It is always incredibly arduous for retail stock traders to pick a winning stock. They do not have access to the systems or research that professional traders have. Nor do they have a quant-based strategy system that can test stock performance under a specific condition.
Coronavirus made stock picking more arduous for retail traders. That is because the pandemic is unprecedented. Even hedge funds that outperformed the stock market benchmark index, generally the S&P 500, had to steer away from their usual strategies. The hedge funds that performed immensely well in 2020 were those which deployed analysts with the best stock picking abilities.
Big Fear: Coronavirus, Covid Mutations, and Another National Lockdown
Coronavirus is still going to be very much written into the stock market performance in 2021, and the good news for stock traders and investors is that this time we do have some history from which we can take some guidance. The beginning of this year was expected to be different than 2020, but at the start of January, the biggest fears on Wall Street were the following:
- Mutations of the coronavirus
- The vaccine’s effectiveness for other strains of covid-19
- Another wave of national lockdowns
- Vaccination may take much longer than current expectations
Good News For Stock Traders
Although the above factors are new, the fear underpinning them is the same. Hence, there are greater chances that we may see the stock playbook of 2020 working this year as well. This means stock investors need to pay attention to the following:
Broadband Usage Stocks
We saw the biggest surge in broadband usage as consumers were told to stay behind closed doors, and businesses were forced to ask employees to work from home. We see this trend still very much playing out in 2021 as several countries have started to implement national lockdowns. So companies that are providing broadband services are likely to see their shares surging this year as well. Stocks such as Verizon, Comcast, AT&T and BT Group are very much likely to be in demand.
Dating And Social Media Stocks
Although the public was told to stay indoors, dating and social media apps saw some tremendous traffic and downloads. The reason was simple. We are social animals, and we like to mingle with others. So when real-world socializing wasn’t available, dating and social apps became an alternative, and their stocks performed well. The Match group was trading around $90 back in July, and as of today, the stock price is $151. Another major company that is looking to go public with a big user number is Bumble. Snapchat also saw a lot of users. Its stock price jumped from $9 (in March 2020) to $51 (as of today).
Streaming Entertainment Stocks
It is difficult to think of a house that doesn’t have a streaming platform subscription, and the lockdown period took companies like Netflix and Disney+ to a completely different level. Once again, buying Netflix and Disney+, even though they are expensive, could be beneficial. Netflix stock jumped from $300 to $514 from March 2020 to January 2021.
Work From Home Stocks
Everyone who has worked in an office environment or has been involved in a business meeting must know Zoom. The company literally took off in 2020 during the pandemic, as in-person meetings were no longer possible. Zoom’s stock growth story isn’t over yet; it is likely that the growth will continue this year as well. Of course, Zoom wasn’t the only company that saw its stock price double, but companies like Slack also performed really well.
While all the major retail shops closed their shutters and tried to build their online presence, Amazon took full advantage of this opportunity, and its sales skyrocketed in 2020. Amazon is fully aware of how to serve its customers, and it is likely to perform very well in 2021 as shops remain under the coronavirus influence. Amazon stock fell below $2,000 back in March 2020, but as of today, the stock price is $3,195. Of course, Amazon wasn’t the only company that took advantage; eBay had a tremendous run too.
Food Delivery Stocks
Uber, the car-sharing app, turned its business around during the pandemic. Rather than complaining about lower car passenger numbers, the company focused fully on food deliveries. Uber stock, which was trading near $15 back in March 2020, skyrocketed, and it is still rising now. As of today, the company’s stock is trading at $55, and with current lockdown measures, the only way for the stock is to continue to move higher.
The turmoil in the financial markets and investors sitting at home saw a massive opportunity. Stockbrokers saw the unprecedented flow of new applications, and the result of this was reflected in stockbroking stocks such as Charles Schwab. The company’s stock price rose from $30 (late March price) to $58 as of today.