Business has always been seasonal, no matter what industry it is. No industry is evergreen and in the same breath, no industry is always unprofitable either. Ebbs and flows are a categorically intrinsic part of any business. COVID 19 has proven to be a general ebb creator in this cycle. For instance, as of the time of writing this article the Dow Jones Industrial Average tanked at a 31% while FTSE 100 Index closed below 5,000 today that is a 27% decline in a month.
However, not all hopes are lost tho. Certain industries and companies are doing better than the pre-lockdown economic boom!
The obvious reason behind this anomaly is the service or product provided by these companies and the relevance of their industries. So, without further ado lets take a look at what companies and industries are shining right now and have a future for them.
Now biotech has been a booming industry for quite some time now. The union government of India through Department of Biotechnology has granted funds to 16 companies to develop biotech applications to fight the virus. Some prominent companies in this domain which has seen significant growth in the recent months are –
The French big pharma is drawing lessons from it’s experience during the SARS outbreak to fight COVID. Investors were drawn to Sanofi signing a collaboration deal with US based Transale Bio. The combined effort aims to produce coronavirus vaccine by working on messenger RNA technology. This has resulted in Sanofi (NSE:SANOFI) seeing a stock surge between late March and mid April. With investor’s sentiment increasing, we can only expect the numbers to grow.
With a $ 250 Million backing from pharma giant, Galaxo Smith Kilne for collaboration to research and develop COVID solutions utilising Vir’s patented monoclonal antibody platform technology. This innovation allows for accelerated research in identifying existing and new anti-viral antibodies with GSK’s experience and speciality in functional genomics, CRISPR screening and AI.
This huge development resulted in a massive stock price surge to the tunes of 173%! No doubt we are inching closer to a solution with such massive interest.
Perhaps oddly, we have seen a corresponding decline in big pharma’s stock performances with Pfizer, GSK, and Merck & Co riding out more than 15% in declines. That is a clear indicator that investors are putting more trust in companies with innovation such as Gilead (+15%), Regeneron (+30%), and Chugai (+24%). No doubt these are small-mid cap stock options, but they are relevant in the current situation, thus their rise to prominence.
Evolution truly is a never ending process. We went from having to commute to office, to being pushed to make our home the office. Now just like bio-tech, this industry was gaining momentum for quite some time now. Notably, since the recession of 2008 an increasing number of jobs have been moved online and freelancing has been the on the rise as well.
To serve this niche domain of remote working, a particular company stands out for it’s incredible growth.
From team meetings to classroom courseware, Zoom is dominating the video conferencing platform right now. To put the meteoric rise of this app into perspective, by March 9th the first time installs of Zoom increased by a staggering 728% in a matter of weeks touch 200 million in March from 10 Million in December.
All this growth however has not been without any criticism. There has been severe security issues with the application, however quick patches and updates have fixed said issues.
However, talking about Zoom’s business growth we must account for the fact that zoom was born with a silver spoon in mouth. Within four years of launch, zoom became an unicorn and was funded by Sequoia Capital among others.
As far as numbers are concerned, Zoom turned a revenue of $ 620+ Million and enjoys a market cap of $ 40.5 Billion. As you might have read in our coverage on #large cap stocks#, zoom does fit in that category and its stocks sell like hotcakes as evidenced by this chart-
Electronic payment has been pushed by the Indian government through BHIM-UPI. An obvious choice for payment today is digital contactless payment, cash is a thing of the past and with the coronavirus scare it is even more prevalent than before.
Bloomberg reported that contactless payment will take over traditional methods of transaction like cash and card over the course of this pandemic. The same report also mentioned a growth of 27% in customers using services like Apple Pay & Google Pay as found in a survey of 361 companies by Strawhecker group.
The credit card giant reported a 4% rise in this financial quarter on profits. This period also oversaw the payments volume rise up to 5%, amounting to a total of $2.14 Trillion. Refinitiv IBES analysts estimated a net revenue of $ 5.75 Billion which was promptly surpassed to have a 7% revenue growth totalling to $5.85 Billion.
All things considered, Visa Inc. is set to be a safe but medium yielding stock option amidst the pandemic.
With all time high volumes due to the SBA’s payroll protection program loans which can be processed through PayPal among other companies, there has been a steady surge in the stock prices. With a market cap of over $ 170 Billion it does appeal to institutional investors and currently sits with a Zack Rating of 3 (Hold). However, unlike the other companies we mentioned, PayPal (NSDQ:PYPL) does not have good yield on short term holdings but excellent one on long term plans.
With all that said, there are fintechs which are on the brink of going bankrupt. With the current mentality of hoarding as much cash as possible, micro-credit companies and p2p lending firms are closing their doors. So, keep an eye out for opportunities and find them accordingly.
The sheer boredom of lockdown is unbearable as most of us would reckon, YouTube thus comes to the rescue. YouTube has garnered over 300 Billion views in Q1 of this year in India alone!
And YouTube is not the only platform where our masses are turning to for media consumption, Instagram, Reddit, Tumblr, and others have reported drastically increased screen time as well. However, all of that has been there for about a decade and in mass adoption as well. What has changed is the rise in use of Virtual Reality. From meetings in VR on Microsoft’s Altspace VR to companies like Limbix who are in the business of effective VR based mental health treatment, VR has it covered.
Recently announcing a $ 9 Million series A funding, this startup from Silicon Valley is paving the way for therapy of future. It was recently on the news owing to it’s collaboration with COVID hospital in Italy. The software uses VR application to emulate a near real feeling environment where the user has some positive or euphoric feeling associated with, maybe a particular spot which can be accessed via third part API such as Google streets.
With so many mental disorder patients unable to visit their doctors, this might be the solution towards a healthier society.
You might have heard of the Oculus before, it’s newly delivered quest system which requires no PC to operate has exceeded it’s projected demand. However, there has been a surge in enterprise applications as compared to recreational application. So much so, that the current rate of production is not able to keep up with the demand. Some industry professionals prefer adoption of Oculus in their Zoom meetings because of the attention that VR facilitates over 2-D video conferencing. In the same use case scenario schools and colleges have shown renewed interest in the technology as well.
With over 70% of our population under lockdown, coronavirus has caused mass scale adoption of new technologies. Maybe VR is the way ahead, there’s companies like Alibaba who have developed VR based shopping experiences in China, VR based vacationing is the new cheap way to see the world.
Now businesses have not been through a cataclysmic change like this in over a century. Today our dependence on technology and the constant progress we have made in that realm will be our saving. The reason why so many businesses have been failing is particularly because of the flawed business model which does not resonate in this situation. The business model propagated by MBB over the past decade has been one of inventory lean business. With global logistics lines collapsing maybe this will change and lean will be limited to only service based industries.
With that being said, if you are an entrepreneur or an aspiring one this is your chance. Go do further research from the list, if you have skills in these industries or can contribute in their growth, you have a profitable business idea right there.