Five stocks that have sparkled through the coronavirus downturn
Since diving sharply in March, Aussie shares have staged a solid recovery – and some stocks are cruising through COVID without a worry. Here’s why, and how you can prepare for in the future.
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PANDEMIC? What pandemic? This question could be asked by many of Australia’s 634 public companies that have enjoyed share price rises of more than one-third despite the world’s biggest economic shock in 70 years.
Don’t mention the health crisis, lockdowns, high unemployment, recession and business failures, and you have a lot of satisfied sharemarket investors out there.
More than 300 companies listed on the Australian Securities Exchange are now trading at twice the price they fetched a year ago.
Most of them are smaller stocks typically related to mining exploration, technology or healthcare, but there are a few names you may know.
And while past performance doesn’t mean you’ll enjoy future growth, there’s some interesting stories behind our biggest 100 companies that are cruising nicely through COVID.
AFTERPAY up 163% in a year
The boom in online shopping went hand-in-hand with a boom in buy now, pay later businesses and Afterpay is the biggest player.
Its growth potential in the giant US market is grabbing more attention from investors than its success at home.
FORTESCUE METALS up 90%
Iron ore prices have defied the global economic slump and climbed 50 per cent since late March. Fortescue, founded by billionaire philanthropist Andrew Forrest, is a pure iron ore investment.
DOMINO’S PIZZA up 77%
Life in lockdown has been great for Domino’s, which hit a record high share price last week.
While restaurants have struggled with closures and social distancing restrictions, fast food has gone gangbusters.
JB HI-FI up 59%
More time spent at home has prompted us to spend up big on home entertainment, technology and gadgets. JB Hi-Fi has earned praise for its online business, in contrast to department store Myer whose share price has halved in a year.
ANSELL up 47%
Rubber gloves anybody? The global maker of medical and industrial protective gloves was always going to benefit from a pandemic.
THE BIG QUESTION
Picking sharemarket winners is a nice feeling but behavioural economics research shows financial losses have a more powerful effect on our brains.
More than half of Australia’s biggest companies’ share prices are weaker than they were a year ago, so it’s a good idea to diversify a share portfolio among different stocks, sectors and countries.
It’s also important to focus on the long-term rather trying to time the market’s short-term winners.
Which leads us to the biggest question for investors: where to next?
Some analysts say Aussie stocks are overpriced and in danger of a fall, while others believe record low interest rates have created a new normal where minuscule investment returns from cash and fixed interest push more people into shares permanently. There’s also a view that Aussie shares have underperformed relative to other major markets such as the US and Britain, and have more potential for growth.
The truth is nobody really knows what will happen, what shares will soar and what will sink. That’s why smart investors diversify.