The big coronavirus winners

A handful of stocks are thriving despite the mass shutdown, report Sam Benstead and Marianna Hunt

In any crisis there are winners and this one has been no different: a number of companies have seen their shares jump since the coronavirus epidemic began. But would investors be better off seeking out the businesses that will benefit later on, when the virus’s longer-lasting effects on our lives emerge?

Among those to have benefited already is the online grocer Ocado. Its share price has risen by 10pc in the past three weeks after a surge in demand for delivered groceries from shoppers forced to stay at home. It has had to cancel delivery slots and limit new customers in order to meet the demand. The business told investors that its sales growth had almost doubled as a result of the coronavirus.

American bank JP Morgan expects even more from Ocado, saying the share price could rise to £14 from about £12.

In the same vein, supermarkets have benefited as consumers rush to fill their kitchens with essential items. The share prices of Sainsbury’s, Morrisons and Tesco have all performed better than the FTSE 100, losing only 2pc on average in the past three weeks while the market fell by 10pc.

Naturally, the consumer goods conglomerates behind many of our favourite brands have enjoyed a surge in sales. The share prices of Unilever and Reckitt Benckiser, owners of brands such as Dove, Marmite, Cillit Bang and Hellman’s, have also bettered the performance of most other companies. This is despite some concern over long-term sales as corporate customers shut down their operations.

However, while these stocks have been resilient, investors might do even better by turning to businesses that will benefit from this fundamental shift in our way of life.

It is expected that, with vast swathes of the population ulation working remotely and social interaction at a minimum, the adoption option of new technologies such as cloud computing and remote communications unications will soar. This will be a boon to software companies that can embed their products in people’s s lives during this period and snap up market share.

Chris Elliott of Evenlode venlode Investment, a fund manager, said that even once people returned to their offices, the way we work will have changed

Grocers and manufacturers of popular brands have withstood market volatility as consumers spend more time at home irreversibly and the companies comp that facilitate those changes should benefit.

Walter Price, manager of the Allianz Technology Trust, said he expected companies that offer subscriptions to cloud-based technology services to grow right through the crisis.

One such firm, Microsoft, is a favourite of Thomas Fitzgerald, co-manager of the EdenTree Amity International Fund. “Although Microsoft will not be immune from the impending economic downturn, it will continue growing for long afterwards, thanks to its wide range of products to enable flexible working,” he said. It owns Skype, for video calls, LinkedIn, for job searches, and Teams, for remote working.

As more workplaces are having to communicate online, the shares of some firms that offer video conferencing services have rocketed. The stock of Zoom Video, for example, has doubled in value since the end of January.

Mr Fitzgerald also backed its older rival Cisco Systems, saying it was one of the best options for gaining access to this market. I It provides tools for video conferencing, confere online meetings and webinars. webinars “According to th the company, its number o of active users is currently current at record highs,” M Mr Fitzgerald said. He added a that, over the long l term, he believed believ Cisco was well-positioned well-pos to benefit from fr future upgrades in technology, such as th the move towards 5G and faster wireless networks. network

However, remote working does come with its own set of risks. Home Wi-Fi systems and personal laptops may be more susceptible to hackers and data breaches. Many prudent employers are now investing heavily in cybersecurity, said Josh SambrookSmith of Sarasin & Partners, the investment manager.

He suggested American software firm Okta as one of the possible beneficiaries. It has an app that allows users to verify their identity so that they can log in to company networks remotely and securely.

“It was already the leader in this area and was seeing increased demand even before the coronavirus crisis,” Mr Sambrook-Smith said. While most stocks have fallen since the start of the epidemic, Okta’s share price has been flat.

Buying American technology stocks directly may not appeal to British investors and using funds or investment trusts to back coronavirus winners is an alternative.

Ocado’s share price has risen by 10pc in the past three weeks after a demand surge

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