The FTSE All-Share index is still languishing about 15% below where we began the year but it’s well up from the lows. Investors in the US market – especially in its technology shares – have enjoyed an even stronger recovery from the doom and gloom that gave us the fastest bear market ever in March. Partly this stock market bounce reflects investors coming to terms with the pandemic and its economic consequences. As rationality returns, we’re better able to reflect the balance of risks without our decisions being egged on by an overdose of fear and adrenaline. But beneath the index level, when looking at individual stocks, it’s clear the market has also done a first pass at sorting winners and losers from the pandemic and its aftermath.
Shares in online retailers and Internet platforms haven’t just rallied because business boomed while we were stuck at home. Investors are also betting these firms have secured more of our attention for the future, too, as a result. Similarly the travails of property firms and restaurants doesn’t just represent the loss of six months trading – or even the risk of bankruptcy. It also reflects that the business model of these firms may be impaired indefinitely.
How to own the future If the world really is changed forever by Covid-19, then we might have only seen the start of a reordering in the value of many aspects of the economy. And over the years I’ve noticed markets often overreact in the short term while under-reacting in the long term. In short: it’s probably not too late to buy. Here are three shares to give you a piece of the post-pandemic action.
“Bring me my stuff!” Online retail is nothing new. But who didn’t buy more direct to their door during lockdown? People tried new online shops as well as new categories – for example fresh food and clothing – and they also increased how much they spent. All of this bodes extremely well for online retail. One way to play the theme is Ocado (LSE: LON:OCDO). As well as its own online grocery business, Ocado sells retail logistics and distribution know-how to third parties worldwide. If the move to online shopping has jumped forward five years in six months, then despite its strong share price rise since March, Ocado could have much further to go.
- Also consider Tritax Big Box and ASOS (LON:ASOS)
Builders could start to cater for this priority reboot by building properties with more breathing room – as well as home offices or more multifunctional spaces. The bottom line is by turning over decades of established property trends – which had seen us move from suburbs to inner-city cores, and away from houses with unruly gardens to self-contained luxury flats – the property market has now been thrown into flux and perhaps upheaval. It should all be good for companies that can profit from the resultant reshuffling.
- Also consider M Winkworth, Persimmon (LON:PSN)
- Also consider Codemasters, Team17, Keyword Studios
Owain owns shares in Frontier Developments and Rightmove. The Motley Fool UK has recommended ASOS, Frontier Developments, Keywords Studios, Rightmove, and Tritax Big Box.
Motley Fool UK 2020
First published on The Motley Fool
