Take note of these strong performers.
As the pandemic has worn on and the economy tries to recover from the downturn, the stock market has managed to gain back most of its spring losses as the Federal Reserve and Congress have pumped trillions of dollars of stimulus into the economy. There are even some companies whose shares have managed to exceed their pre-pandemic levels as demand for their products or services has ratcheted up with people spending more time at home. It also seems that these companies could do well for the longer-term as they are part of ongoing trends that the pandemic has just accelerated — like home delivery of food and cloud computing. Here are six standout companies to watch.
Microsoft Corp. (ticker: MSFT)
In recent weeks, investors wanting to be in the stock market but also seeking to reduce risk with stable companies have turned to mega-cap tech names in droves. In the year through Monday’s close, the information technology sector of the S&P 500 has led the index with a whopping 43.6% gain. Meanwhile, Microsoft recently hit a record high of more than $217 per share, well ahead of its pre-pandemic peak of around $185. In its most recent quarterly report, Microsoft beat analyst expectations on both revenue and earnings as cloud computing and gaming benefited from increased demand with consumers increasingly working, playing and learning from home. Although Microsoft’s Azure cloud services business is playing second fiddle to Amazon Web Services, Azure recently reached 20% market share for the first time, according to research from Canalys.
Amazon.com (AMZN)
In the second quarter, worldwide cloud infrastructure spending grew 31% to $34.6 billion, according to Canalys data. As the biggest provider of cloud services, Amazon is primed to take advantage of this acceleration. In the second quarter, year-over-year sales growth for Amazon Web Services fell to 29% from 37% in the comparable quarter last year — but the business still racked up more than $10 billion in net sales. Amazon said it was actively trying to help businesses save money on cloud services, which didn’t help revenue in the short term but could translate into customer loyalty going forward. Amazon is also seeing plans for migration to the cloud accelerate — not something that can happen overnight but also part of a longer-term trend. Plus, while there has been growth in cloud computing needs for videoconferencing, gaming, remote learning and entertainment, other industries like hospitality and travel have been more challenged, CFO Brian Olsavsky said in a conference call.
Apple (AAPL)
Apple is another tech stock that beat earnings and revenue expectations for its most recent quarter. Sales for its products, which most notably includes the iPhone, as well as its services increased year over year, despite the pandemic’s continued weight on the economy. The company reported nearly $60 billion in revenue, a record for its June quarter. IPhone sales surpassed $26.4 billion, up from roughly $26 billion a year ago — helped by a strong iPhone SE launch. That’s before the company’s expected release of iPhone 12 models later this year. The company also announced a stock split that makes its shares more available to a wider range of investors.
Nvidia Corp. (NVDA)
Nvidia, which makes computer chips, was well-positioned to ride the growing wave of demand for internet-based services even before the pandemic. Now, as the pandemic has increased demand for gaming and data center usage, the company’s shares have been soaring well above their pre-pandemic levels. In its most recent quarter, Nvidia’s gaming-related revenue jumped by 27% year over year, and its data center sales skyrocketed a whopping 80% from the same quarter in the prior year amid a surge in people gaming, working and learning from home. In April, Nvidia also completed the acquisition of Mellanox Technologies, a buy that makes Nvidia a bigger player in data centers and cloud computing.
Shopify (SHOP)
It’s not just Amazon that is benefiting from the surge of people wanting to shop at home. Canadian e-commerce company Shopify has also been reaping the benefits of lockdowns as companies have flocked to its online retail platform. In the second quarter, new stores created on the platform grew by more than 70% from the previous quarter amid the pandemic-accelerated shift to online shopping as well as the company’s extension of a free trial period for standard plans. Shopify expects users that created stores in April and May to continue converting into paid merchants through the end of this month. The company’s revenue in the second quarter was also up an impressive 97% year over year.
DocuSign (DOCU)
With travel and in-person meetings curtailed sharply during the pandemic, businesses have increasingly been turning to DocuSign’s technology that allows for electronic signatures on business agreements. The company’s CEO Dan Springer said on a conference call that he expects the surge in people looking for ways to sign documents electronically will translate into expanded business for the company’s Agreement Cloud, which is a suite of products and integrations for digitally transforming how organizations prepare, sign, act on and manage agreements. “Even when the COVID-19 situation is behind us, we don’t anticipate customers returning to paper or manual-based processes,” Springer said. In its most recent quarter, the company reported $287 million in total revenue — a 39% increase year over year.
Six public companies outperforming in tough times:
— Microsoft Corp. (MSFT)
— Amazon.com (AMZN)
— Apple (AAPL)
— Nvidia Corp. (NVDA)
— Shopify (SHOP)
— DocuSign (DOCU)
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Update 08/06/20: This article was published on a previous date and has been updated with new information.
