Top 5 Industry trends to watch in 2021
[DISCLAIMER: All the views mentioned in this post are personal and I am not being paid by any of the mentioned companies. As of writing I might hold positions in below stocks mentioned.]
As we approach towards the end of 2020 (yes, the first year of pandemic), we wish things to turn around for us. We as human beings have a tendency to be passively optimistic and look forward to the brighter future.
There are many benefits of following the market and reading about companies. One of them is that you start identifying industry trends alongside profitability and valuation of sectors backed with real data.
Predictions are hard, so I will try my best to give a suitable reasoning on which sectors to watch out for and where to invest in 2021. In descending order:
5. Fitness and Athletic leisure (Athleisure)
2020 has proved Work from home and fitness from home quite successful during the hard times of lockdown and stay home orders. It is very important for everyone to stay fit and relax in their home environment. There is a huge potential in fitness industry be it Food or Equipment is going to flourish in years to come. Companies such as Lululemon (LULU), Athleta, Zella, Mirror, New Age beverages (NBEV) etc. will continue to outperform in the market.
4. Advertising and Digital marketing
It is interesting that most of us don’t like advertisements, but this industry has grown to be a multi-trillion economy. There is always a push and pull between premium , freemium and free-tier. Many large tech companies such as Google, Facebook, Pinterest hugely rely upon advertising revenues. As the customers evolve, advertisement platform evolve. In my view, it is all about real estate of Ads and timing of display. eg. For companies who rely on Ad, they want customer to look at them (introduce/impression), browse the product (influence/Click) and make the sales (close/purchase). I am betting on platforms which are powering Ads on streaming platform and mobile in 2021. Stocks to watch out for are Digital Turbine (APPS), Magnite (MGNI), Fluent (FLNT), Roku (ROKU) while the biggies continue to grow — The trade desk (TTD), Facebook (FB), Google (GOOG).
3. Clean Energy
Picture a world where there is no carbon smoke from vehicles, engines, Industry boilers and BBQ pits (JK). I strongly believe from 2021 and onwards it will be huge era for clean energy. As we have new US government which is all set to play a pivotal role in climate change reversals, we can expect nothing but more rebates, discounts in clean energy products. It is a multi-trillion dollar sector, so I have broken into multiple sub-sectors.
Transportation — When it comes to transportation, I like to further break it down into public transport and personal transport. Personal vehicle manufactures such as Tesla (TSLA), NIO (NIO), NIU mopeds (NIU), AYRO 3-wheelers (AYRO), Blink charging (BLNK), Zipline (drone delivery), Amazon/ Zoox will continue to grow.
Fuel cells, Solar and Wind — As government will continue to promote alternative energies, companies who enable solar and wind farming, Solar panels, and micro-inverters will see a headwind in 2021. Stocks to watch are Solar — JKS, CSIQ, RUN, SEDG, ENPH. Other alternative energies — PLUG, FCEL, BLDP, WPRT, CLNE.
2. E-commerce v10.0
E-commerce has evolved a lot and will continue to shine. As Amazon has set very high expectations for customer service with 1-day delivery etc. Every e-commerce company needs to serve fast deliveries and hassle-free returns. We are seeing startups which as supporting innovation/e-commerce Affirm (installments pay), Route (peaceful delivery), Shopify (SHOP), ShopRunner(Free 2-day delivery)which are changing the way how e-commerce traditionally operated. I will continue to watch out for them out including Paypal (I am a big fan of Paypal checkout!)
1. Telemedicine, Pharma, Biotech and Alternative therapies
The Game changers from 2020 and onwards are Pharma/Biotech companies. They haven’t received much love until 2020. I believe Covid-19 is an eye opener for human race to invest in Pharma and biotech more heavily than we ever have. As human being are exploring places where we have never been and doing activities which were never done in the past we will see more novel outbreaks of microbes around the world. Categorizing further:
- Pharma and vaccine— Moderna (MRNA), Regeneron (REGN), Novavax (NVAX), Exelixis for Cancer treatment (EXEL) and SANOFI (SNF) to name a few.
- Alternative therapies— Shockwave Medical (SHAV) — It is trying to use sound wave for treating cardiac blockages, ClearPoint Neuro (CLPT) . — Minimal invasive brain surgeries, UV treatments
- Mindfulness Apps — Calm (100M revenue already), headspace
- Telemedicine — Zoom (ZM), Teladoc (TDOC).
Extra credits
I could go on and on with more sectors which will continue to grow. Listing down some others which are poised to grow in 2021 —
Chipsets — Such as (NVDA, TSM, AMD) will continue to disrupt due to 5G, console and data-center business but the growth will slow down as cloud is slowing down YoY and as the world recovers from pandemic we will see a decline in PCs/devices sales too.
Materials — For every clean energy fuel, chipsets and any new development or breakthrough in materials. Of course we need Lithium, cadmium or a new alloy for example for innovation. Be it in making more-efficient solar panels etc. or fast charging or faster chips or faster airplanes. This field is the most underrated and unappreciated one in my view. Stocks to watch out for are Applied materials (AMAT), ASML, SMIC etc.
Robotics — It is not just limited to cleaning our house but it is powering much more scenarios than we anticipated. Applications such as Industry robotics, Medical robotics etc are going to continue to disrupt the way we operate.
Fin tech and alternative payments — It will continue to grow steadily as e-commerce is growing rapidly. Companies such as Square (SQ), Paypal & Venmo (PYPL), StoneCo(STNE), Shift4 payments (FOUR) are worth watching out for.
Delivery and Gig economy — This economy is evolving with stay home economy. But I feel this sector will slowdown and plateau when things open up. I qualify it as high risk as of now. Companies to watch out for are Doordash (DASH), InstaKart, UBER Eats (UBER).
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(Drop a line below for any feedbacks. Leave a comment on a sector which you believe in and I have not covered here.)
