Christmas is just around the corner and it’s been a challenging 2020 as the Covid-19 pandemic has kept the world in lockdown for large parts of the year.
After an initial slump in March, global stock markets have rebounded strongly following extensive support from central banks and governments alike.
However, as we edge towards the end of 2020, it’s worth taking a look at the long-term trends that have been accelerated by Covid-19.
What stocks we buy and how we position our portfolios, not just for 2021 but over the next decade, will have a meaningful impact on our returns.
With that in mind, here are five stocks that I believe long-term investors should hold for Christmas, the New Year and beyond.
Shopify Inc (NYSE: SHOP), the digital storefront software provider for businesses, has been a big beneficiary of the online shopping boom.
E-commerce was already growing fast before the Covid-19 pandemic. When that hit, growth was supercharged.
Shopify’s unique role has been in helping not only small and medium businesses (SMBs), but large businesses too, establish an online presence.
Given Shopify has over one million merchants using its platform in over 170 countries, its “Flywheel” will likely see it keep pulling in more and more merchants.
In 2019, Shopify-powered online stores only made up around 5.9% of total e-commerce sales in the US – a tiny number when next to Amazon.com Inc’s (NASDAQ: AMZN) commanding 37% share.
However, that also gives Shopify plenty of room to grow as third-party sellers look for alternative channels to bypass Amazon and go direct-to-consumer (DTC).
New platform partnerships established this year, with the likes of Walmart Inc (NYSE: WMT) and Facebook Inc (NASDAQ: FB), means Shopify looks set to continue to expand over the next few years.
Contactless payments have allowed companies such as PayPal Inc (NASDAQ: PYPL) to further strengthen their case for the “war on cash”.
PayPal is now one of the defacto payment options available to consumers on a lot of websites and e-commerce websites.
As a result, it’s no surprise to see the company continuing to grow the amount of money it processes. In its latest quarter, it total payment volume (TPV) expanded by 36% year-on-year (see below).
Source: PayPal Q3 2020 investor update
Expanding its Venmo money transfer service, to include a physical credit card for specific points, has also seen PayPal enter into the more lucrative credit card space.
As the lines blur between traditional banking and “fintech” names such as PayPal, it means the opportunities will continue to gather for disruptors. That’s good news for PayPal in the years ahead.
It’s been a landmark year for US stock markets but that doesn’t mean there hasn’t been big Asia-based winners. One such example has been Singapore-based Sea Ltd (NYSE: SE), the online gaming and e-commerce giant.
The owner of gaming company Garena, which distributes the wildly-popular Free Fire game, and e-commerce platform Shopee, Sea has had an extraordinary 2020.
However, I think it’s just getting started. E-commerce penetration in Southeast Asia in 2019 was still well below 10%. No doubt that has climbed somewhat in 2020 but the runway ahead is still huge.
Looking at China, where 30% of overall retail sales are carried out online, you can see how far Southeast Asia still has to run.
As one of the biggest and most popular platforms in multiple countries in the region, Shopee is set to benefit from its continued execution on its expansion strategy.
Having recently raised around US$2.6 billion in an upsized stock offering, management is showing investors that it is intent on continuing to grow in the region.
With more and more people turning to shopping online, expect Sea to be one of the region’s big e-commerce winners.
4. Ping An Good Doctor
Telehealth provider Ping An Healthcare and Technology Co Ltd (SEHK: 1833), known more commonly as Ping An Good Doctor, is a Hong Kong-listed subsidiary of insurance giant Ping An Insurance Group Co of China Ltd (SEHK: 2318).
One of the best things about telemedicine is that we are just at the start of the growth journey. The rapid growth of Ping An Good Doctor’s services in the first half of 2020 demonstrates how quickly habit can be adopted.
Yet people question whether patients will just return to waiting in doctor’s waiting rooms with other sick patients.
Like shopping online, once this habit takes hold and its value is proven, it’s unlikely to be a trend that is reversed en masse.
The great thing about Ping An Good Doctor is that its Online Medical Services division (which includes remote consultations with in-house doctors) is displaying hyper-growth. But it still only makes up around 25% of overall revenue (see below).
Source: Ping An Good Doctor H1 2020 earnings slides
This revenue slice, more importantly, is higher-margin than the rest of the business. By leveraging Ping An Insurance’s network, Ping An Good Doctor can also cross-sell its services.
For investors who want to look towards the future, Ping An Good Doctor should be one of the key winners of the telehealth revolution in China over the next decade.
5. Mapletree Logistics Trust
For dividend investors, riding the e-commerce trend could also mean buying into Singapore-listed REIT Mapletree Logistics Trust (SGX: M44U).
Mapletree Logistics Trust has 146 properties across Singapore, Hong Kong, Japan, China, Australia, Malaysia, South Korea and Vietnam.
The REIT deals mainly with logistics properties, with a large part of that catering to firms in the e-commerce fields.
It’s well-diversified, geographically, and has continued to grow its payout over the long term. What’s more, it also has 696 different tenants across its properties – reducing the tenant concentration risk that some smaller REITs have.
Assets under management (AUM) was a shade under S$9 billion at the end of the September 2020 and the overall occupancy rate of its portfolio is a respectable 97.5%.
With responsible capital management and acquisition opportunities in the pipeline courtesy of parent Mapletree Investments Pte Ltd, Mapletree Logistics Trust looks set to keep riding the e-commerce wave in Asia.
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Shopify Inc, PayPal Inc, Sea Ltd, Ping An Healthcare and Technology Co Ltd, and Mapletree Logistics Trust.