A bull market is a condition of the financial market where prices are rising or are expected to rise. This term is reserved mostly for stock market prices, but is used to describe any sale of security whose value is seen to appreciate or rise over some time, which can be months or even years.
These markets are characterized by Investor confidence, optimism of price appreciation, and expectation of strong results over some time. However, there is no specific or universal metric to identify a bull market. Bull markets take place when the economy is strong or when it is strengthening. They are not easily predictable because speculation and psychological effects play a huge role in the market.
Currently, the pandemic has crippled trading and caused major stock prices to fall at record low values not experienced in over 25years, the NSE’s main index hit a 17year low. Most stocks have been adversely affected but there are still stocks that are expected to stand the pandemic and even rise in prices on the wake of COVID 19.
Most investors are caught between Investing in the bull market for short term profits and investing for the Long term for wealth creation, Hence the Question Go Bull or Go Long?
So here is the list of stocks which are to look out for, during the pandemic in Industries like transport, tourism, entertainment, and commodities e.g. oil and gas because of the stay at home directive by the Ministry of health.
- The airline industry like Delta Airlines dropped with almost 40% with just a few weeks. Our very own Kenya Airways also dropped sharply due to the impact of COVID since it had to be shut down with zero operations on passenger’s flight.
- Southwest airlines with also almost 40% drop in just weeks
- Cruisers companies also experiencing more than 40% drop and,
- Oil and gas companies like ExxonMobil dropped from $69 to $47.
So, should you buy or hold these stocks with the perception that the hit is just temporary? How long will the pandemic affect stock prices and business as we know it?
The following Industries and related Organizations deserve a keen look at during this period:
We are all at home but we need to still communicate with those we love, with our colleagues/clients/partners by attending online meetings and with the world at large.
We all need Facebook, Instagram, WhatsApp, and these three products are owned by Facebook, and in China, the equivalent is WeChat owned by Tencent, collectively called social media. Then we have Google and YouTube owned by Alphabet. So, stocks from all these sites are highly likely to be on a bullish trend.
Safaricom, Kenya’s leading communications Company and largest market share are still doing well in the NSE, despite the pandemic. This is because subscribers are using M-Pesa more, purchasing more data bundles for work, Installation of home fiber to ease in working from home, and an increase in subscriber calling frequency.
This is a classic SWOT situation where Threat to health turns into Opportunity for businesses.
With the stay at home directives, working part-time, compulsory leave, and unemployment, people are inclined to find having gaming around the house as a necessity and also as a platform to spend time more with kids. The 2nd largest gaming company in America’s and Europe in terms of Revenue ($ 5.3Billion courtesy of Forbes, as of May 22, 2020) and market capitalization is owned by Tencent, Electronic Art (EA). So, stocks related to gaming and to be precise Tencent and EA would be one of the stocks to look out for in the Industry.
3) Working Software
The government said we should try as much as possible to avoid gathering and going to our workplaces and stay at home, if possible. Therefore, we need to work from home and this means Zoom, Google meetings, Microsoft teams, hence need for these apps either Windows, Mac, or mobile.
With minimal movement comes online shopping hence ordering through different sites available e.g. Jumia, Uber eats, Kilimall, and delivery also through Sendy. The stocks for these companies are currently in demand.
We all need to take care of our health and even much more during this time of pandemic and one of the biggest medical suppliers is Johnson & Johnson. Have you realized how the shelves of late have been empty actually in the tissue paper section? this means stocks related to Kimberly-Clark would be in demand.
6) Consumer essentials
Whether we have a pandemic or not there are the common and basics goods we will need from time to time. We will all need to keep our house clean especially like now we are advised to always keep our environment and surfaces we touch regularly clean. The most known company in the world in selling the cleaning products is Clorox.
We all have to use the P &G products. Being Kenyan and maize flour as our staple food, are we eating less or more? Is this bad or good for maize millers? Maize flour is a staple food it is the main commodity donated, So for Companies like Unga Group stock prices should be doing well or even better.
The above Stocks have a high probability of recovery after the pandemic compared to the other stocks which are extremely affected by the virus are provide opportunities for one to go long but this doesn’t mean that their stock price won’t go down.
This is an overall view of the current stock market trends but the decision to go long or short term in trading demands in-depth research and analysis.
Author: Festus Thuo
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