Investors and Wall Street experts are trying to predict the stocks poised to benefit most from the lingering pandemic.
Robert W. Baird analyst Peter Benedict explained that just how consumers are spending their money has changed since the start of the year.
Overall, “experience” spending on accommodations, theme parks, theaters, and public transportation is still the most depressed when compared to pre-COVID levels, whereas food services and even gambling have jumped and are about 90% recovered.
“Given the behavioral changes that will likely endure beyond the pandemic (including more time at home, outdoor activity), this basket of ‘experience’ spending presents an intriguing wallet share opportunity for many retail sub-sectors in the months ahead,” Benedict writes, according to Barron’s.
He believes that theirs is still “significant… longer-term spending power that could still be up for grabs:” He estimates some 3% of retail sales—or more than $150 billion—could be repurposed, even if food services and gambling see roughly a 95% recovery from COVID and other experiences like travel and theaters get to the 80% mark, Barron’s explained.
Benedict thinks people will redirect their money toward home improvement and furnishings, eating at home, and outdoor activities.
His “outperform” rated stocks:
- BJ's Wholesale Club (BJ),
- Bed Bath & Beyond (BBBY),
- Costco Wholesale (COST),
- Floor & Decor (FND),
- Freshpet (FRPT),
- Home Depot (HD),
- Lowe's (LOW),
- Target (TGT),
- Tractor Supply (TSCO),
- Walmart (WMT),
- and Yeti Holdings (YETI).
Meanwhile, as some of the world’s biggest investors say it’s time to position portfolios for an end to the pandemic, they reportedly disagree on how best to do it.
One of JP Morgan Asset Management Inc.’s recommendations is to buy beaten-down shares of travel companies, airlines and hotels. Fidelity International Ltd.’s multi-asset team is increasing holdings in regions such as Europe that are badly hit by the virus, betting they’ll get better. Franklin Templeton contends it’s still too early to move away from places like Asia that have better handled the crisis.
Even as all three firms look beyond surging cases and renewed lockdowns to the prospect of a vaccinated population achieving herd immunity sometime over the next two years, their at times divergent views on how to invest underscore the high stakes for money managers during what could be a pivotal moment for markets, Bloomberg explained.
Progress on COVID-19 vaccines has triggered wild shifts in relative performance among industries, countries and stock-market investment styles.
“Equity-sector rotation could dominate investor discussion in coming months,” said Tai Hui, the chief Asia market strategist at JP Morgan Asset Management. “We think investors can look to diversify their allocations to take advantage of potential good news on vaccine development.”
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