5 Companies to Invest in After the Health Crisis
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Although the economic situation remains largely uncertain as the ongoing crisis and looming global recession continues to contribute to market volatility, most predictions focus on the "base case" scenario. This approach assumes that states will reopen their economies in the fall or winter depending on whether a vaccine is found. In turn, this is expected to lead to economic growth returning to pre-crisis levels by the end of 2021.
Given this prediction, what would be the best sectors in which to invest?
Ecommerce automation: Amazon Robotics
One of the three main sectors expected to continue experiencing growth after the crisis is ecommerce automation. Online shopping has been on the rise as a sizeable portion of the global population was confined to their homes.
Automation, or warehouse and delivery solutions fulfilled by robotics, both cuts the operation costs for ecommerce companies and makes for a safer working environment in situations where social distancing is of concern.
The most popular company to invest in within this sector is Amazon (NASDAQ: AMZN). The AMZN stock price has experienced a steady rise since the March crash, increasing by over $1,000 by July.
Amazon itself needs no introduction. The automation division, Amazon Robotics (previously Kiva Systems), creates and implements robotic solutions for automated storage and retrieval mechanisms in the company’s immense warehouses.
Food: Kellogg Company
Investing in food company stocks has one major advantage: It can be a beneficial decision regardless of how the crisis progresses. If we are to experience a second or third wave, as some experts predict, and possibly further stay-at-home orders, consumers will likely begin stocking up on food and other essentials. If the crisis lets up enough for economy to begin recovering, significant growth in plant-based meat alternatives is expected.
An investment in the Kellogg Company (NYSE: K) covers both bases. Kellogg’s and its many subsidiaries produce convenience foods with a long shelf-life – in short, the category of products that we’re likely to stock up on. Meanwhile, the company introduced a new product line last year – Incogmeato – consisting of plant-based meat alternatives. This line put Kellogg in the lead within the meat-substitute sector.
Kellogg Company stocks are considered one of the best options in convenience food investments, given their low volatility and affordable prices. The K stock recovered very fast from the March downturn and returned to its pre-crash price of approximately $65 by the first week of April.
Healthcare: Teladoc Health Inc.
The crisis has exposed the many shortcomings of healthcare systems globally, as well as drawing attention to previously underappreciated biotech and pharma companies as they began the race to find a vaccine. Interestingly, however, the healthcare niche that is expected to experience the highest growth is telemedicine.
The term telemedicine refers to remote healthcare solutions and is the domain of companies that provide platforms for patients to consult with medical professionals online. Teladoc Health Inc. (NYSE: TDOC) is one of the few publicly traded major players in the telemedicine field. Founded in 2002, Teladoc is now the leading virtual healthcare company, with primary services including telehealth, AI and licensable platform services.
Cybersecurity: Palo Alto Networks
The stay-at-home orders and precautionary measures caused by the crisis led to many of us working remotely from home. The increased online security risks generated by this unprecedented, widespread shift have brought cybersecurity to the forefront for many companies.
One of the most profitable cybersecurity providers is Palo Alto Networks (NYSE: PANW), a California-based company with a revenue of over $2.2 billion in 2018. Palo Alto offers a platform with advanced firewalls and cloud-based security solutions. With the exception of the March crash, the PANW stock has been fairly stable over the past year, oscillating between around $200 and $250. By May, it almost recovered to its pre-crash value.
Sustainable investments: Brookfield Renewable Partners
For many of the world’s governments, sustainability is a key element of the strategy for recovery and growth after the crisis. Experts are therefore expecting increased investor focus on ESGs (environmental, social and governance considerations).
A key company to watch for in this sector is Brookfield Renewable Partners (NYSE: BEP), a renewable energy company diversified across hydroelectric dams, wind power and solar power. Founded in 2011, the company reached over $30 billion in total assets by 2017. Brookfield has 18,100 megawatts of generating capacity, meaning it is one of the largest investors in renewable energy worldwide.
What about a continued economic downturn?
The base case scenario is far from certain – we can’t predict how the crisis will continue to progress and, as a consequence, it’s difficult to be sure how the market will react.Most experts’ advice for investments during an ongoing economic downturn is to buy gold and bitcoin. In case of inflation and continued devaluation of the U.S. dollar, the price of gold and bitcoin can increase. For this reason, gold and other precious metals have historically been considered safe investments during recessions and economic downturns, and the health crisis-induced downturn is no different.