2020 has been a challenging year for investors as optimists have clashed with the pall of gloom led by economic slowdowns before and after the outbreak of Covid-19. However, the year has not been bleak for traders and opportunities have abounded as well.
With the year winding down and entering the 4th quarter, we take a look at the stock market and what sectors are ripe for investment opportunities going forward. You’ll find some of them as standard “go to” blue chips, but many that might have eluded your eye.
Here is a quick rundown of the sectors we like best for earning money in a lockdown and going forward in 2020.
Tech and Online Stocks
To be more specific, stocks of companies that have demonstrated increased value to consumers by providing services or products that have been relatively untouched by the shutdowns in major economies.
Companies that have either taken no “hit” at all by the Covid-19 shutdowns and/or even flourished as a result of the shutdowns of typical brick and mortar stores would be online shopping companies.
The most notable examples of these are Amazon and Alibaba, but other companies that provide products or services through these two powerhouse companies are also good picks for a high return on investment.
Here is why — These companies are going to be (or have already) announced good 2nd and 3rd quarter profits despite the challenging economic environment. The 4th quarter is the bread and butter of consumer spending because of the holiday season in the U.S. and other Western nations.
If you aren’t already aware of this, U.S. consumers drive the global economy. The sheer purchase volume in comparison to ANY other economic zone in the world is astounding. U.S. buyers will be spending in the 4th quarter regardless of whether lockdowns remain in effect and these companies that have been meeting their needs will continue to do so.
Therefore, Amazon, Alibaba, and associated stocks will either continue to flourish or take the least of any economic hit if consumer spending doesn’t perform as well as expected.
Similarly, tech companies that have emerged with services that either solved problems during the pandemic related shutdowns and moves to remote employment, will also emerge stronger in the 4th quarter and going forward.
These types of companies would include service related ventures like Baidu, Cisco, and Zoom. Baidus camera technology which is being used in hospitals and their advancements in AI are just a few of the many ways that the tech giant is expanding its markets.
Communication Blue Chip Stocks
If there is a severe economic slowdown beyond what we’ve already experienced so far in 2020, there are some companies that will still remain insulated from a severe recession. Firms that make their bread and butter off communications will continue to do well since our reliance on high-speed, modern connectivity is assured.
There are two types of companies to consider here. Those that provide communications themselves like mobile service and home/office internet and those that provide the hardware necessary for mobile services.
Additionally, startup and aspiring companies will be a lot riskier because they haven’t established a significant enough market share to guarantee their ability to weather an economic storm. Therefore, we are more focused on the blue chip stocks of companies that are well established within the market.
The first group of companies would include stocks from firms like AT&T, Sprint, MegaFon, etc. However, it would also include companies like Oracle and Microsoft that provide cloud and computing services in a variety of industries and markets.
The 2nd group would include handset manufacturers since mobile phones have become a “must-have” item in today’s world. Look for companies like Apple and Samsung to continue their dominant positions in the market regardless of how the economy looks.
These blue chip companies will enjoy some of the best results in a bull market, but will also gain market share in a struggling economy.
This sector has shown increasing resilience despite the decline in traditional television viewership during the Covid-19 lockdowns and quarantines. In fact, streaming services in particular have increased viewership as more people have been stuck at home unable to enjoy other forms of entertainment.
Look for this trend to continue into the 4th quarter as temperatures drop and new programming begins. Companies like Netflix and Disney that offer streaming services should be able to show profitability regardless of how the global economy fares.
There is Money to Be Made in Any Market
Armed with an idea of what types of stocks to keep an eye on, investors can feel comfortable trading regardless of the overall economic situation in the world. Even in the worst of times, stocks still trade and traders make money.
While our list here focuses on stocks that we believe will do well in 2020, don’t forget that Olymp Trade provides traders with the opportunity to trade profitably on the losers in the market as well. Understanding, which stocks will perform well will also help you identify those that won’t and you’ll be able to capitalize on them if you’re prepared.
Your best efforts will be made with the combination of knowledge, understanding, logic, and trading mechanisms that allow you to take advantage of the market circumstances for not only stocks, but also Forex and commodities.