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AAM Viewpoints – Promising Sub-Industries in a Post-COVID-19 World


It’s no secret the world has gone crazy and there will be many rippling effects across the economy, many of which we can already measure as analysts pump out article after article about record-breaking indicators – often causing more fear than anything else. So, we want to go over the areas of the market we feel have the potential to benefit most from the narrative shift caused by the global shutdown. We believe the shift in the narrative will alter the way the world consumes and does business. Yes, some things will return to normal, but we believe enough changes are coming that it warrants discussion. Below are some sub-industries that we feel have the potential to grow in the post-COVID-19 world.

  • Many businesses are establishing systems for their employees to work remotely and are often discovering they can be just as productive at home as they are in a formal office setting. Allowing employees to work remotely can reduce a company’s need for office space and may provide opportunities to hire talent from across the world.
    • Businesses need to invest in project management technology, technology that allows easy collaboration and idea sharing, network security, and tools for productivity monitoring. The two notable sub-industries with companies that meet these needs are Application Software and System Software.
  • We will continue to see new pharmaceutical drugs and vaccines developed and manufactured. This won’t be our last pandemic. We believe that investing in the Biotechnology sub-industry has the potential to be a good investment, as well as investing in telehealth via Health Care Technology sub-industry. Both doctors and patients may find telehealth a convenient and cheaper alternative to going into the doctor’s office for every ailment.
  • Financial technology has the potential to continue to grow as it becomes easier and more convenient to conduct your financial business online. Companies providing many of these services are found in the Data Processing & Outsourced Services sub-industry.
  • Even as states begin to re-open, we believe it will take time to return to normal as consumers may still be wary. This uncertainty is likely to decrease spending on travel and lodging. Instead, those dollars might be put toward home improvements, outdoor recreational vehicles, and other leisure products. The sub-industries that take advantage of this shift are home improvement retail, automotive manufacturing, and leisure products.
  • With people working and spending more time at home, they may need additional technology to support that work and occupy their leisure time. Companies that provide those services can be found in the Cable & Satellite, Movies & Entertainment, and Interactive Home Entertainment sub-industries.
  • Other notable sub-industries: Internet & Direct Marketing Retail and Hypermarket & Super Centers

This is by no means a comprehensive list. There will be other sub-industries that have the potential to thrive in a post-COVID-19 world, but these are ones with which we have the most conviction.

 

CRN: 2020-0604-8341 R

This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the Disclosures webpage for additional risk information at commentary-disclosures. For additional commentary or financial resources, please visit www.aamlive.com.


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