Best Stay at Home Stocks to Buy
The new 'stay at home' stock market revolution is here! Largely thanks to the fact that 2020 has gone down in the history books as a critical turning point in social and economic trends.
The impact of the coronavirus has forced investors to think differently and adjust their portfolios for a new wave of 'sector investing.' Are you prepared for it?
One of the hottest new sectors that has caught everyone's attention are stay at home stocks. Read on to find out more about this booming sector and where the opportunities are right now. ▼▼▼
In this article, you will learn:
✅ What the best stay at home stocks to buy now are and why.
✅ Why every investor needs to know about this new shift in sector investing to battle proof their investment portfolios.
✅ Why aligning your long-term investing strategy with how millennials perceive and invest in stay at home stocks could help you capitalise on this 'once in a lifetime' opportunity.
✅ How to prepare, find opportunity and trade the volatility of stay home stocks when shorter-term players start exiting.
✅ How to access the right products and tools to take advantage of the boom in stay at home stocks, including:
✔️ How to open an Invest.MT5 account with a minimum of just €1 and access low commissions from just $0.01 on US stocks!
✔️ How to open a Trade.MT5 account to trade stay at home stocks via Contracts for Difference (CFDs) and potentially profit from both rising and falling markets!
✔️ How to test all of the services from Admiral Markets UK Ltd completely FREE by opening a demo account!
✅ And much, much more!
What are stay at home stocks?
The coronavirus pandemic of 2020 upended traditional stock market investing techniques. The impact of government stimulus, lockdown restrictions and a new way of working had many investors scrambling and confused on how to take advantage of the historic volatility.
However, further analysis of the stock market during the early weeks of the pandemic shows that a few stocks were bucking the downward trend and have since continued to do so as social and economic priorities shift. Interestingly, the shift was not even down to the trillions of dollars from stimulus packages that central banks pumped into the economy. It was, in fact, that people staying at home found a new way of working, a new way of living and a new set of priorities.
Savvy investors caught these trends early on and started to embark in what is known as 'sector investing' which basically focuses on a group of stocks that have commonalities (industry, sub-industry, etc). Traditionally, sectors fell into the well-known categories of energy, financial, retail, health care and others, but during the coronavirus pandemic of 2020, new types of sector categories and stocks were being formed. These included sectors such as the:
▶️ The 'work from home' stocks sector
▷ A basket of stocks that experienced a surge in demand due to remote working in the lockdown period.
▶️ The 'coronavirus vaccine' stocks sector
▷ A basket of stocks that were primed to find a vaccine first, helped funded by the US government's Operation Warp Speed programme.
▶️ The 'stay at home' stocks sector
▷ A basket of stocks that experienced a surge in demand due to people staying at home in lockdown restrictions but also changing the way they work to spend more time at home.
While many investors have been investing in these new sector categories due to the impact of the coronavirus pandemic in 2020, many analysts now predict the shift to stay for the long-term due to a change in thinking from companies, the workforce and families.
Before we look at the best stay at home stocks to buy, it is important to understand the different industries they are in. This is because the key to long-term investing is to make sure you are diversified, so if trends change in the future one loss-making investment in one industry doesn't affect the whole portfolio.
Did you know that you can download the MetaTrader 5 trading platform provided by Admiral Markets completely FREE? This means you can view real-time prices of thousands of different stocks, perform technical stock market research with in-built indicators and trade directly from the platform! Click the banner below to start your download! ▼
Trading stay at home stocks? Know your industries!
As we now already know, stay at home stocks represent companies that experience an increase in demand for their products and services due to people staying at home. This could be because of the new 'work from home' sector, the rise of people wanting to set up remote or online businesses, the realisation they want to spend more time with the family, or lockdown restrictions enforced by governments.
Either way, each one of these categories has led to a surge in demand for products and services in specific industries. Of course, finding the best stay at home stocks requires some in-depth research and strong risk management principles but even then there is no guarantee the stock will outperform over a fixed period of time.
However, the first part of the process is to look at the industries which have performed well under 'stay at home' conditions and some of the companies involved in them. Some of the industries that have performed well in the stay at home sector include:
☑️ Food delivery
☑️ Internet/social media
It's no surprise that most of these industries fall into the more traditional sectors of consumer cyclical and technology. Consumer cyclical stocks are companies involved in retail, restaurants and entertainment, among others. Of course, the fact that technology companies are involved in the stay at home sector is no surprise either.
Source: Finviz 19 November 2020
The degree to which investors have positioned themselves in these sectors may surprise some. Above is a chart showing the one-year relative performance of the different stock market sectors up to November 2020, the year of the coronavirus pandemic.
Both the technology and consumer cyclical sectors have massively outperformed the rest. It's also no surprise that the energy sector is the worst-performing. If more people choose to stay at home for work or enforced government lockdown restrictions, there is less mobility and travel happening on planes, buses, trains and cars. That means a lower demand for oil which is why the price of oil and oil companies like Shell and BP crashed to near 30-year lows during the early part of 2020.
Of course, it's probably no surprise that the technology sector has massively outperformed everything else. After all, when you're at home how much technology do you use? It's also quite evident from how the Nasdaq 100 stock market index surged higher after the initial sell-off from the coronavirus pandemic, as the chart below shows:
Source: Admiral Markets MetaTrader 5, NQ100, Monthly - Data range: from 1 May 2013 to 19 Nov 2020, accessed on 19 Nov 2020 at 16:36 pm GMT. Please note: Past performance is not a reliable indicator of future results.
Did you know that with a live trading account you can speculate on the direction of stock prices using Contracts for Difference (CFDs)? Using this product means that you could potentially profit from both rising and falling markets! Some investors may consider buying the best stay at home stocks while shorting the stocks that will be most affected by this trend - such as energy stocks. Get started today by clicking on the banner below: ▼
Best stay at home stocks for investing
Now let's have a look at some of the best companies within each of the industries related to the stay at home revolution. Of course, there are thousands of stocks out there so the list is not exhaustive but it can pay off to focus on the most well-known companies that you are most familiar with.
✴️ #1 Shopping - Amazon (AMZN)
Whether people are spending more time at home for work, a lockdown restriction or change in lifestyle it is likely they will need some new supplies or redecorate and upgrade certain things in their homes. The retailers who are already positioned online have been the ones who have benefited the most in 2020. However, the trend in online shopping is likely to continue and is likely to reach even more people in the future, which means more sales.
One company which stands out from the rest is Amazon. The company was founded in 1996 as a book store and has since grown to become one of the largest online retailers in the world with revenues of more than $280 billion in 2019. Amazon's revenue surged higher during the initial stay at home lockdown measures in 2020 as workers and families rushed to buy things for their homes. As Amazon specialises in one-day Prime deliveries they were well-positioned to take advantage of the trend.
Source: Admiral Markets MetaTrader 5, #AMZN, Monthly - Data range: from 1 May 2013 to 19 Nov 2020, accessed on 19 Nov 2020 at 16:45 GMT. Please note: Past performance is not a reliable indicator of future results.
The monthly price chart above of Amazon's share price shows a strong multi-year trend higher. In fact, the stock was largely unaffected by the stock market sell-off that followed the pandemic. The two wavy lines on the chart are called moving averages and they are used to help identify the trend of the market. In this instance, the 50-exponential moving average is above the 100-exponential moving average suggesting that the average price of the last 50 bars is higher than the average price of the last 100 bars - thereby, signifying a bullish upward trend.
Other notable mentions in the shopping industry which are available to invest in and trade on via Admiral Markets include:
☑️ Home Depot
You can learn more about some of these companies in the ' Best Retail Stocks to Invest in' article.
✴️ #2 Entertainment - Netflix (NFLX)
All of those extra hours saved from travelling to work, or from being stuck indoors have encouraged more people to seek out entertainment. There's a reason why giants like Netflix, Disney and Apple have increased their online streaming revenues in 2020. The trend in online streaming is likely to continue too as users become comfortable with the ease of access and low cost provided by online entertainment.
While the Disney+ and Apple TV+ streaming services are relatively new to the market, the clear winner has been the long-standing Netflix (in relative terms to the fast-moving technology sector of course!). During the 2020 pandemic, Netflix added more than 16 million new subscribers to their books. This was double the user growth it recorded in the last quarter of 2019 and is one reason Netflix has been pumping out a significant amount of new content.
Source: Admiral Markets MetaTrader 5, #NFLX, Weekly - Data range: from 9 Aug 2015 to 19 Nov 2020, accessed on 19 Nov 2020 at 16:50 GMT. Please note: Past performance is not a reliable indicator of future results.
In the weekly chart above of Netflix's share price, it is clear to see an overall trend higher but with some significant dips, or pullbacks. While the 50-period, 100-period and 200-period exponential moving averages are moving higher the share price has been quite volatile. This has been due to a large amount of money being spent on new content and the new competition the company is facing from film companies and production houses launching their own online streaming services.
Other notable mentions to keep an eye out on for the stay at home revolution which are available to invest in and trade on via Admiral Markets include:
☑️ Disney (Disney+)
☑️ Apple (Apple TV+)
☑️ AT&T (HBO Max)
☑️ Amazon (Amazon Prime Video)
☑️ Comcast (Peacock)
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✴️ #3 Food delivery - Delivery Hero (DHER)
Shares in food delivery companies such as GrubHub and Delivery Hero (Germany) surged higher over the first round of coronavirus lockdowns in 2020. The increase in demand from users has now attracted more food outlets to use these delivery companies rather than try and set up their own. This in turn has attracted more users and more revenues to these companies.
One stand out performer has been Germany's Delivery Hero. The online food-delivery service actually operates in more than 40 different countries and partners with 500,000+ restaurants. In 2019, the company processed more than 666 million orders. The company's most recognisable brands include Foodora, Foody, Appetito24, Domicilios, Hunger Station and more.
Source: Admiral Markets MetaTrader 5, #DHER, Weekly - Data range: from 25 Jun 2017 to 19 Nov 2020, accessed on 19 Nov 2020 at 17:50 GMT. Please note: Past performance is not a reliable indicator of future results.
While the company was founded in 2011, they listed their shares publicly on the Frankfurt Stock Exchange in June 2017. After a rocky start, the share price took off in early 2019 and received an additional boost during the 2020 pandemic. This helped lead the 50-period and 100-period moving averages higher, confirming the upwards trend.
Other notable mentions in this industry which are available to invest in and trade on via Admiral Markets include:
☑️ Ocado (UK)
☑️ Takeaway.com (Netherlands)
✴️ #4 Fitness - Nike (NKE)
In 2020, more people discovered that they liked working out at home or running outside. While some had no choice but to do so, there has been a trend in more people getting into fitness and buying fitness equipment. Shares in companies like Nike, Adidas and Under Armour are just a few examples of stay at home stocks that have benefited from this new trend.
However, as Nike not only makes sports apparel but also sports equipment it is the clear favourite in this industry. It is also boosted by having a strong online presence, which is beneficial if people choose to not go out and visit its stores. Shares in Nike soared to all-time high price levels after the coronavirus-led sell-off in 2020 and has continued its long-term uptrend, as shown in the monthly price chart below.
Source: Admiral Markets MetaTrader 5, #NKE, Monthly - Data range: from 1 Oct 2005 to 19 Nov 2020, accessed on 19 Nov 2020 at 18:50 GMT. Please note: Past performance is not a reliable indicator of future results.
If you are interested to learn more about how to invest in stocks, simply watch the video below! In this 48-minute video, a professional trader talks you through what stocks and shares are, how to invest in them and what the best strategies are! Essential viewing so be sure to check it out! ▼
✴️ #5 Communication - Zoom Video Communications (ZOOM)
Companies who offered products that specialise in connecting people together, soared during the initial coronavirus lockdowns in 2020 but then went on to dominate the industry. Zoom soared in value as the simple-to-use video conferencing software was not only used by the general public at home but was then adopted by corporations around the world to interact with colleagues and clients - a trend that is most certainly going to continue.
While Zoom's share price rocketed higher during the 2020 pandemic, it quickly gave back some of its gains as short-term traders looked to exit the market. However, as the company is now so well-known and used widely for personal and commercial use, investors may be looking for an opportunity to get back in. The share price has experienced a phenomenal rally higher since its initial public offering (IPO) in April 2019, as shown in the chart below.
Source: Admiral Markets MetaTrader 5, #ZOOM, Weekly - Data range: from 14 Apr 2019 to 19 Nov 2020, accessed on 19 Nov 2020 at 19:50 GMT. Please note: Past performance is not a reliable indicator of future results.
✴️ #6 Internet and social media - Facebook (FB), Alphabet (GOOG), Microsoft (MSFT)
With more and more people staying at home, internet browsing and social media interaction has surged. All these new visits to Facebook and increased searches in Google have helped these companies increase their advertising revenue which is one of their biggest sources of income.
The most dominant players in this industry, include:
☑️ Alphabet (Google)
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This means you can find trading and investing ideas on all of the stocks listed above! For example, below shows all the active events for Facebook's share price from 19 November 2020:
A screenshot showing an example of searching for 'Facebook' in the Trading Central Technical Insight Lookup indicator in the MetaTrader 5 Supreme Edition platform provided by Admiral Markets.
This tool allows you to save a lot of time by providing you with ideas for short-term (2-6 weeks), intermediate-term (6 weeks - 9 months) and long-term (9+ months) opportunities. You can also use it to confirm your own technical trading and investing ideas too!
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How to invest in stay at home stocks
Once you've settled on the company you want to invest in or trade on, the next step is to view the price chart of the stock and then open a trading and investing ticket. To do so, simply follow the steps below:
▶️ Open your MetaTrader 5 trading platform provided by Admiral Markets, or start your free download here.
▶️ Select View from the menu at the top and open the Market Watch window.
▶️ When this window opens on the left-side of your chart, simply type in the instrument you wish to trade on in the last line of the window next to the + icon. The platform will populate some names for you to select.
▶️ Press enter, or the return key, on your keyboard and it will be added to your Market Watch window. To view its price chart, simply drag the symbol onto the chart.
▶️ To open a trading ticket simply right-click, select Trading and then New Order. A trading ticket will open up for you to input your own entry, stop loss and take profit levels as well as your position size.
A screenshot showing the MetaTrader 5 trading platform provided by Admiral Markets with a trading ticket open on the chart.
Why invest in stay at home stocks with Admiral Markets?
✅ You can invest with a well-established company authorised and regulated by the Financial Conduct Authority (FCA).
✅ Start investing with the popular online trading platform MetaTrader for PC, Mac, Web, Android and iOS operating systems, provided for FREE by Admiral Markets.
✅ Upgrade and supercharge your trading platform completely FREE to the Supreme Edition for actionable trading ideas on thousands of different stocks and shares, while accessing advanced trading tools.
✅ Open an Invest.MT5 investing account to buy stocks, shares and ETFs from 15 of the largest stock exchanges in the world.
✅ Open a Trade.MT5 trading account to trade via CFDs, allowing you to trade on margin and the ability to go long and short a market to potentially profit from rising and falling markets.
So what is the best way to get started? ▼▼▼
The first step is to simply test all the services and products provided by Admiral Markets, while testing your own trading and investing ideas, on a FREE demo trading account! By opening this account you will be able to buy and sell in a virtual trading environment until you are ready for a live account!
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About Admiral Markets
Admiral Markets is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or recommendation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.