New normal or old normal? 3 scenarios that prove Nasdaq stocks are the ones to watch in 2021
Several Nasdaq listed stocks had their time in the sun in 2020. In particular, technology stocks from the larger FAANG stocks to Zoom benefited from the Covid-19 pandemic, when entire populations were forced to live, work, and play from home.
But what will happen in 2021, with the ongoing Covid-19 vaccine rollout in many countries, and a potential return to normalcy? Whether we stay in or head out, there is a potential investment opportunity for you. Here’s what we mean.
Scenario 1: More lockdowns and staying in
This scenario would be a continuation of what has happened in 2020, with nation-wide lockdowns, circuit breakers and quarantines as the order of the day.
There is a strong likelihood that we will continue to experience lockdowns in many economies for the next several months, as many countries face their third and fourth waves of infections, coupled with emerging new strains of the virus that are proving to be even more infectious than before.
For instance, the UK entered its third lockdown in early January, and is set to remain in lockdown until March, while Japan and Malaysia recently announced a state of emergency to cope with rising Covid-19 cases.
Technology companies like Facebook, Apple, Amazon, Netflix and Google could continue to get a boost from the stay home trends. Smaller technology companies that help companies with remote work like Dropbox and Zoom, and popular online game developers like Activision Blizzard and Electronic Arts could also continue to benefit.
As more consumers buy groceries in bulk to stock up their pantry, companies like Costco Wholesale and Pepsico could also see growing interest.
Scenario 2: Higher vaccine take up, limited outdoor contactless activity
Covid-19 vaccination programmes have started in many countries with healthcare workers and world leaders taking their first doses in the public eye. US President Joe Biden and former Vice President Mike Pence took theirs last December, while Singapore Prime Minister Lee Hsien Loong and Indonesian President Joko Widodo took theirs in January.
Even so, vaccine rollout is expected to be slow, with logistical hurdles to cross and with many people requiring more time and information to be convinced about the safety of the vaccines.
If enough people are inoculated – or caseloads remain low – consumer activity could grow. More people could be willing to dine out more, gather in small groups outside their homes, and engage in more physical activities.
Stocks like Beyond Meat, Starbucks, and Lululemon could benefit from such trends.
On the other hand, contactless payment solutions would continue to be a mainstay as consumers remain well aware of the need to prevent infections and stay safe. This would be good for stocks like Paypal and Ebay.
Amgen, which announced last November that it is developing a Covid-19 vaccine could also see some investor interest if their vaccine proves promising.
Scenario 3: Return to Normalcy
What if things go back to normal? What if the large majority of the population gets inoculated and herd immunity is achieved?
In this best case scenario, much of what we have seen in 2020 would get reversed. People will go back to their offices to work, people will head out for meals and seek entertainment, and everyone travels freely.
Does this mean that the companies that were booming before Covid-19 would naturally recover? Not exactly. While this scenario still remains on the horizon, the pandemic has sounded the death keel on many sunset industries and declining business trends. Such businesses are unlikely to recover even after Covid-19.
On the other hand, other businesses have proved themselves to be invaluable in a pandemic and outside of it. Those businesses could be worth a look, and includes chipmakers like AMD Inc and Qualcomm.
Trading Nasdaq stocks in volatility
Planning your investment for 2021? It bears reminding that 2021 is likely going to be as unpredictable as 2020 – or even more so – as economies swing between optimism and pessimism depending on how the virus pans out.
If you anticipate high volatility when investing this year, you could consider trading Nasdaq share CFDs. It is a leveraged product which comes with its own set of risks. At the same time, CFD trading provides the flexibility and of trading in both bull and bear markets, smaller contract sizes so you can trade with less capital, and no risk of delivery.
Now you can trade the stocks mentioned above through CFD trading on the Phillip MT5 platform. The Phillip MT5 platform is a powerful multi-asset platform that is integrated with Trading Central Indicators and the powerful Autochartist pattern recognition tool.