Which stocks to buy and not to buy?
Coronavirus shrank the economy by a considerable amount in the last seven months. There are more to come. The most optimistic projection would even tell that it will last least till the end of Spring 2021. That means seven more months of slow growth from the ditch that we fell into in the late February to mid-March.
If the western countries can vaccinate 50% of their people by April 2021, we should be able to see a reasonable bounce on the economy. There will be some sectors where people will see huge growth because people are frustrated about not being able to use those sectors.
For example, our corporate office prohibits any kind of travel (even to outside the state visit). We couldn't convene any conference or visit any customer in the last six months. Our business development is stagnant because of the travel ban and the suspension of industry conferences. Many of our customers also need to visit us to validate our facility as a vendor. Moreover, the business transaction needs personal interactions and off-track discussions, which is merely possible through Zoom or WebEx. When the situation will get back to normal or at least pseudo-normal (chances of catching COVID is extremely low), there will be a huge hike in business travel. That will inflate the stocks of airlines, hotels, and the leisure industry.
The Internet is seeing an expected boom. We wouldn’t see the growth of consumer internet companies such as Facebook, Twitter, Google, or Youtube. Apple is a mixed bag now, they will have their own organic growth of revenue independent of pandemic or post-pandemic, but surely the stock growth will be stagnant.
E-commerce is the biggest sector that profited from the pandemic. People got used to ordering with a click and it will continue to grow. However, the growth will slow down after the post-pandemic. That means stocks of Amazon will not grow as it is growing now.
Food and grocery delivery is seeing an immense growth expectedly. Food delivery will keep growing because of the habit of people, but the grocery delivery (i.e. Instacart) will slow down because people will prone to go out more than ever.
Speaking of going out, the biggest growth will be on the hospitality and leisure industry. Disney will see multiple folds customers in 2021. People are depressed about missing out holidays, meeting up families and friends, and especially missing games. The sports industry will see huge growth in 2021 fall, however, that might be already part of the leisure industry.
Manufacturing companies will see reasonable growth in 2021. That might be more than usual. For example, people would buy more cars and travel more in the air. Thus, car and aircraft OEMs might see a revenue boom; however, that might not reflect on their stock because of people’s less interest in their stocks in general. If anyone wants to buy something for long,
Fintech will see growth with more sophisticated money transfer and payment systems such as contactless payment and a more secure way of payments. Square is already getting a lot of traction, but it will be a commodity soon and the stock market growth from this will be minimum.
Biotechnology will get a lot of attention in the post-pandemic. There will be a lot of investments from governments for making the countries ready for the next pandemic and it will result in big contracts to big pharma and medical device companies. That’s why some medical companies might see small growth. The vaccine is a cheap product, it will not impact the growth of the stocks. The startups in the medical technology, biotech, and medicine area will be mostly benefitted from a lot of VC cash.
Coronavirus taught people to be more restrictive on spending and pay more attention to saving. That will reduce costs in some luxury retails, however, daily retail/commodity retail will be unaffected. For example, people might not buy the most expensive jewelry or the cologne, but they would still spend $50–100 for the Fitbit.
Internet and communication will not see growth in 2021. That will put semiconductors in a stagnant phase for 2021.
Real estate might take off well in 2021. People will be buying houses with a new job market and might have an expectation that an economic crash is not coming in 7–10 years (which might not be true).
Now buy List
Airline
Hotel and leisure
Medical technology, biotech, and pharma
Semiconductor
Now maybe buy list
Airplane OEM
Automotive OEM
Now NOT buy list
E-commerce
Tech
TESLA
Delivery and logistics