One of the big stock market stories of 2020 was the domination of so-called Work-From-Home Stocks. While some companies lost massive share value last year, these work-from-home stocks skyrocketed. But what happens after COVID? Can some of these stocks continue to climb? I think they can.
To understand why, let’s take a trip through innovation history for a moment. The story begins back in 1994 in Bellevue, Washington, with the birth of Amazon.com. A nerdy guy with a funny laugh named Jeff Bezos came up with the somewhat novel idea of creating an online bookstore. Within four years Bezos and his team had expanded into music, video and consumer goods. And then, well, Amazon basically took over the world.
But the key element of the story for our purposes is the “delivered to your door” aspect the company arguably invented and then unarguably mastered—basically showing the world it’s possible and how to do it. From 2000 to 2020, many companies claimed their stake in the burgeoning cottage industry catering to, well, cottage industries and agoraphobes to boot.
This sector had been growing for a long time even before the pandemic hit. Many of the companies in this niche already had solid business plans in place and in practice for home shopping and the remote-working economy. The pandemic merely accelerated the pace of expansion out of necessity.
Many companies have the opportunity to thrive from catering to the work-from-home crowd. These are four notable stocks I think will continue to rally even after vaccines and herd immunity bring the world back—or at least return it closer—to normalcy.
Zoom Video Communications stock (ZM)
Now a proprietary eponym for any remote video meeting, Zoom was the incontrovertible pandemic darling. Ah, yes. Looking back at mid-March of last year, the excitement of watching Zoom’s stock price blast higher almost balanced out the terror of the realization we were heading into the first major global pandemic in around 100 years.
After hitting an all-time high on Oct. 19, 2020, ZM pulled back and entered a downtrend. But the past two weeks saw the establishment of a new level of support, with more support at the 200-day moving average.
Zoom has faced competition, including Google temporarily offering a streamlined competing product for free. And its lightning-fast growth had some obstacles to overcome—“Zoombomb” is a new word in the dictionary as of 2020. It also was possibly a bit overbought in the hype during the fall. But is that business going away anytime soon or ever? No. And Zoom has established itself as the dominant player and has to defend its title for the sake of its investors. It is Damocles-like pressure being king of video meetings. But, hey. That’s what corporations do.
This stock likely will have growth potential for a long, long time, as many companies have moved toward allowing their employees to work, at least part of the time, from home (Twitter, Adobe, Amazon, Capital One, etc.).
DoorDash stock (DASH)
Hugely exciting IPO.
There aren’t enough trading days for any reliable technical data on this company. And there are a lot of naysaying haters out there. But aren’t there always?
The thing I like is that there’s a lot going on under the surface. Zoom hires people with a spare car and more spare time to deliver food to you. But it’s savvy and strategic. The company decided to own the suburbs—and does—or at least 58% of suburban areas in the U.S. That’s up from 23% in January 2018. It’s expanding delivery into other things besides food. And it’s been working on autonomous cars for years now. Oh, and it looks like it will be first to market in the densely populated, COVID-stricken Japanese market.
This one can catch some wind in its sails.
Docusign stock (DOCU)
This remote signing company was well positioned going into 2020. Then contract signers in corporate America had to stay at home with their pens to avoid The Rona. What to do? Digital documents to the rescue! The pandemic was the shot in the arm to propel Docusign to the next step toward its destiny faster than planned.
Last quarter’s earnings surged 53% year over year to reach $382.9 million. It’s growing and it knows it. This past week it secured a new $500 million senior secured revolving credit facility. And it will offer $500 million of convertible senior notes maturing in 2024.
Airbnb stock (ABNB)
I have to give this online home sharing marketplace at least an honorable mention.
A work-from-home stock? Well, kind of. I’d say part of what has helped it lately is being more a “work from anywhere” stock. And that’s just what a lot of gig employees are doing. City-dwelling workers have opted to get out of Dodge (or Chicago or New York) and head to the ’burbs or rural areas with their laptops. I mean, if you’re going to quarantine, do you want a condo in New York City with another 8.4 million of your closest friends or a quiet ranch in Colorado with a view of Pikes Peak? Not to mention these questing quarantiners often stay for two weeks or longer (a typical stay otherwise is four to seven days).
What’s more, home rentals have outperformed hotels in 27 global markets since COVID started. And rental rates were higher this summer than last. To be fair, travel has been a tough biz since last year. But if you’re going to be in this business, it’s good to be Airbnb with more than 7 million listings in over 220 countries—the biggest of all.
Plus, the company was as nimble as the best of them. Airbnb laid off a quarter of its workforce in the spring to manage costs and got into some tangential businesses like transportation and entertainment. It seems to have some vision and this model isn’t going anywhere.
Key Stock Market Data
I watch these stocks (and own or trade them with options) daily. They’re on my radar and watchlists. While one can lean bullish or bearish on option plays, I’m always looking for dips to potentially take some positive delta plays. And, of course, watching their earnings will provide key insight into what may come. As many of our traders know, earnings are a big thing at MTM. They provide huge insight on value and can create great trading opportunities as well.
Founder and President
Market Taker Mentoring, Inc.