An exchange-traded fund (ETF)
is a basket of stocks that trades on the stock exchange with a single value. They offer a great way to get exposure to an industry or industries while retaining enough diversification that you’re not overly exposed to any one company.
They also allow investors to get involved without too much due diligence required. Instead of comparing Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) to see which is the better investment for the coming years, you could just buy an ETF that counts both of them among its components.
As we look ahead to the final five months of the year, it’s not unusual to be viewing opportunities through the prism of coronavirus. It has defined 2020’s markets so far and looks set to continue doing for a good while yet. Here are three interesting ETFs that should continue to do well in a post COVID landscape.
Amplify Online Retail ETF (NASDAQ: IBUY)
With the e-commerce industry so well-positioned to capitalize on the coronavirus pandemic, few will be surprised with the 150% move logged by the Amplify Online Retail ETF (NASDAQ: IBUY) since the lows of Q1. Its $500 million in assets makes it the largest e-commerce focused ETF available and perfectly positioned to continue rallying as the trend towards digital shopping continues to accelerate.
Paypal (NASDAQ: PYPL), Etsy (NASDAQ: ETSY), and Overstock.com (NASDAQ: OSTK) are among the top components in IBUY which helps explain its blistering run over the past four months. Its RSI is well over 70 which might make some investors nervous, however, this is an unprecedented time and opportunity for these kind of stocks so some leeway is needed. For context, its RSI rose above 80 in June and the stock is already up 20% since then.
Unless investors think we’re going back to a world of brick and mortar dominated shopping anytime soon, this should continue.
Staying with the tech theme, ARK Innovation ETF (NYSEARCA: ARKK) is up around 140% since March. Its focus is on tracking companies with “disruptive innovation” potential like Tesla (NASDAQ: TSLA), Square (NYSE: SQ), and Zillow (NASDAQ: ZG) who are disrupting the decades-old automotive, payments and real estate industries.
While these companies could certainly all be classed as technology stocks, they’re obviously not from the same industry which means additional diversification and added comfort for investors. Technology’s dominance in the stock market has never been this pronounced, with the shift away from industrial, energy, and finance looking more permanent than ever. In fact these sectors were among the most hurt during COVID and are struggling the most to recover.
With COVID looking set to stick around, investors should be focused on the companies and industries that have been hitting all-time highs since it arrived.
WisdomTree Cloud Computing Fund (NASDAQ: WCLD)
While the previous two ETFs discussed revolve around B2C and consumer-focused companies, WisdomTree Cloud Computing Fund (NASDAQ: WCLD) offers exposure to the B2B world. The pandemic certainly helped accelerate a shift towards cloud-based servers and apps that was already well underway in the corporate world. With more people than ever before working from home, services like Docusign (NASDAQ: DOCU) and Zoom Video (NASDAQ: ZM) exploded in popularity.
The ETF only went live last October but in hindsight, it couldn’t really have arrived at a better time. Shares were already up 20% by February but fell 40% into March, offering a gift of a buying opportunity for the astute investor. Since then, they’re up 120% which is indicative of just how promising Wall Street feels the future is for cloud computing. For those still on the sidelines and looking to position their portfolio for the long term, WCLD is well worth considering.
Companies Mentioned in This Article
Compare These Stocks
Add These Stocks to My Watchlist
Restaurant Stocks That Still Look Tasty As the Economy Reopens
As part of our national response to the Covid-19 pandemic, many Americans considered it their patriotic, if not moral, duty to support the restaurant industry. And while many consumers were intensely focused on their small, local restaurants, the national chains were still open for business during this time.
And the reality is that the national chains are going to be the most adaptable to whatever pace of economic recovery we see. Hopes for a “V” shaped recovery have pretty much gone out the window. The new model suggests a stair-step recovery may be the best-case scenario.
The worst case scenario for the restaurant industry will be one where different regions of the country are subject to rolling lockdowns. In a business with notoriously low margins, an open/close, open/close recovery would be disastrous.
It’s one reason why I’m not sure I would be diving into restaurant stocks right now. But the same was being said of airline stocks and cruise line stocks. And sure enough, discount investors have been trying to invest in these stocks.
But as all 50 states have now re-opened in some fashion, it’s not unlikely that restaurant stocks are drawing attention from investors. We’ve put together this presentation that highlights seven restaurant stocks that you should consider looking at if you want to dive into this sector.
View the "Restaurant Stocks That Still Look Tasty As the Economy Reopens".