The prognosticators are hardened in their positions: some say the markets are headed toward cataclysmic losses, and others say we are poised for a V-shaped recovery. They can’t both be right. And the truth could land anywhere in between.
Regardless, anyone with a 401(k), IRA, mutual fund, or other exposure to the stock market will likely be wondering what defensive moves to make. Hopefully, they’ll have devised a strategy with a financial advisor such as HCR Wealth Advisors, and their portfolio will be appropriately balanced based on their financial situation, age, and remaining time to retirement.
Much of the uncertainty about markets comes from whether the recent spikes in COVID-19 cases is a sign of things to come. Will the economy have to be shuttered again? Or is the virus weakening, and the spikes are simply the result of more extensive testing and more young people exposing themselves? (That should help with what’s called the “herd immunity” effect.)
HCR Wealth Advisors sees that many industries are struggling and may have difficulty reaching pre-pandemic levels ever again. Others are benefiting from the populations sheltered at home, but the benefits will phase out after the pandemic. Still, others have benefitted and will continue to do so after the Coronavirus.
Let’s look at seven industries that are thriving now, and see if they might thrive post-pandemic.
Virtual meeting facilitators
Coronavirus has made video conferencing software a critical technology for consumers and businesses. Having to work from home has accelerated the acceptance of virtual meeting software, both on the part of the employer and the employee. Safe interactions with professional service providers such as HCR have played a role as well.
Household names today are Zoom, Google Meets (ex-Hangouts), Cisco’s Webex, and Microsoft’s Teams. As an example of growth, by the end of March, the daily usage of Google Meet’s enterprise videoconferencing tool was 25 times higher than it was in January.
As these platforms go after new applications of distanced activities (in education and telemedicine, for example), they promise to continue in high demand even after some of us go back to the office. But after strong growth during the pandemic, the key may be to look for upstarts that can attract users away from these established companies.
As companies rushed to move their operations and services online because of the pandemic, they may not have had the time to ensure that data transmission was as protected as it should be. Cybercriminals were well aware of this fact, and have taken advantage of the uncertainty created worldwide by the virus.
As companies caught their breath, they zeroed in on cybersecurity to shore up what they had already built and reassessed where to invest dollars in the future. Whether to meet the needs of virtual meeting platforms or online sales, the cybersecurity industry is destined to offer growth opportunities well beyond the Coronavirus.
As communities discuss whether or not to reopen schools in the Fall, Coronavirus’ impact on education has already occurred. Online learning resources have blossomed to meet the needs of parents and teachers to replace the classroom situation. Artificial Intelligence (AI) resources are being thrown into the mix as well.
HCR Wealth Advisors sees the accelerated trend towards online learning as more likely to grow than retract. One small example is access to quality education for those outside the high walls of venerated universities at a price affordable to many more.
But e-learning goes beyond students from pre-school through university. It also grew exponentially during the shutdown, as shut-ins sought ways to pass the time. One question HCR Wealth Advisors asks is whether the drive to master new skills can survive the economy returning to normalcy. Any company that can add a high-value component to the ease and low cost of pursuing new hobbies from home could be a long-term winner.
Remember the brouhaha over the ad for Peloton? That ad cost the company $1.5 billion in Christmas sales. That was before the pandemic, and the online fitness industry was already nearing $100 billion. Enter the Coronavirus, and those able to offer online services were handed the golden ticket as people were barred from gyms and fitness studios.
The global home fitness equipment market is only projected to grow at a CAGR of 2.86% during the period 2020–2025. But that represents just one segment of the market.
It doesn’t include the online part, which seems to have the most significant appeal. Note that athletic apparel company Lululemon Athletica recently announced it would be buying Mirror, an interactive home gym, for $500 million.
Although many will be counting the days to go back to their favorite gym, the virus has raised awareness of the dangers, costs, and inconveniences of having to leave home to work out. The germ-aspect may last long enough to make home workouts a habit, one that is hard to kick. And the winners in the online fitness industry — even after the pandemic — will be those that offer the most addictive experience.
Gaming is another addictive form of entertainment. And during the pandemic, countless new gamers were added to its universe as they looked for ways to kill time. Nintendo launched a game in March called “Animal Crossing: New Horizons,” and its sales surpassed those of all of the previous games in the series combined.
Long before Coronavirus, the video game industry was growing so fast it was targeting $300 billion by 2025. It already counted 2.5 billion gamers worldwide. The shift to free-to-play games such as Fortnite and Apex Legends increased profitability through gaming subscription services and the demand for in-game items purchased with real money: billions of dollars in revenues yearly.
Even without the pandemic, HCR Wealth Advisors saw this industry as one scheduled to grow dramatically in the coming years. Now, as third-party developers join game developers to build the “in-game economy” items and trading spaces, it will be that much harder for new gamers to give up the excitement of the gaming world and go back to however they entertained themselves before.
One industry that came seemingly out of nowhere was the home delivery industry. But when vulnerable people were told to stay home, delivery became their primary way to get food. The first companies that could scale their delivery solutions — Amazon and Walmart — did exceptionally well. And many other supermarket chains turned to third-party delivery services such as Instacart.
Between early March (before the shelter-in-place orders) and April, HCR Wealth Advisors watched online grocery sales grow by 110%. Instacart’s 2-week sales in early April were up 450% over its December 2019 sales.
Many households suffered from limited financial resources, as people lost their jobs or shut down their businesses. Regardless, the desire for safe shopping exceeded the need to save money. Add-on fees and delivery subscription costs were somehow absorbed.
Restaurants and cafés added takeaway orders as a way to stay active and serve customers despite the pandemic. Now, although some eateries have reopened, social distancing concerns support the demand for home delivery until the Coronavirus is gone. And after that, eating (and cooking) at home may be one good habit Americans choose to continue.
The Walmarts and Amazons of the world will thrive regardless. The question is, what upstart will have a new idea that clicks long term?
Remote medical services
Ongoing healthcare has been one unintended victim of the pandemic. People, even those requiring chemotherapy for cancer and other vital interventions, are staying home. Emergency rooms are emptier than they’ve ever been. Everyone’s afraid of catching the virus.
What’s the solution? Telemedicine. This technology was growing gently pre-pandemic, but it has taken giant steps since the virus erased patient confidence in safe visits to doctors and hospitals.
Platforms such as Teladoc Health and CareClix are connecting doctors and patients, and 24/7 online diagnosis services such as Zipnosis are growing astronomically (3,600% increase in virtual visits in 11 days in March).
In March, the U.S. government issued a waiver to expand the coverage of telemedicine for Medicare members. More severe or complicated issues would still require face-to-face doctor-patient visits, but many could be handled safely from home. Telemedicine can minimize the exposure of vulnerable patients to the virus now, and provide an effective way to extend affordable service to more people later.
The industry is held back by some obstacles: clarifying some IRS implications, reimbursement rates, interstate licensing, and handling of payments for the different participants (hospitals, doctors and telemedicine platforms).
Once resolved, additional opportunities exist with new tools that facilitate video interaction, improved balance sheets for hospitals as costs drop, and devices (like remote stethoscopes) that complement video interactions with doctors. This trend is not going away.
These industries represent just seven of the ones that have potential post-Coronavirus. But investment decisions cannot be made in a vacuum. They need to consider the unique circumstances of an individual’s finances, resources, and goals.
About HCR Wealth Advisors — Every HCR Wealth Advisors client benefits from an entire team of professionals who consider all life factors — not just financial — when advising. HCR Wealth Advisors is not constrained by proprietary investment products. Instead, the firm considers the full range of options and possibilities based on their clients’ specific situations.
Originally published at https://www.entrepreneurshiplife.com on July 24, 2020.
*This article is for informational purposes only and should not be considered investment advice.