The stock market is a fickle mistress. In this dizzying world, predictions are not always reliable, as wild swings can happen at a whim. 2020 is evidence of that. In a year where the hospitality and leisure sectors took a nose-dive, others profited. Delivery services, home health providers, used car sales, and internet casinos thrived during the current global crisis. Thus, it is hard to predict what will occur next on the stock market. We can only mention expanding industries, rising companies, and investment options that seem like a decent wager in 2021.
Financials Stocks
Over the last few years, the financial sector has gotten a reputation as being a consistent loser due to record low interest rates making profit generation hard. The global pandemic has tightened up lending, impacting banks’ futures even more. That said, now inflation rates are increasing, threatening to push interest ones higher, providing a boost for these financial institutions.
In this time of calamity, they are not looked at as villains, as they have worked with customers by allowing them to defer credit and loan payments. They have also helped small businesses via Paycheck Protection loans, earning billions via fees. Despite all this, bank stocks were a loser in 2020. However, this isn’t unusual for giant commercial entities in this field, as they continuously face peaks and valleys, performing poorly in recessions, and well when the economy is flourishing. Most of them set aside billions in preparation for massive loan defaults. Deloitte estimates that by 2022, North American banks could write off as much as $318 billion in loan losses. In the worst-case scenario, this figure could go up to $600 billion.
So, why should you invest in bank stocks if 2021 is unlikely to be a banner year for these institutions? Well, this may be the perfect time to swoop in and scoop them up cheaply, looking at them as a value investment. It is an opportunity to buy them when they are in a valley and await the next peak.
Airline Companies
According to Vasu Raja, American Airlines’ Chief Revenue Officer, demand for air travel is currently at about 40% compared to where it was in 2019, and revenues are 30% compared to what they were that same year. Many believe that the crucial factor to recovery is letting vaccine distribution run its course. As this happens, many Wall Street analysts think that you should add airline stocks to your portfolio in anticipation of the industry’s inevitable comeback.
Top US airline companies raised $50 billion of debt and equity in 2020 to keep enough liquidity to survive. However, that should not shun you away from considering their stocks. Delta shares have gone up 75% over the past six months. American Airlines, United, and Southwest have also marked increases of 67%, 51%, and 61%. Airline representatives also note that Google searches for airplane tickets grow each day, which shows pent-up demand.
Some observers remain skeptical that the travel industry will ever recover since companies have gotten used to remote work. Videoconferences are now a usual occurrence in daily work schedules. So much so that Bill Gates predicts that 50% of business travel will disappear forever. A steep decline in international business travel would be a devastating blow for airlines, as these categories of customers bring in far more profits than domestic leisure travelers. Regardless of what happens in the future, in 2021, expect to see airline stocks increase throughout this year.
Telehealth Providers
Telehealth is the distribution of health services via telecommunication technologies. It allows long-distance contact between doctors and patients. Amidst the current global pandemic and its accompanying lockdowns, this field has experienced a boom. In April of 2020, interest in it went up by 4,000%. Fortune Business Solutions now projects that the global market will reach $560 billion in 2027.
In the US, this boom did not get started by customer demand but by a fundamental shift in reimbursement. Once a Public Health Emergency state got announced, it allowed the relaxation of privacy rules that led to FaceTime sessions getting billed as visits. Mental health start-ups Betterhelp and Talkspace, which got acquired by Teledoc six years ago, saw a tremendous uptick in new users in 2020. Many doctors are now asking for a long-term legislative fix that would able telehealth services to be commonplace. They could reduce healthcare spending and improve health outcomes. Thus, in anticipation of such an event, telehealth stocks are currently soaring.
