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We look at how some names exposed to emerging trends in the pandemic have performed      
Thursday 04 Jun 2020 Author: Tom Sieber

Fund manager Peter Lynch once observed he wouldn’t invest in anything that he wasn’t able to illustrate with a crayon and a sheet of paper.

What he really meant is that you shouldn’t put money into a business you don’t understand. We can all take this into our own investing by allocating cash to firms whose products we recognise, understand and can easily research.

You shouldn’t underestimate your own instincts and ability to spot investment opportunities based on your own intuition and experience.

The coronavirus crisis has provided an interesting test for this approach amid rapid and dramatic changes in consumer behaviour which would have been observable to most of us.

This column thought it would be interesting to look at a hypothetical portfolio made up of names which were well placed to benefit from the almost overnight shift in our lives when lockdown was introduced.

The table shows how these stocks performed since the market first began pricing in the impact from coronavirus at the end of February.

One of the first observable effects of the virus was heavy stockpiling as people became fearful about their ability to buy essentials when the pandemic really took hold. Slots for grocery delivery were like gold dust.

We said to buy Ocado (OCDO) in July 2019 as we identified the shift towards doing our weekly shop online – the pandemic has accelerated this trend and helped Ocado’s share price to new record highs.

Supermarket Morrisons (MRW) seemed to have a good start to the crisis as it worked hard to support its staff and customers and its vertically integrated model came into its own, easing supply chain pressures.

An increase in costs linked to safety and distancing measures and extra staff have since taken some of the momentum out of the share price.

As suppliers to the likes of Morrisons and Ocado, many consumer goods firms such as Reckitt Benckiser (RB.) have also performed relatively well. In particular, Reckitt’s hygiene and health portfolio saw strong demand.

Takeaways have been a popular treat in lockdown, underpinning advances for Domino’s Pizza (DOM) and Just Eat Takeaway (JET).

While being stuck at home with little to do has seen surging demand for streaming services and gaming. Netflix’s shares have performed well and computer game outfit Frontier Developments (FDEV:AIM) is up more than 50%.

We remain social animals at heart and video conferencing service Zoom has received a big boost as we look to remain in contact with our friends and family.

This list is backward-looking but rest assured Shares will remain alive to emerging opportunities as we consider some of the lasting impacts from the coronavirus crisis.

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