Market indices fell sharply on Monday as buyers have been spooked by information of a brand new COVID variant present in South Africa. The Nasdaq Composite and S&P 500 each slid greater than 2% Monday morning as buyers digested the information.
Whereas it might be some investors‘ intestine response to promote shares, they might need to consider carefully about which shares could also be good investments throughout instances like these. Some firms may very well be capable to not solely navigate challenges related to a brand new variant, but additionally have enterprise fashions that would profit from market dynamics created by shoppers sheltering at dwelling. On that be aware, listed below are two companies which will show very resilient if one other variant beneficial properties traction world wide.
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Zoom Video Communications
One of the crucial apparent potential winners of distant work environments is Zoom Video (NASDAQ: ZM). Unsurprisingly, the inventory surged practically 10% greater at one level Monday morning. Traders are doubtless betting that the corporate can profit from elevated funding in digital collaboration as firms brace for extra folks sheltering at dwelling world wide.
Including to Zoom inventory’s attractiveness, shares have offered off sharply lately as curiosity in them has cooled off following a spike in 2020. Shares of Zoom are down 33% this yr, taking a breather from a near-400% acquire in 2020. The corporate’s income development has slowed considerably lately as Zoom faces robust year-ago comparisons and as fewer individuals are reliant on distant work. Third-quarter income elevated 35% yr over yr. That is down from 54% development within the second quarter.
Zoom’s top-line development may, in fact, reaccelerate if this new COVID variant turns into a severe world risk and shoppers and employees begin staying at dwelling extra.
One attention-grabbing and maybe underappreciated tech company that’s nicely positioned for difficult instances is promoting know-how specialist PubMatic (NASDAQ: PUBM). Whereas general promoting spend may take a success if demand for firms’ merchandise suffers or if stock is constrained additional as a result of a brand new COVID variant, programmatic promoting specialists like PubMatic may finally acquire market share. As an enabler of very agile digital promoting marketplaces the place budgets may be simply adjusted on a whim and advertisers can shortly gravitate towards the best return-on-investment advert merchandise, PubMatic may see elevated curiosity from entrepreneurs.
Additional, PubMatic has no debt, is cash-flow constructive, and is benefiting from surging gross sales lately (income has elevated greater than 50% for 4 quarters in a row). The corporate’s resilient go-to-market machine, aided by the majority of its analysis and growth occurring offshore within the cost-saving India market and a tradition that favors innovation-driven natural development, means PubMatic has sturdy fundamentals for unsure instances. Its debt-free steadiness sheet and profitability give its enterprise mannequin resilience. Extra importantly, its programmatic-focused enterprise mannequin will doubtless acquire market share in digital promoting amid a dynamic and quickly altering advert market.
10 shares we like higher than Zoom Video Communications
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Daniel Sparks has no place in any of the shares talked about. The Motley Idiot owns shares of and recommends PubMatic, Inc. and Zoom Video Communications. The Motley Idiot recommends Nasdaq. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.