When stay-at-home regulations lift, certain sectors will see an increase in stock price. Here’s an example of two sectors and two stocks that should perform well in a post-pandemic world.
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Top Stocks: Post Pandemic
The Changing Economy
The coronavirus COVID-19 pandemic has interrupted international trade and global supply chains. Borders are closed, travel has come to a standstill, and many business sectors and markets have been massively impacted because of closures.
The United Nations have warned of a 1% global economy shrink this year compared to 2.5% growth last year. Unemployment is expected to reach at least 20%, and April saw over 20 million job losses in the U.S.
As the world starts to come back ‘online’ and people start their relatively normal routines again, the economy will see a degree of lift. Some countries and states are opening, and there are some positive signs of consumer spending, which may be attributed to stimulus payments and business aid.
The coronavirus stock market has moved on from March lows, and the Nasdaq is boosted by the big techs such as Amazon.com (AMZN), Apple (AAPL), Microsoft (MSFT), and Netflix (NFLX). The S&P 500 index has also picked up, and low-interest rates will boost consumer spending.
The Fed, in trimming its short term interest rate, will help financial institutions to provide more loans to individuals and businesses. This could encourage businesses to purchase new equipment and individuals to buy big-ticket items.
With 30-year-low interest rates, many spenders are likely to buy goods on finance or make mortgage applications (which are seeing a rise week on week).
Almost two-thirds of the U.S. economy is consumer-based, and there is pent up demand for dining out, traveling, shopping, going out and socializing generally.
Although the current coronavirus economy feels different from historical disease-spreading economies, for example, MERS and SARS, looking at past events, the broader market is robust and good at bouncing back.
Healthcare Top Stocks, Post Pandemic
Healthcare services and companies are an obvious choice to invest in as the world recovers from the COVID-19 pandemic. Medicines, surgeries, and vaccines will be in constant need, and people are likely to be more cautious about their health.
When stay-at-home orders are lifted, this sector will likely see a surge in spending for things like diagnostic testing. The golden ticket will be the company or companies that produce a vaccine for COVID-19.
The surge in telemedicine may see a dip as people come out of lockdown. Still, many people will be converted to the convenience of online appointments, or the fear of coronavirus may put people off from waiting in doctor’s surgeries for some time yet.
Real Estate Top Stocks, Post Pandemic
Despite many real estate stocks losing a third of their value because of the effects of the coronavirus on the economy, the market is optimistic for real estate investment trusts (REITs). These securitized portfolios offer the income customarily associated with real estate investments and the liquidity of traditional stocks.
Investors receive dividends, likely at a lower return than owning actual property, but risks are lower.
AvalonBay Communities (NYSE: AVB) has taken a fall this year mainly because of rent collections doubt, but in April, rent payments came in at 96%, which is a much higher figure than other retail REITs. Leasing activity has improved, maybe because of government aid. They have a robust balance sheet with a good leverage ratio.
They have several projects in the pipeline, including a $4 billion development.
Their Board of Directors recently announced a cash dividend for the second quarter of 2020. The common stock dividend is $1.59 per share payable to all Common Stockholders of Record (as of 30 June) on 15 July 2020.
Investors are confident that the consumer will be back to increase stock prices across all markets. Sports and outdoor activities, restaurants, travel companies and tourism; markets that have suffered greatly, will hopefully bounce back.
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