Revealed: Shares that’ll shoot up with a COVID-19 recovery

Two fund managers pick which shares they think will go gangbusters after a coronavirus vaccine comes to rescue the world. Here’s the lowdown.
The post Revealed: Shares that’ll shoot up with a COVID-19 recovery appeared first on Motley Fool Australia. –

surge in asx growth share price represented by tiny bean stalk being watered by miniature watering can

Two fund managers who look after WAM Leaders Ltd (ASX: WLE) have revealed which sectors they’re expecting to rise as the globe moves on from COVID-19.

WAM Leaders lead portfolio manager, Matthew Haupt, said gross domestic product would jump once a vaccine or treatment came along.

And there has to be businesses to provide that output.

“You’ve got to be positioned for anything linked to economic activity or recovery,” he said in a Wilson Asset Management video.

“Balance sheets will be rewarded finally. They were punished before.” 

Haupt picked out the insurance industry as ready for a big recovery.

“That’s very much out of favour at the moment. But that’s a sector that will benefit from rising yields.”

The sector was rocked last week when a court ruled that insurance companies could not refuse to pay out COVID-related business interruption claims. It remains to be seen how much this will cost the industry.

WAM Leaders portfolio manager, John Ayoub, specifically called out Insurance Australia Group Ltd (ASX: IAG) and QBE Insurance Group Ltd (ASX: QBE) as insurance providers to watch.

He also liked the look of companies that benefit from government spending.

“Stocks like Lendlease Group (ASX: LLC) and Downer EDI Limited (ASX: DOW) will continue to do well over the next 12 to 24 months.”

Mature companies took a broom to their operations

The coronavirus pandemic has given companies an excuse to restructure their business, according to Ayoub.

“What we’re going to see when we come out the other side is more profitability in corporate Australia.”

He took Qantas Airways Limited (ASX: QAN) as an example of a company that executed reforms that would not have been possible pre-COVID.

“They were able to redress their cost base… As you come out the other side, their domestic earnings will probably be greater than their peak earnings for the group in totality from 2018.”

Dividend vs growth shares

Haupt predicted a roaring comeback by dividend shares.

“Dividend payers have been punished in this environment, which is quite bizarre. They will be the next beneficiaries as well.”

He believes that much of the money that flowed this year from dividend shares into fast-growth shares would reverse flow post-COVID.

In fact, Haupt went as far as to forecast share prices of technology shares could crash as much as 40%.

This is because the prospect of ultra-low interest rates would dissipate once a vaccine or treatment is mass-distributed.

“That transition will be quite painful for a lot of people,” said Haupt.

Investors who thought this year brought a permanent and fundamental shift in the way the world operates could get burnt, according to Ayoub.

“Although people have suggested structural change has happened rapidly, as we know from the past, things don’t happen that quickly.”

Earlier this month, IG Group Holdings plc (LON: IGG) surveyed 253 fund managers and economic experts on the sectors they thought would do the best during the recovery period.

Pharmaceuticals was the most popular pick, with 73% thinking it would increase in value over the next 12 months.

But the second most popular answer was a surprise, with technology chosen by 66% of the experts.

“Companies with interests in digital technology and remote working should prove to be strong performers over the next 5 years,” stated the IG report.

“Also, digital companies with fewer physical assets, or ones that are able to embrace the new socially distant, tech-first culture will survive the crisis.”

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Revealed: Shares that’ll shoot up with a COVID-19 recovery appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!