COVID-19 has flipped our way of life upside down and is still messing with it. An effective vaccine and treatment are still far away from being developed, and by the time they are, the virus may have altered our psychology.

Traditional investment themes will bite the dust and new leaders will emerge.

There is some clarity emerging on what these themes will be, and here’s a bird’s eye view.

A. GREEN ENERGY

Though the clean energy segment’s supply chain has gotten disrupted by the virus, it is all set to witness boom times in the post-COVID-19 age.

An investment in green energy projects can fetch $98 trillion worth of GDP gains by 2050, with a payback between $3 and $8 per dollar of investment. Germany has already announced it will gradually shift to green energy. The other major advantages of clean energy are that it does not create geopolitical tensions as oil does, and it is great for the environment.

This is a cheap and no-tension source of power that pays back its investment over the long term – and it is likely to witness mega investments in the post-COVID-19 era.

B. TECHNOLOGY

People have gotten accustomed to working from home and organizations have experienced cost savings. Naturally, many people will be motivated to work from home after the virus clears up.

Providers of Software-as-a-Service (SaaS), cloud computing, cloud REITs, cybersecurity, online meeting tools, home education, eCommerce, and online entertainment services will majorly benefit.

Many of these stocks have run ahead of their fundamentals and investing is all about patience. You should ideally wait for the market to correct before venturing. There’s already a lot of talk of a double-dip and a W-shaped recovery.

C. INSURANCE

The pandemic has heaped misery upon people who were not covered by insurance. The growing number of unemployment claims combined with the fact that not all states expanded Medicaid will leave a deep impact on the uninsured and their families. Otherwise too, memories will get stamped on generations that have experienced the pandemic. Going forward, either the government will step up and extend insurance coverage to all, or uncovered folks will buy it.

D. HEALTHCARE

Nations respond to a major disaster by building facilities that they lacked during the event. After every war, countries invented new and more lethal weapons and stockpiled them. This time nations will build a more robust healthcare infrastructure and rely less on outsourcing.

There is a race to develop a COVID-19 vaccine, so there’s no point chasing the vaccine and test kit developers – there will be many. What is likely to happen is that the production of drugs and healthcare equipment will be brought home. Makers of precision equipment, semiconductors, raw material, and medical devices should benefit.

E. FOOD

The virus has blown the lid off the American food system and proved it to be fragile. Going forward, the government has no option but to strengthen food production and logistics. Companies that grow food are likely to benefit. There will be spin-offs too – for example, many folks will start growing veggies at home, and companies that make hydroponic farming systems can benefit.

Many people are eating vegan meat during the lockdown – because meat factory workers are impacted by the virus. Then, there’s that link between meat consumption and COVID-19 – so what if it’s bat meat!

There’s growing awareness about the benefits of a plant-based diet and many NGOs have begun promoting sentience. Vegan stocks performed solidly during the pandemic – Beyond Meat (BYND) is one example. This report estimates the sector to grow at a CAGR of 8% from now till 2025.

Another flipside is that the government may start warning about the danger of consuming sugar, junk food – and maybe even smoking (though that’s not food). If that happens, some food stocks can get negatively impacted.

G. AUTOMATION

People are scared of going near other people and until a vaccine is found and injected into us, we may follow social distancing norms – or at worst, become loners, though it goes against our psyche. The flipside is that our employers may opt for automation (industrial and office) because it saves cost and has become more acceptable.

Companies that are into robotics, industrial automation, and automation software will benefit.

H. HYGIENE

We’re going to become sticklers for cleanliness – the virus has ensured that. We’re going to clean ourselves, disinfect almost everything we touch, and generally become fussy about hygiene – I’m sure you get the drift. Stocks in this business segment should outperform. My personal favorite is PG, what’s yours?

I. SKILL INSTITUTES

Let’s face it – a large portion of the unemployed will not get back their jobs in the near term. They will have to entrepreneurially channelize their skills after the virus disruption clears up. Skilling and vocational institutes can witness a surge in demand going forward.

Conclusion

The virus situation is evolving at warp speed. The data from last week seems a year-old if you view it after a few days. I have assumed that a vaccine will take time to develop and we will have no option but to live with the virus longer than anticipated. If this assumption proves true, stocks in all the sectors listed above will outperform.

However, if a vaccine gets developed in the near term, say in a couple of months – then life will return to pre-COVID-19 days, and some of the sectors listed above will not shine as much as I have hypothesized.