem disappears. Meanwhile, according to Forbes (published in Fatbit Technologies article), the worldwide e-learning market is projected to be worth $325 billion in 2025. Here we ask investors to focus on Chegg, Inc. (CHGG - Free Report) and Zoom Video Communications, Inc. (ZM - Free Report) , both carrying a Zacks Rank of 2 (Buy), with stellar growth prospects. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the meantime, during such unprecedented times, digital communication stocks are grabbing attention, with global corporations having no other options but to allow mass work from home for employees. Going by a Statisrta data, during a March 2020 survey, 32% of 18-29 year age group in the United States stated that they had used the internet for video calling or conferencing services to attend a work meeting. This was 33% for the age group of 30-49.
This overnight transformation of the work-life concept has popularized digital communication stocks. On Mar 19, Microsoft (MSFT - Free Report) noted that its group chat and collaboration software — Team — has registered a 500% spike in usage since Jan 31. Further, Alphabet (GOOGL - Free Report) division Google’s android video-calling app, Duo, has increased its group calling video limit. These two stocks carry a Zacks Rank #3, at present.
Another sector that has already started to gain significance amid current turbulence is e-commerce. With restaurants and supermarkets remaining closed, consumers are fast shifting from offline to online shopping. A Digital Commerce 360 report states that the pandemic-led crisis will provide a long-term boost for online retailers — if they can survive through the short-term turmoil that is hurting overall economic health. Amish Jani, a partner at venture capital firm FirstMark, believes in the long term, online shopping will get a boost from the lifestyle changes currently being forced on consumers. And this change will be enduring. Amazon (AMZN) is, undoubtedly, heading the line of e-commerce stocks, at this moment, banking on its expanded supply chain. We also ask investors to keep a tract of stocks like Costco Wholesale (COST - Free Report) and Fiverr International (FVRR - Free Report) , both carrying a Zacks Rank of 2, currently.
(We are reissuing this article to correct a mistake. The original article, issued on Apr 6, 2020, should no longer be relied upon.)