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Work From Home: The Next Big Stock Investment Theme

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It began with the coronavirus. But it might not end with a vaccine. The work-from-home culture is proving surprisingly sustainable on several levels. The benefits extend beyond increased health and safety to include lower carbon emissions and stripped-down business overheads. Here are some emerging investment options as the case for extending the telework model after the pandemic grows stronger.

How to play growth in the work-from-home space

The tech stock option includes the likes of Zoom, Microsoft, and Amazon. Zoom is quickly muscling in on Microsoft’s Skype territory. Meanwhile, online retail giant Amazon provides not only an in-demand e-commerce platform but also its own work-from-home initiatives. A seismic shift towards a more permanent telework culture will see other changes across multiple sectors. Home grocery delivery is likely to become the norm, for instance.

Investors should also consider the sales of office furniture, as home spaces are repurposed as work places. Office tech sales will likely rise. Internet usage and media streaming are likely to become as defensive as utilities in a work-from-home world. Investors should therefore consider adding top telecoms names like BCE and Rogers to a TSX stock portfolio. The growing emphasis on the home also supports names like Canadian Tire with its home-focused multiline retail model.

The rise of the green economy

The end of the daily commute adds up to a win for the environment. It could also be the last straw for the oil sector. Look beyond electric vehicles (EVs), since they’re supported by a high physical traffic model. Look instead to energy production and the rise of a more climate-conscious mode of investing. Indeed, fund managers are already looking past Generation Z to Generation Alpha as typical near-future investors. Hydrocarbons are out and the green economy is in.

Greener modes of public transportation could become a major investment theme. But again, look beyond the personal EV. There is clearly a market for cleaner, cheaper, and more comprehensive public transport networks. Retooling public transport for the new decade could become a growth market all of its own. Publicly owned transport companies with extra routes and zero-carbon tech could generate a lot of momentum.

Working from home will eventually eat into the automobile industry if it goes on for long enough. But people will still need land travel, even if they end up ditching their cars. Public transport could rush in to fill the void. As with any disrupted industry, there’s a chance for upside. Investors may want to consider names such as Finning International and Badger Daylighting for growth in the infrastructure sector.

The bottom line

Change is in the air as the world quickly re-organizes to combat both the pandemic and the economic upheaval it’s causing. Every big change in society brings investment opportunities, though. Right now, changes in consumer behaviour are disrupting retail stocks, causing waves of positive momentum. The work-from-home model is likely to contain upside of its own, therefore, from tech solutions to a potential infrastructure boom.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Zoom Video Communications. The Motley Fool owns shares of and recommends Amazon, Microsoft, and Zoom Video Communications and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short May 2020 $120 calls on Zoom Video Communications, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon.

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