The Pandemic, It Changed Things
If there is one thing we can be certain of about the COVID-19 pandemic is that it changed things. Some for the worse, don’t get me wrong but, in terms of the market, some for the better. A few of the trends that have emerged include stay-at-home, work-from-home, pantry-loading, exodus to the suburbs and acceleration of tech adoption that we are only now getting a grip on.
There are many great investments along the lines of these trends. The very best are riding a wave of business that is driven by not one or even two of these trends but by several. Today’s news highlights two such companies, companies investors with long-term horizons should have their eyes on.
Zillow (NASDAQ:Z) Is At The Nexus Of Powerful, Converging Trends
Zillow (NASDAQ:Z) was expected to do well in the quarter, it is after all the leading digital platform connecting buyers and sellers in today’s real estate market. There was already high demand for homes before the pandemic, the pandemic caused a brief hiccup in the activity but the signs are good a strong rebound is underway. Regarding the results, Zillow produced a stunning 28.2% increase in YOY revenue versus the 2.6% predicted and the outlook is good this trend is sticky.
The results were "even better than we had hoped, and firm up our belief that powerful tailwinds in both real estate and technology are rapidly converging, with Zillow at the nexus," CEO Rich Barton says. “real estate, like other industries, is experiencing an acceleration in technology adoption, as people move their shopping habits from offline to online.”
Looking forward, the company guided estimates for the 3rd quarter down on a sequential and YOY basis but investors should look beyond the numbers. The company has demonstrated its ability to produce results for its client/users as well as investors so we should expect business to continue expanding. The bottom line is this, the pandemic is elevating the Zillow brand to a household name putting it in a position to dominate the digital housing market for years to come.
The news has shares up more than 14% in premarket action and trading at a significantly higher new all-time high. While bullish, investors are cautioned not to rush in. In the near-term, it is wise to expect profit-taking to cap gains if not close the gap formed by today’s surge. Waiting for a retest/test for support before entering this stock is advised.
NortonLifelock (NASDAQ:NLOK) , A Pure-Play On Internet Security
NortonLifelock (NASDAQ:NLOK) is uniquely positioned in today’s market as a pure-play on consumer Internet security. The pandemic accelerated the adoption of technology and with it the need for security and identity protection. In terms of the fiscal Q1 results, there are bit confusing to look at, depending on the comparisons being given.
You see, NortonLifelock (formerly known as Symantec) wasn’t always the pure-play on consumer cyber security it is today. That journey began about a year and half ago resulting in a more streamlined, consumer-focused, operation. At face value, net revenue is down -50% on a YOY basis but that’s not the comparison that counts. Consumer revenue grew 5% for the year, supported by a 9% increase in bookings, and gave management the confidence to raise guidance for the year.
“NortonLifeLock’s transition to a pure-play consumer company will be completed by the end of August. Through Q1, approximately 95% of the stranded costs have been removed … The stranded cash costs have already been more than offset by $875 million in realized proceeds from the sale of under-utilized assets. The Company remains committed to its target of $1.5 billion in total proceeds from sales of under-utilized assets.”
The Q1 report has shares moving higher in premarket action and breaking out to a new high. The break out is a signal to buy, assuming price action is able to hold. In the near to short-term, price action may test support at the $23 level or even move lower to close the gap formed by today’s price action. In either case, a confirmation of support is a trigger to buy. Longer-term it looks like this stock is headed up to the $34 to $38 range. Oh yea, and it pays a safe 2.25% yield.
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Top 8 Companies That Are Adapting to a Post-Coronavirus World
The unintended consequences of the coronavirus pandemic are being played out in homes and apartments throughout the world. More and more employees are working from home, that’s if they have a job to go to. Entire industries are effectively shut down as the world attempts to slow the spread of the virus.
At some point, however, things will return to normal. But it will be a new normal. There are many businesses that won’t reopen, and many industries that will forever be changed. As an investor, now is the time to get out your crystal ball. Timing the market is a fool’s errand. But looking at what industries are positioned to thrive in a world that will be changed by the coronavirus is a prudent strategy.
We’ve identified 8 companies that are adapting to what the economy will be like in a post-coronavirus world. It will undoubtedly be more digital than it already is. Supply chains may become more vertically integrated as “Made in America” may take on a whole new meaning. As will the idea of working from home, going to a concert, or even preparing a meal.
View the "Top 8 Companies That Are Adapting to a Post-Coronavirus World".