At the outset of the coronavirus pandemic, we highlighted some stocks that could outperform with the "new normal" of remote work and "learn from home". While most parts of the economy would be impaired, the companies that facilitate these arrangements are experiencing greater revenue and a permanent shift in their adoption and trajectories.
Initially, it seemed like this would be a short-term affair. However, it's now becoming increasingly clear that these arrangements are going to last for many months. Dr. Anthony Fauci recently said that the mask-wearing and social distancing may continue into 2022. It doesn't seem like a vaccine will be developed anytime soon, and then, there will be questions of distribution and getting enough people to take it.
Another factor is that the virus's "third wave" is developing as case counts are rapidly increasing. Many experts believe that this is going to be particularly bad given that the virus seems to spread in cold weather, and people won't be spending as much time outdoors. Additionally, people are not as assiduously social distancing as they were in the Spring.
As a result, many companies like Microsoft (Nasdaq: MSFT), Ford (NYSE: F), and Dropbox (Nasdaq: DBX) are making "work from home" arrangements permanent or extending them into next year. This will be a boon for many stocks including Zoom Video Communications (Nasdaq: ZM), Okta (Nasdaq: OKTA), and Microsoft (Nasdaq: MSFT).
Zoom Video
Zoom is one of the leaders of this bull market. Its stock barely went down during the market crash in March as the market correctly anticipated that its business would be a massive beneficiary of the new normal.
It also beat out many companies with deeper pockets including Google (Nasdaq: GOOG), Microsoft, and others in the race to build a video conferencing platform. Now, it's become the tool of choice for the majority of workplaces and schools. It's also become a verb and part of the English language which seems to be an indication of a company's staying power.
The company's success is due to the simplicity and effectiveness of its product. Now, it's turning Zoom into a platform that will feature third-party apps and integration with other software. This will accelerate the network effects that are fueling Zoom's growth.
Okta
Okta is a cloud-based, cybersecurity company. It's essentially a cybersecurity company that helps companies manage the login process to ensure security through its identity verification software. Currently, it has 8,900 companies using their servers.
Like Zoom, the increase in remote work has accelerated its growth as more companies need a solution to let its employees use their network while ensuring that their accounts are not being compromised. Many large companies developed their own internal methods to do this but Okta is making this available for businesses of all sizes. It's expected to grow revenue by more than 30% and profits by 90% over the next 12 months.
Microsoft
Microsoft is a winner of the "new normal" for a couple of reasons. There's increased demand and use for cloud services given the growth in the digital economy and remote work. More PCs and laptops are being bought which means that more software is being sold including Windows and MS Office.
It also has its Teams product which is a workplace-collaboration software that combines aspects of Zoom and Slack (Nasdaq: WORK). Teams has grown rapidly as it was offered free to customers of MS Office. This has helped it eclipse Slack and drawn antitrust scrutiny. It's expected that in its next earnings report, the company will report that Teams will have over 100 million users.