Beyond Covid investment ideas

As lockdowns are creeping back in some parts of the world, investors need something to look forward to. So where’s better to look than at companies that are already gazing way over the pandemic’s immediate horizon?

While for many industries, our new stay-at-home tendencies spell trouble for their bottom line, there are others that are doing OK despite or even because of our them. It might seem far away, but one day we will be back to “normal” and by looking beyond the short and medium we can spy three companies that may emerge from the crisis even stronger.

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Online clothing retailer Asos, already flying high from a trend towards internet sales, knocked its second quarter figures out of the park and reforecasted for revenue growth of between 17% and 19% for the full year, back in August.

One of the reasons was a misstep in predictions around the number of customer returns. It seems that under lockdown we are more discerning in our choices — or less likely to try them on immediately, perhaps — meaning the company said it expected fewer return parcels going forward.

Additionally, the so-called fast-fashion brand has taken a responsible turn, thanks to pressure from its increasingly world-aware audience. In recent months, it has launched a “circular collection”, that claims zero waste designs and recycled materials to produce clothing and accessories that are also more durable and hard wearing.

Its MarketPlace arm, which showcases small independent businesses, also on-boarded five charities as it cashes in on growing consumer appetite for second-hand items. Cancer Research UK and Royal Trinity Hospice, join Oxfam’s Festival Shop, Save the Children and British Red Cross on this most up-to-the-moment platform.

With this new sustainable outlook and a much quieter post room, Asos has seen its share price surge around 55% from the start of 2020 to mid-October.

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SolarEdge Technologies
Another company tapping into a consumer-led trend towards sustainability is SolarEdge, a technology firm built for the 21st Century.

Listed on the tech-heavy Nasdaq exchange since 2015, SolarEdge is responsible for “intelligent inverter solutions” that have changed the way power is harvested and managed in a solar photovoltaic (PV) system.

For those of us who still draw our electricity from the grid and are unfamiliar with SolarEdge’s products, they ultimately lower the cost of energy generated by a solar PV system – making renewable power cheaper and more attractive.

The company’s “mission is to become the leading provider of inverter solutions across all PV market segments and broaden the availability of clean, renewable solar energy”. It is already well on its way.

Despite a tough time for business overall, its second quarter revenues of $331.9m were up 2% on a year earlier.

“While the pandemic has created many operational challenges, I am confident in our financial strength and grateful for the trust of our customers and dedication of our employees, which enable us to continue to focus on product innovation and execution of our long term plans even in these challenging times,” said CEO Zivi Lando in August.

Around a month or so later, the company also announced significant investor confidence in the form of loans that would convert to an equity share under specific conditions… but would pay a 0% interest until then.

Between the start of 2020 and mid-October, the company’s share price ballooned 183% to $289.

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Union Pacific Corp
With airlines struggling to stay afloat and road vehicles being targeted to hit lower emissions, it might be time to let the train take the strain. And while you might think the US is a country of trucks, wagons and pickups, there is a significant railroad option.

Union Pacific Railroad claims to be the nation’s premier franchise, covering 23 states across the western two-thirds of the country. Its track covers 32,200 miles, employs 37,000 people and has spent $35bn in the decade to 2019 on upgrades.

It operates 7,700 locomotives and serves 10,000 customers… And if that last number looks small, it is due to the company transporting goods rather than people, which has helped it through the pandemic.

Although its operating revenue of $4.2bn was down 24% in the second quarter 2020 on a year earlier, thanks to a 20% fall in volume, the company said it expected to weather the Covid-19 storm in relatively good shape thanks to the implementation of its Unified Plan 2020.

This plan speeded up longer trains, while keeping injuries down and also reaping the windfall of lower fuel costs, thanks to the oil price drop earlier in 2020.

WIth its third quarter results due in mid-October, its share price is up almost 15% since the start of the year.

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