Buy These 5 Stocks for Post-COVID Profits
Dear Rich Lifer,
The pandemic forced Americans to make countless changes to their daily lives and routines. We took up mask-wearing, toilet paper shortages became the norm, and Zoom turned into half the country’s only social space for social interaction…
That last one thanks to perhaps the biggest change we saw: the switch to remote work.
As Covid-19 spread across the country, businesses shut down and employees were told to work from home.
Now, over a year later, companies and employees are beginning to navigate the murky waters of returning to offices.
Some employers have strong preferences for their employees to be in the office full-time, while others seem to be embracing a hybrid model.
Meanwhile, employees have their own opinions about the productivity and flexibility that can come from remote work.
Today, we’ll explore the near future of office work, what it means for stocks…
And give you some specific plays to position your portfolio for profits.
Bosses Are Tired of Remote Work
Recent comments from multiple chief executives seem to paint a clear picture: workers need to return to offices.
Jamie Dimon, CEO of JP Morgan, said remote work doesn’t work well “for those who want to hustle.” Goldman Sachs CEO David Solomon has called working from home “an aberration that we are going to correct as soon as possible.”
Other CEOs are singing the same tune, like WeWork CEO Sandeep Mathrani, who said employees who are “uber-ly engaged” with their work should want to go back to the office at least two-thirds of the time.
Remarks like these resulted in outrage from workers who feel devalued, and Mr. Mathrani has apologized for how his comments came across.
However, it appears that these publicly displayed opinions mirror the private beliefs of many managers, who think employees should be in the office five days a week to prove they are ambitious and productive.
Overwhelmingly, bosses want their employees in the office, so there isn’t a loss in creativity or collaboration — both things, they believe, are easier to cultivate in person.
There are also issues regarding the difficulty in managing employees that are located all around the country. Last summer, The Harvard Business Review found that of 215 managers from around the world, 40% said they struggled to lead remote teams in the pandemic. 38% said they believed remote workers performed worse than those in the office.
The Hybrid Work Model
An alternative to a full return to the office would be hybrid work, where employees split time between the office and the home.
A survey of 9,000 workers by Accenture PLC found 83% of respondents viewed a hybrid workplace as optimal. Companies may tiptoe into this model before diving into 100% in-person, required work.
Companies will be able to establish guidelines for hybrid work, and the expectations will vary from office to office.
For example, at JPMorgan, employees on some teams can schedule work-from-home days, but not on Mondays or Fridays.
However, some companies have fears that remote employees could fall behind in-person workers in terms of promotions and pay. Executives at PricewaterhouseCoopers LLP have voiced such concerns about remote workers ending up as “second-class corporate citizens” and cited the need to track rates of advance for both in-person and remote workers.
There’s research to support that. In February 2020, researchers at Rensselaer Polytechnic Institute and Northeastern University studied over 400 tech workers and found that while remote and non-remote workers were promoted almost equally, the salaries of remote workers grew more slowly.
Employees Voice Opinions
In a 2021 Gartner Inc. study of over 3,000 professionals, 75% of fully remote workers and 70% in a hybrid setting said they and their teams were able to adjust to shifting priorities, compared with 64% of fully on-site workers.
Many employees currently working remotely or in a hybrid model also stated that they were more comfortable taking risks and testing new ideas, as compared to in-person workers.
However, junior employees and extroverts both reported that a physical office space was crucial to learning and brainstorming.
Employees who have become used to the flexibility of working from home are not eager to give it up completely. In an Ernst & Young survey of more than 16,000 employees this month, 90% said they wanted flexibility. Additionally, over half said they would consider quitting if they weren’t able to do so.
Companies are taking notice. Like software company OnSolve LLC, whose chief executive Mark Herrington reports that applicants for 90 currently open positions have insisted on some type of hybrid model.
He explained, “Those folks are pretty much saying, ‘Hey, if I can’t have a bit of a hybrid work environment, then I’m probably not going to be interested.’”
Work From Home Stocks
The shifts we’re seeing in work culture are also affecting the stock market.
When everyone began working from home last year, there was a boom in demand for digital solutions that could assist in turning the bedroom into the office. As a result, stock for companies like Zoom, DocuSign, and Slack boomed.
Wall Street even put together a basket of work-from-home stocks and packaged them into the newly established Direxion Work From Home ETF (WFH), which rose 25% from June 2020 to December 2020.
Although many of these individual stocks are currently down, the likelihood of the hybrid work model prevailing will mean that individuals will continue to need these types of tools and services.
Some stocks to keep your eye on are workflow management leader Asana (ASAN), digital app manager Appian (APPN), business intelligence software provider Domo (DOMO), observability pioneer New Relic (NEWR) and DevOps company JFrog (FROG).
These companies will be crucial to the success of any business embracing this new era of hybrid work.
To a Richer Life,
The Rich Life Roadmap Team