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Finding a Thriving Stock to Invest in Challenging Situations

The pandemic has made the market situation unpredictable, making it difficult to find a stock or industry to invest in. But there could be an opportunity here.

Finding a Thriving Stock to Invest in Challenging Situations

Unpredictable crises can unfold anytime in the stock markets and the economy. Many of these situations are driven by external causes. It is hard to be prepared for every such eventuality, but such circumstances could lead you to other industries or sectors you may not have thought of. A few stocks or industries thrive specifically in crisis situations, while there are other stocks that thrive in all situations.

It is interesting to see that while the Covid-19 pandemic has negatively affected the earnings and functioning of most businesses, some stocks have actually thrived. Understandably, these are tech stocks. Now with the second wave apparently showing itself, you may want to think of these kinds of stocks. There still is unpredictability as to when the pandemic would end.

A Stock and Industry Thriving in the Pandemic Situation

Let’s look at the home fitness industry. Any company offering products for home use – work or recreation – is bound to succeed at this time. That’s because people are spending more and more time at home. It’s the safest thing to do. And while remaining at home, those thoughts of movie watching and resolutions of keeping fit, come to mind. That’s why you need to look at the home fitness industry. One stock particularly shines brighter here, according to Motley Fool’s Andrew Tseng. And that is Peloton ($PTON).

The Interactive Fitness Industry Is Popular

The company specifically operates in a sub-sector of the fitness industry – interactive fitness, a category they invented when the company launched in 2012. Back then, the category sounded like a temporary trend. But Peloton’s performance since then has proved that this is a serious segment to consider. Interactive fitness attracts even people who are too lazy to exercise themselves.

The company offers many attractive features – a variety of fitness classes covering various activities such as indoor cycling, running, walking, stretching, meditation, yoga, bootcamp, etc. Peloton also offers engaging instructors and attractive fitness studio content. There’s something for just about everyone.

Subscriptions Double

That’s why the business has been doing well, even before the pandemic. Subscribers to its Connected Fitness program have doubled during every past fiscal year of the company. Tseng reports that the company is on course to repeat that performance. The Connected Fitness program includes subscribers who own the company’s Tread or bike while also subscribing to its interactive content.

Pandemic Further Increases Demand

And when the pandemic caused gyms to close down, Peloton products became even more popular, particularly the bikes. The soaring demand actually was overwhelming. The company had to significantly ramp up its production but was still not able to stop the long delivery times.

Peloton management believes that it can catch up with the demand by July end or early August. It is also significantly investing in a new high-tech factory in Taiwan, in collaboration with Tonic, which it acquired last year. Once that is functioning, the holiday demand could be fulfilled later in 2020.

Hardcore Subscribers

Peloton’s members are known to become fans. That can be understood from its subscriber cancellation figure, which is significantly below 1%. The company claims that the Net Promoter Score (NOS) of the Peloton bike is between 80 and 93. Its Tread treadmill has an NPS score in the region of 80. Tseng points out that any NPS score that’s above 0 is “good”. And if it’s above 70, it is “world-class”.

The company’s long-term future is strong, given its strong performance even in the midst of the global economic crisis. The demand for home fitness equipment and interactive fitness services and products is only set to keep growing. And even if the pandemic situation gets worse, this company will continue to churn great earnings.Successful online stock trading with direct access trading platforms gives more power to the trader. But success also depends on finding the right industry and stock that can give you a long-term advantage.

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Is Long-term Investment in the Ecommerce and Video Streaming Markets Worthwhile?

With contrasting news emerging about trade relations between the US and China, and the Covid-19 pandemic, you need stocks that give you long term stability.

Is Long-term Investment in the Ecommerce and Video Streaming Markets Worthwhile?

One of the challenges in the stock market is staying calm despite the uncertainty that rocks it. With zero commission trading offered by online broker-dealers, you sure can get attracted to stock trading. But avoiding knee-jerk reactions is something you learn from experience.  

Everyone’s Eyes on the US-China Trade Relations

How strong is the US-China trade deal now? Well, Trump believes it is “intact”. That belief was expected to do wonders for the stock market. What Trump said seemed to contradict Peter Navarro’s response to a Fox News interview that the deal was off. Navarro responded, saying that the statement was quite “out of context” and it was particularly in reference to mistrust with China.     

While the vagaries of the trade deal with China could keep sending the markets up and down, it is important to have a long-term perspective towards trading. You need stocks that you can hold on to for a long period of time. With that perspective, analyst Parkev Tatevosian recommends the eCommerce industry, with one stock particularly standing out.

Why Amazon Could Be a Rock in Turbulent Seas

Looking at e-commerce giant Amazon, its past is its greatest record book. From 2014 to 2019, the company grew its revenue from $89 billion all the way to $280 billion. It has benefited from brick-and-mortar store customers gravitating towards online shopping, which has only accelerated during the coronavirus pandemic when people are asked to remain indoors as much as possible. And according to Motley Fool contributor Brian Stoffel, Amazon could continue its amazing growth pace.

While the American economy has reopened following the pandemic-induced lockdown, there are still Covid-19 cases being reported. The pandemic hasn’t died down completely, and people are still advised to maintain social distancing. In such contexts, shopping from home continues to be the best option.

A Loyal Customer Base for Amazon

Amazon already has a loyal customer base. Its global Prime membership is in the region of 150 million. And while the pandemic has brought in new customers for Amazon, they are likely to stick around even if the pandemic conditions subside. They have tasted the convenience and reliability of online shopping with Amazon and wouldn’t want to give it up. They could either continue shopping with Amazon as non-members or be tempted to take up Prime membership. Tatevosian states that 65% of Amazon shoppers already were Prime members in 2019. As a result, Amazon’s growth isn’t showing signs of slowing down anytime soon.           

The Video Streaming In-home Entertainment Market

Amazon’s Prime membership not only offers free delivery for many of its products, but also the Prime Video streaming service. That has put the online shopping giant firmly in the competitive video streaming market. In-home entertainment is another industry that has taken off with pandemic-induced shutdown. Even before the pandemic, home entertainment was getting popular with many other providers out there, particularly Netflix ($NFLX) and Disney ($DIS). Now, when Prime membership comes with shopping benefits plus streaming service, it becomes hard to resist. 

Rising Popularity in the Cloud Computing Industry

And let’s not forget the company’s cloud computing division, Amazon Web Services (AWS). AWS had a 33% growth in the latest quarter. Overall revenue had a 29% growth. AWS, therefore, grew revenue even faster than the whole company. Despite constituting only 13.5% of Amazon’s total sales, AWS made up 77% of its operating income.

With so much going for it, Tatevosian reckons there is some long-term stability in the stock despite the uncertainty that political events and the pandemic could bring about.

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