Sectors to Watch Upon Vaccine Optimism
& Stimulus Checks

Money-center banks are among the best recovery stocks, according to S&P Global Market Intelligence. That is because they act as a bet on both domestic and international growth trends, both of which are projected to come bouncing back as we progress in the pandemic recovery.

"While the low interest rate environment creates meaningful revenue headwinds in consumer banking, we believe Bank of America (NYSE: BAC) will be a leading beneficiary of the pandemic-driven acceleration toward digital banking and reiterate our Overweight rating," says Piper Sandler’s Jeffery Harte.

The travel market shut down almost completely in 2020, and Wall Street analyst Justin Post anticipates a major rebound in 2021 due to pent-up travel demand. After a year of being cooped up inside, travelers around the world are going stir-crazy. Investors can anticipate many Americans will use a portion of their stimulus payments to make summer travel plans, using online travel platforms like Expedia (NASDAQ: EXPE).

Despite the optimistic outlook, the airline industry still faces plenty of challenges in the near term. Bank of America analyst Andrew Didora says investors should prioritize airlines that have strong balance sheets and relatively high exposure to leisure travel rather than business travel. Southwest (NYSE: LUV) finished 2020 with more than $1 billion in net cash and is Didora's top pick among the "big four" U.S. airline stocks.

Analysts also expect that much of the stimulus payments will likely be spent on groceries and general consumer purchases. According to a recent article by Yahoo!Finance, with any rise in American consumer spending, Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN) and Dollar General (NYSE: DG) could be expected to see an increase in purchases.

Compared to the overall 5.3% increase in Retail and Food Service for January 2021, Sporting Goods, Hobby and Music rose 8%; eCommerce jumped 11%; Furniture and Home Furnishings snapped 12% higher; Electronics and Appliances leaped almost 15% and Department Stores outpaced all categories with a 23.5% gain.

The gaming industry was heating up before the pandemic started and has established itself as one of the most profitable segments of entertainment, which includes the music and film industries. Now, the post-coronavirus world has more gamers who have joined because of the lockdown, and many are expected to remain consumers. For example, Logitech (NASDAQ: LOGI) is up 33.22% as of March 15th, 2021 (when compared with its closing share price on February 19, 2020).

These gains are due in part to surprise increases of 16.34% in EPS and 7.35% in revenue reported as part of the company’s latest earnings report. Another example is popular casual game developer Zynga (NASDAQ: ZNGA), which rose nearly 30% over the same period, due in part to its new partnership with Amazon aimed at offering content to Prime subscribers. Therefore, it is no surprise that gaming has also become a popular investment theme.

As the housing boom continues, Congress has pumped additional stimulus into the economy and mortgage interest rates remain near all-time lows. Companies like Home Depot (NYSE: HD), Floor and Decor (NYSE: FND) and Sherwin-Williams (NYSE: SHW) stand to benefit from a stimulated and reopening economy, as homeowners may feel compelled to renovate their homes in the hopes of snagging a higher sales price.

The extraordinary demand for Covid-19 vaccines and the record speed with which vaccine manufacturers have produced them has transformed the vaccine industry, and it expects to continue to generate significant profits as the pandemic continues.

Large pharmaceutical companies, particularly those involved in the vaccination program, namely Moderna (NASDAQ: MRNA), Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ), also stand to benefit under President Biden.

Moderna was tasked with producing booster shots of the vaccine for COVID-19 and since the beginning of November 2020, their share price has risen by 114% (as of close on March 15, 2021).

Biden has signed executive orders on climate change and EVs and has hinted at a new approach to trade with China.

“With Biden re-entering the Paris Agreement, I expect we will see an uptick in net-zero 2050 announcements as US companies feel pressure to set a similar target,” said Wood Mackenzie Asia Pacific Vice Chair, Gavin Thompson.

“As a result, competition will increase for clean energy sector resources, including battery metals and renewables supply chains,” said Thompson. “Analysts believe that the solar industry will grow from its current valuation of $US53bn to $US223bn by 2026, as a repercussion of these changes,” said Gilbert of eToro.