29 Apr How To Invest In A Post Covid19 World
The US stock market has seen an almost uninterrupted bull run since early 2009.
However, the COVID-19 pandemic has brought the bull market to a screeching halt.
Many businesses are now reeling, but we believe that there are opportunities amid the crisis.
In fact, we think that there are growth trends that have been present before the COVID-19 outbreak and are being strengthened by the pandemic.
As the US government implements widespread lockdowns, businesses and schools are switching to working and studying from home, respectively.
Let’s dive deeper and look at the industries and companies that are continuing to grow.
As more people hunker down at home, the demand for online deliveries through e-commerce has soared.
The US market leader in this field is none other than Amazon (NASDAQ: AMZN).
Amazon is a conglomerate that focuses on e-commerce and cloud computing.
The trillion-dollar company reported net sales of US$280.5 billion for the fiscal year 2019, while net profit jumped 15% year on year to US$11.6 billion.
Just two weeks ago, Amazon announced it will hire 100,000 full and part-time positions across its global network to keep as many people employed as possible.
It also committed US$350 million to increase its workers’ salaries during this crisis.
Online consumer services
Along with online delivery, payment services have also experienced a boom as the work-from-home crowd turn to their laptops and smartphones for their transactions.
More transactions are being made through online payment portals, such as Paypal Holdings (NASDAQ: PYPL).
Paypal supports online money transfers and functions as an online alternative to traditional forms of payment such as cheques and physical cash.
In 2019 alone, 37.3 million new active accounts were added, bringing total active accounts up 14% year on year to 305 million.
What more, these accounts are transacting more on PayPal’s platform.
The number of payment transactions per active account has been increasing over the quarters, from 36.5 in the third quarter of the fiscal year 2018 to 40.6 in the most recent quarter.
As a whole, a total of 12.4 billion payment transactions were conducted, an increase of 25% year on year.
The company generated revenue of US$17.8 billion last year, while net profit jumped 20% year on year to US$2.5 billion.
Meanwhile, as more people work from home, the usage of videoconferencing has climbed dramatically.
Zoom Video Communications (NASDAQ: ZM) provides videoconference and online chat services through a cloud-based platform for business and home usage.
Not only are businesses flocking to use Zoom’s service, people who are cooped up at home are also turning to video conferences to keep up with friends and loved ones.
The number of daily Zoom users has since increased to 300 million.
Online business services
Like consumers, businesses are also turning to online solutions to speed up processes and eliminate red tape.
Signatures, for instance, can now be done electronically.
Docusign (NASDAQ: DOCU) is a software-as-a-service (SaaS) provider that helps other organisations to manage their electronic agreements.
The company provides secure, cloud-based software that enables its customers to electronically sign a wide range of documents.
In essence, Docusign helps to eliminate legacy paper processes and speeds up the contract-signing procedure for all parties.
For the fiscal year ended 31 January 2020, 94% of Docusign’s revenue came from subscription agreements.
The company saw a 24% year on year jump in total customers to 589,000, while full-year 2020 revenue soared 39% year on year.
Online food delivery
By now, most Singaporeans should be aware of online food delivery.
Demand for online food delivery has risen sharply as dine-in at restaurants and cafes has been disallowed during lockdowns.
One prominent player in the space is Domino’s Pizza (NYSE: DPZ).
The largest pizza company in the world was founded in 1960 and has a global store count of over 17,000 stores as of 22 March 2020.
Global retail sales climbed by 4.4% year on year in the first quarter of the fiscal year 2020, while US same-store sales growth inched up 1.6% year on year.
The most recent quarter marked the 105th consecutive quarter of international same-store sales growth.
The company franchises 98% of its outlets, has a 15% global market share in quick-service restaurant pizza and generated sales of US$14.6 billion in its last fiscal year.
The examples above demonstrate the myriad of choices out there for investors.
Opportunities abound to purchase great companies even during crises.
Investors need to look for businesses that latch on to these growing trends as it would translate to strong multi-year growth numbers.
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