We take a deeper look at the 'stay at home' stocks that are bucking this downward trend.
‘Stay at home’ stocks surge in popularity among investors
- We are currently seeing a surge in buying of ‘stay at home’ stocks
- Investors align their spending and investing activity, 40% of UK adults are more likely to invest in companies they buy from regularly
- Approach can be lucrative as stocks generate returns of up to 81%
Coronavirus may have sent shockwaves across stock markets, however our analysis finds a rare few stocks are bucking this downward trend.
With billions of people across the globe on lockdown, there is a growing amount of consumers becoming dependent on a select few companies that have helped many adjust to the new ‘stay at home’ lifestyle. With spending and dependence on these companies surging, these stocks are becoming increasingly attractive and popular among investors.
Analysis of our trading data shows that buys of ‘stay at home’ stocks have soared.1 Netflix has witnessed a nine-fold (900%) increase in purchase activity compared to the same point last year. While Zoom (550%), Ocado (336%) and Amazon (200%) have also seen buying activity of their stocks increase dramatically under the lockdown.
Aligning investment strategy with spending habits
With their own spending on these companies likely to be increasing, many consumers are looking to match their investment strategy with their spending patterns.
This is a common strategy among investors which is likely being enhanced further as a result of the lockdown, as consumers’ spending becomes concentrated on the few companies still in operation.
Around one in six (15%) UK adults already invest in companies they buy from regularly, while a further two in five (40%) UK adults would be more likely to invest in companies they buy from regularly.2
Approach proves lucrative for investors
Such an approach is proving lucrative for investors, as since the Coronavirus outbreak began in December, ‘stay at home’ stocks have enjoyed considerable returns over the period.
Zoom investors, have witnessed total returns of 80.7%, while Netflix (17.4%), Amazon (8.1%), Ocado (5.9%) and Microsoft (5.0%) have all enjoyed growth.3
Matching your investment strategy with your spending habits can be a sensible approach and sticking to companies you’re familiar with, and you know are performing well, makes a lot of sense in times of uncertainty.
‘Stay at home’ businesses are fast emerging as the winners of the coronavirus crisis and are acting as a strong addition for many investors portfolios as a result.
As with all investment decisions investors should be investing with a long-term outlook, the lockdown will eventually lift so investors should consider whether this is a company that will continue to deliver returns. The flurry of interest in these stocks does also leave them at risk of becoming over-valued, so investors should avoid getting caught up in any excitement and objectively consider the price before purchasing.
1Analysis of our trading data for Feb/March 2019 and Feb/March 2020. For Zoom Video Communications the time period considered is Apr/May 2019 and Feb/March 2020 due to their listing in April 2019. Based on purshasing data from this point last year.
2Opinium polled 2,449 people aged 16+ online 13 –17 December 2019
3Cumulative total return performance 31/12/2019-07/04/2020
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.