The world will be a better place when we have a Covid19 vaccine that can be manufactured and delivered to every corner of the globe. Covid19 has changed the outlook for quite a few industries permanently and there are industries that will just not recover quickly enough. It is thus important to keep in mind that while stock prices can go haywire and market sentiment can drive investors to make investment decisions that may not turn out to be the wisest in the long run. For instance, banking stocks are up since the news of a vaccine emerged. However, the road to recovery for the banking sector is long and bumpy and is highly dependent on the recovery of the economy. All we are trying to say is – exercise caution when entering positions and have a clear cut strategy in mind.
That said, here are 3 sectors (apart from the usual travel and airline that everybody talks about) that we think will benefit from a vaccine:
Granted, the markets have had a mixed reaction to healthcare stocks on the first day of trading since news arrived of a vaccine. But the healthcare sector is huge. Markets may have slashed prices off few healthcare stocks that have stood to benefit from Covid19. However, there are healthcare stocks out there whose operations were severely affected due to restrictions on non essential care. On the ASX, we do have such healthcare stocks that are exposed to the USA and Europe, and they stand to benefit as soon as we have a vaccine.
While international travel is certainly not on the cards anytime soon, domestic travel, and general increase in daily traffic on roads will boost certain firms in the transportation sector. Off the top of our head is Transurban Group – the firm has assets in Australia and North America. While Australia looks to be ahead of the rest of the world in the road to recovery from the pandemic, the boost the firm will receive in North America with a vaccine is huge. Daily traffic increases and increased infrastructure spending for new projects will be expected in the near future.
The F&B sector was one of the most affected by the pandemic. A lot of staff was let go as restaurants and cafes were closed either temporarily or permanently. The ones that benefitted were restaurants that were already online in large metro cities. With governments trying to put more money into people’s pockets to increase consumer spending and an arrival of a vaccine, we are sure to see people head out to the streets and resurrect the F&B sector – which is an extremely essential part of any community. Stocks that hold diversified assets of F&B businesses are poised to benefit
A lot of sectors and industries will gain from the arrival of a vaccine. When picking stocks from any of these sectors, investors should exercise caution and research on the level of diversification these firms have – both asset diversification and geographical diversification. At Shares in Value, we hold stocks from each of these sectors in our portfolios and we are always available to help investors make that fully informed investment decision.