Op-ed: Firms which have tailored to Covid-19 may nonetheless be winners after the vaccine
I knew the day would come, even if an effective vaccine was announced shortly (which it was), my most "normal" activity of playing tennis would again succumb to the Covid-19 protocols. The virus has grown dramatically in my state, and the daily cases have increased more than ten fold from June. Finally, the State House decree came – we must wear masks in many places that were previously considered safe, including the tennis court. My heart sank when I heard the news.
After the dejection, I turned to my newest form of coping: I focused on the ways communities have strengthened their connections between members and how companies have adapted to the new pressures of the world. We also watched how quickly investors rewarded stocks whose business models were remote and life-focused. Zoom, Peloton, Nintendo, Teledoc and Netflix easily fit this description.
However, there have also been a multitude of companies that willfully adopt technologies that were vital to the success of Covid-world, and those that twisted, stretched, and even reconfigured their strategy, product lines, and services in ways unthinkable before the pandemic half a year ago (or a lifetime).
Home Depot has been expanding its e-commerce capacity for years, strengthening connectivity between retail locations and pick-up locations, which has helped meet the rapid demand for home projects. The company also quickly took advantage of the garden and landscape product parking lots to increase sales. Investors hailed the effort, gaining HD stock 27% that year.
In the healthcare sector, many participants were able to use their skills in Covid tests and therapies. Thermo Fisher (+ 50% year-to-date), one of the largest manufacturers of life science tools and diagnostics, announced third-quarter sales of $ 2 billion for Covid tests, far exceeding the most optimistic expectations.
Mettler-Toledo, an instrumentation company for the industrial, health and food markets, was able to "accelerate market share gains by improving our digital sales and marketing tools" with a highly effective e-demo and CRM system, especially in the health sector. The stock is up 43% in 2020.
Exact Sciences (29 +% YTD), which focused on colorectal cancer detection, reported significant sales on Covid testing, demonstrating their flexibility and expertise.
Even a traditional consumer goods company, Hershey, achieved higher sales during Halloween than a year ago, despite fewer trick or treating and Christmas parties. Have I eaten so many Reese bars and Kit Kat bars? They sold tons more chocolate chips and other baking products, an activity that had not been so well known since the middle of the last century; developed Covid-safe candy dispensers from which children could remove wrapped candy without compromising social distance; and redesigned all of their advertising to coordinate with a domestic existence.
While the stock has underperformed the S&P 500 so far this year, up 5% versus 10% for the index, the final quarter could see an uptrend for HSY given the clear success of their ingenuity.
Even if a vaccine may arrive at a pharmacy near you in the next year, we're not out of the covid forest yet, with many long months of adjustment bringing profits and higher stock prices. It's not just the removed stocks versus the reopened ones.
Vaccines must be stored across the country. Who will do this – Amazon warehouses, underutilized stores, or anchor stores and malls; empty office buildings in the city center? Does UPS, FedEx, the commercial airlines and public railways ship the product?
Now that millions of Americans have bought a peloton, we need sturdy bikes and treadmills that fit into smaller spaces to meet the demands of so many apartment dwellers. That could be Peloton or another supplier.
The huge surge in home renovations has highlighted the shortage of skilled carpenters, plumbers and electricians. Investors could enjoy the opportunity to invest in a safe chain of academies that offer high quality trade certifications developed as a start-up, division of a construction company, Home Depot, or Lowe's.
Tech companies still have great opportunities to better serve the millions of small businesses trying to stay afloat in the coming months by carefully steering purgatory from deep covid towards a vaccinated population.
Could someone please develop a mask that will keep my droplets off my partner on the tennis court, protect me, but also let me breathe?
Karen Firestone is chairman, CEO and co-founder of Aureus Asset Management, an investment firm dedicated to contemporary wealth management for families, individuals and institutions.