This year has been a wild ride for the stock market. In January, the market was at record highs with no clouds in sight. Then the market fell 37% in February and March in response to the pandemic. Now, thanks to a seemingly endless supply of money being pumped into the economy, the market has bounced back close to its 52-week high. The big question is: which stocks will perform best from here?
There is a good chance that the pandemic will continue for a few more years. It has already lasted longer than some people have suggested. And when the world changes, there will always be winners and losers. It is a good bet that those companies and their stocks that are benefiting since Covid-19 appeared will continue to do so. These three companies have great potential whether the pandemic remains or not.
Amazon.com, Inc. (NASDAQ: AMZN) was growing fast before the pandemic hit; now they are growing faster. It is not hard to understand why: people are avoiding malls and shopping online to avoid the virus. The same reason that retailers are being pummeled right now – and present good shorting opportunities in their stocks – plays into Amazon’s online business model. No doubt Amazon is taking market share from many brick-and-mortar retailers. Year-to-date, Amazon has 15% higher sales than 2019 – and that is not including the 4th quarter of 2020.
With a P/E ratio of 95, the stock is expensive, but that also makes sense. Not many companies have such a rosy outlook as Amazon does. The stock is up 75% this year. There is no reason that the stock won’t continue to climb as more consumers shop online. Case in point: last week my son bought several bottles of barbecue sauce online that was on sale and had them shipped to our home. Barbecue sauce? Everything is for sale online these days.
Who is shipping all the stuff people are buying online? United Parcel Service, Inc. (NYSE: UPS) is one company that does. Most things purchased online are shipped with the U.S. Postal Service or United Parcel Service. Again, whether the pandemic continues or not, the habits that people form during our extended stays at home will likely continue.
Stock for UPS appears to be more stable than the other two mentioned in this article. It appears to have less upward potential but also less volatility, making it a nice stabilizing position in your portfolio. UPS stock has also enjoyed a nice move up, climbing 49% year-to-date.
Zoom Video Communications
Zoom Video Communications (NASDAQ: ZM) is another company that was growing fast before the pandemic and grew faster afterward. As companies worldwide have been forced to send employees to work from home wherever possible, Zoom has been there to facilitate video conference meetings. They aren’t the only ones in that space, but they have an excellent way to enter the market that I have personally experienced: you can try one-on-one meetings for free. Since the software is easy to use, people feel comfortable to buy a familiar service.
If you had bought Zoom on January 2, 2020 (the first trading day of the year), your investment would now be up over 490% year-to-date, as of mid-December 2020. A $10,000 investment is now worth more than $60,000. While the stock has had a huge run, the growth will likely continue for years to come, pandemic or not.
Disclosure: No positions