There are three big investment themes that I am looking to invest in for 2021. These are in no particular order:
- Online shopping
- Remote working
- Online security
I like these because they are important in their own right. But, they also reinforce each other. Spending more time online shopping increases the need for software solutions to keep safe online. Remote working means more days are spent at home, which makes scheduling deliveries from online shopping easier and boosting the need to secure laptops against hackers.
I have identified one or two UK stocks or types of companies that I think are well-positioned to capitalise on each of the three investment themes.
Ordering online
People who might not have shopped online have, and those that already did have done it more during the pandemic. What’s more, there are and will be generations of people that have grown up having never known life without the Internet. For them, online ordering is a natural option, perhaps even the default one. Those people are filling up the UK’s quota of adults.
I believe online shopping had around a 21% share of the UK’s retail market in 2019. It went up last year. I don’t think a 50% share is unreasonable in a decade. So, Ocado seems like a good online shopping play. It benefitted enormously from the shift to online shopping in the UK last year, and surveys suggest this will persist. Ocado is also selling its automated fulfilment centre technology to overseas retailers looking to scale up their online offerings.
Investing in delivery and logistics companies would also be in keeping with an online shopping investment theme. Also, commercial real estate companies and trusts that own lots of warehousing in good locations might see demand for their properties rise in a world that increasingly shops online.
Working remotely
People have been forced to work from home in the pandemic. When asked, many do not desire a return to a full five days in the office week. Employers are eyeing the benefits of an at least partially remote workforce. For one thing, if only a percentage of the total workforce is in at a particular time, you don’t need as big an office. That office might not have to be a single centrally located one in a big city but somewhere cheaper perhaps.
Palace Capital is a REIT with a focus on commercial property in the UK’s regions. I think it might do well if a restructuring of the office landscape does happen and from the Tory government’s pledge (if realised) to level up the regions. Learning Technologies Group is a workplace digital learning provider that should benefit from the increased willingness to get things done remotely rather than in person.
Online security
Spending more time online to shop, work, or learn means more time exposed to the Internet’s dangers. Avast, one of the world’s largest cybersecurity companies, is a UK share I have looked at before. It offers online security solutions for individuals and small and medium-sized enterprises.
GB Group has data-driven solutions to help quickly validate and verify their customers’ and employees’ identity and location. If interactions are shifting from face to face to remote, then demand for ways to check entities are who they say they digitally should grow, to GB Group’s benefit.
