The COVID-19 pandemic has been one of the most impacting events in our time that disrupted the global economy in an unprecedented way. Different sectors have suffered from the pandemic's effects, from sluggish growth, lockdowns, disruptions in the supply chain, decrease in demand on most basic items, and the race to create a vaccine. The effects made significant changes in consumer behavior and government efforts. Once vaccines started to roll out, this helped curb the pandemic’s impact to help economies reopen and bounce back. Fast forward 3 years, and the World Health Organization has recently downgraded COVID-19 from its emergency phase. Now this raises the question, is the market ready to bounce back and take some risk? If so, where should investors look into investing their hard-earned cash to bet on the recovery? This article will look at the sectors that thrived during the pandemic and can potentially carry this growth towards the new post-pandemic era.
Technology Sector
The pandemic accelerated the adoption of technology across various industries. People embraced working remotely and relying on technology for communication and entertainment, which boosted the tech sector's growth. One of the companies that experienced the growth was video conferencing software, such as Zoom and Microsoft Teams, due to the demand for remote work—with remote work becoming more prevalent and being adopted further by more companies, cloud computing, cybersecurity, and digital transformation services also benefitted from this significant growth. Cloud computing allowed companies to further enhance their remote work capabilities by allowing them to store their data securely remotely. With the market continuing with remote work, this gives companies on the cloud computing front even greater growth potential. For example, companies like Microsoft and its Azure are one of the key players investors can look into in this space.
Microsoft Corporation (MSFT)
Microsoft Corporation is a company that specializes in technology. They create and support software, services, devices, and solutions. The company is divided into three segments:
- Productivity and Business Processes - this segment includes products and services related to productivity, information services, and communication, which are available on different platforms and devices. Some examples are Office Consumer, Dynamics business solutions, LinkedIn, and Office Commercial.
- Intelligent Cloud - this segment offers server products and cloud services that modern businesses and developers can use and also includes enterprise services
- Personal Computing - this segment aims to provide a customer-centric experience with its technology through products and services such as gaming devices, Windows, and search and news advertising.
Analyst Ratings
Analysts currently rate MSFT as a “Strong Buy” based on their recommendations' 26 Strong Buys, 2 Moderate Buys,3 Holds, and 1 Strong Sell. The mean target price is set to $325.60 with a high target of $370.00, an upside of 20.52%.
E-commerce Sector
The pandemic greatly affected economies with shutdowns of companies' operations and lockdown mandates to avoid spreading the virus. This accelerated the adoption of e-commerce. With people staying at home and avoiding crowded places, e-commerce has become the go-to shopping option, further boosting consumers' ability to adopt online shopping through different retailers. For example, investors can continue to look into companies like Shopify, which has proven to be a popular choice for shoppers.
Shopify Inc. (SHOP)
Shopify Inc. is a company that provides Internet infrastructure to allow its users to start, grow, market, and manage a retail business. The Company's software enables merchants to run their business across different sales channels. This includes Web and mobile storefronts, social media storefronts, physical retail locations, and marketplaces. The platform gives merchants a single view of their business and customers across all their sales channels. It enables them to manage products and inventory, process orders and payments, and fulfill and ship orders. The platform also allows them to build customer relationships, source products, leverage analytics and reporting, and access financing from one integrated back office. Their platform enables businesses in more than 175 countries, and it offers various brands, such as:
- Allbirds
- 12Gymshark
- Heinz
- FTD
- Netflix
- FIGS
Analyst Recommendations
Analysts rate SHOP as a “Moderate Buy” based on 16 Strong Buys, 1 Moderate Buy, and 20 Holds from their recommendations. The mean target price is $56.02 with a high target of $120.00, an upside of 87.82%.
Renewable Energy Sector
The pandemic has also brought to everyone's attention the need for clean energy and sustainability. Despite the pandemic, governments still looked to reduce their carbon emissions and promote sustainable development, which will continue to drive growth in the sector. This sets the stage for companies providing renewable energy solutions, such as solar, wind, and hydropower. In addition, with the Biden administration's continued focus on clean energy, the sector is set to experience continued growth. Investors can start looking at companies like First Solar as some of the companies' names in the solar market.
First Solar Inc. (FSLR)
First Solar, Inc. is a solar technology company and global provider of photovoltaic cells (PV) solar energy solutions. First Solar produces and sells PV solar modules containing semiconductor technology that provides an alternative to conventional crystalline silicon PV solar modules. Its module business is involved in designing, building, and selling CdTe solar modules that convert sunlight into electricity. Third-party customers can use this with their developers and operators of systems, utilities, independent power producers, commercial and industrial companies, and other system owners.
Analyst Ratings
Analysts currently rate FSLR as a “Moderate Buy” based on 12 Strong Buys, 7 Holds, and 2 Strong Sells from their recommendations. The mean target price is $205.47 with a high target of $260.00, an upside of 46.07%.
Final Thoughts
The post-pandemic economy is expected to be different from the pre-pandemic economy. Some investors say that those who will benefit greatly will be companies with the insight to adapt to the changing times and see the opportunities despite the state of the global economy. However, investors have to wait and see if the leaders of the pandemic era will still be the giants once we all fully come out of it.
On the date of publication, Rick Orford had a position in: MSFT . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
