Poll: Biz Breaker
“Which of the following sectors are you banking on outperforming by year-end?”
- 38% Tech.
- 29% Health.
- 14%: Food.
- 11%: Auto.
- 8%: Retail.
We want to know where to throw down a million dollars in fantasy finance! Markets can’t think straight at the moment, so we’ve again turned to the Invstr community.
Trust in tech! The ‘stay at home’ sector has been a consistent winner over the past decade. We simply cannot live without our phones and businesses without big data.
Tech stocks like Google, Apple, and Microsoft could become equally resistant to downturns as companies selling food, utilities, and transportation. Software names that serve businesses, not reliant on a confident consumer, could do even better. They’re financially solid, and might buyout unprofitable tech unicorns when easy financing dries up, and lenders become more guarded.
It’s no surprise to see Invstr’s single out healthcare as well, the coronavirus paralyzing the world. Not every drug maker will develop a commercial cure to COVID-19, and not every managed care provider will survive political scrutiny. However, events so far this year should still boon the overall sector.
As far as food goes, an unlikely outperformance may be on the cards. Food companies usually calm volatility in a portfolio and anchor it with less risk, but shoppers are rushing to clear shelves ahead of quarantine orders. Higher-margin home delivery services are also becoming more popular as people avoid leaving their homes, so the sector could be on for an outlying year if supply chains aren’t disrupted too heavily.
Automotive brands and consumer discretionary companies, however, may not fare so well. Investors have already deserted stocks selling non-essentials, just as would be expected on the brink of a recession.
If the coronavirus subsides soon, these will be the areas that rebound the quickest. Massive stimulus measures from the Federal Reserve and other central banks have created the potential for a massive bull run when we’re past this pandemic, but for now, it seems to be only getting worse!
