Saturday, September 18, 2021

‘Pandemic actions’ like the platoon have skyrocketed. Should you sell?

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Just because the pandemic cloud appears to slowly be lifting, you shouldn’t necessarily drop all the COVID-19 stocks. For one, the highly contagious Delta variant underscores the fact that the coronavirus hasn’t gone away. And even when it eventually does, some of the changes the pandemic has wrought — or accelerated — might be here to stay. In just one example, Zoom started off last year around $70 per share and now sits around $370. Vaccine producers also took off — Moderna was just $20 before the pandemic hit the U.S. and is now over $300.

Has the world permanently shifted?

“Make sure you have a portfolio that would benefit if trends have changed because of the pandemic,” says Sam Stovall, chief investment strategist at CFRA Research in New York City.

The pandemic accelerated many transitions that experts say were poised to happen anyway, experts say.

Take the health care industry. Health care companies have been front and center over the last year, establishing new ways for patients and medical professionals to meet and racing to develop the COVID-19 vaccine.

But we’re really just in the early stages of health care innovation, says Nina Deka, senior research analyst at ROBO Global in New York. Many of the companies that have made big names for themselves during the pandemic were already pushing the health care space forward, and will continue to do so. Deka’s firm didn’t add Moderna to its ROBO Global Healthcare Technology and Innovation ETF in the first quarter of 2020 because of its COVID-19 vaccine, but because the company has spent the last decade building a platform to bring mRNA therapies to the market, which enabled it to rapidly develop the vaccine. Similarly, ROBO Global doesn’t own Teladoc because of the recent telemedicine trend , but because of the scale to which Teladoc has developed telemedicine since even before the pandemic.

The at-home shopping space is another that was sped up by the pandemic. Amazon, for example, reported $108.5 billion in sales in the first quarter of the year, a 44% increase from a year earlier. Yet shopping online was already well in motion and the pandemic only accelerated the adoption, bringing in millions of new shoppers who would otherwise have been laggards, says Jon Ekoniak, partner at Bordeaux Wealth Advisor in Menlo Park, California.

But there are still a ton of question marks when it comes to which pandemic trends will stick, and which ones will go by the wayside (or, at least, be significantly diminished).

‘The pandemic forced changes on people very quickly’

Peloton dominated the exercise industry last year, with the stock rising from around $30 per share in January of 2020 to $121 per share today. But there is only so much demand for these types of products, says Kimberly Woody, portfolio manager at Globalt Investments in Atlanta.

And the jury is still out on whether working from home was simply a pandemic-forced trend, or would have eventually happened anyways, Ekoniak says. While some jobs require workers to be in-person, like those in the manufacturing or hospitality industries, others, like many in tech, have more flexibility. For example, Apple, has said it will require employees to come back to the office at least a few days a week.

Even if the pandemic shifts prove to be permanent, the growth rate of many of the stocks that surged during the pandemic is bound to slow down, Ekoniak says.

“The pandemic forced changes on people very quickly,” he adds.

Competitors popping up in these suddenly ultra popular spaces — like at-home exercise — may also slow the traction of some pandemic stock winners.

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