With the world still in the throes of the coronavirus pandemic, it is difficult to predict how terrible the global economy will be before it all ends, and in what direction it will go after it is over. But even in the midst of this uncertainty, we can gain some clarity about which companies will emerge unharmed or even stronger from this international health emergency.
In technology, the biggest winners are companies that provide products and services that further accelerate the transition to a digital economy.
For example, extra strict hygiene will accelerate a shift to online shopping. In the workplace, teleworking will become much more common and work from home will continue to exist even after this health crisis has passed.
Below are two technologically advanced stocks that have defied the extreme sales pressure and are reaching new heights as demand for their products and services continues to escalate significantly during this crisis.
1. Amazon
The current crisis has separated Amazon (NASDAQ 🙂 from the rest of the high-risk tech stock package after it became clear that the world has no choice but to e-commerce. embrace.
Even as the economy enters a deep recession and unemployment rates rise, consumers flock to Amazon to buy essential health and household products while shopping for groceries through services such as Amazon Fresh.
This week, Amazon announced it plans to hire another 75,000 workers to meet the growing demand for its products, after fulfilling the 100,000 temporary and full-time jobs it announced last month.
Amazon Weekly Price Chart
In addition to the rising demand for e-commerce, the company's Amazon Web Services cloud computing business is also expected to see higher demand at a time when the pandemic is forcing more people to work from home, putting pressure on the IT infrastructure of companies is increasing.
This new economic reality means that investors in Amazon shares have benefited tremendously from the current market. While the year is in negative territory, Amazon is up nearly 25% over the same period, making it one of the 10 biggest percentage gains among S&P components.
Profits have also brought Amazon back above the threshold of a $ 1 trillion market cap. Shares rose to $ 2,333.17 intraday Wednesday, a record for the e-commerce giant. They still closed more than 1% at $ 2307.68.
2. Netflix
The streaming giant Netflix (NASDAQ 🙂 is another technology giant that becomes a clear winner in this crisis.
The popular theory explaining Netflix's outperformance in this very bearish and uncertain environment is that it is a perfect "stay-at-home" share, meaning Netflix would be a beneficiary of COVID-19 as its subscribers will have more time to protect on-site and review the content of the streaming platform.
Before yesterday's close, Netflix's shares had so far gained about 34% this year, while the S&P 500 had fallen by 12%. During Wednesday's rally, the stock increased by more than 4% to $ 432.50, before closing more than 3% at $ 426.75.
Netflix weekly price chart
This unexpected resilience comes after Netflix's dismal performance in 2019, when stocks lagged far behind the rise that pushed so many other megacap technology stocks to new highs.
Research firm Pivotal said yesterday, while raising its Netflix price target to a Street high, strengthens its position as the dominant streaming service during the coronavirus pandemic.
“We have significantly increased our global Netflix subscriber forecasts based on likely higher gross subscribers and lower subscriber numbers driven by orders from global consumers staying at home around COVID-19. The firm raised the target price at the end of the year to $ 490 per share.
"We believe that the unfortunate COVID-19 situation reinforces NFLX's global dominance for consumers, driven in part by the incremental spending on content enabled by their massive and growing subscriber base."
Bottom Line
The economic damage caused by the coronavirus pandemic is likely to cause many companies to struggle in the coming months and years. But the pandemic has also created new opportunities in the economy for services that are more virtual and connected. The above two names fit the bill.
